I was eagerly awaiting a decision on April 16, the date by which the FDA had committed to rendering a decision on whether to grant approval to Canada’s Neurochem (NRMX) for Kiacta, a compound to treat AA amyloidosis (a serious kidney disease). While Kiacta will serve a limited market, I believe it should provide proof of concept for Alzhemed, its phase 3 candidate to treat Alzheimer’s disease.
On April 11 the FDA announced it needed more time, and pushed back the date of the decision by three months, to July 16.
To be clear, I had the good fortune to have done my Ph.D. work at Queen’s University in the laboratory of Professor Walter Szarek. Aside from being a world leader in carbohydrate chemistry and, I can say from personal experience, a fantastic teacher and advisor, Prof. Szarek is one of the founders of Neurochem. While I was working in his lab when the company began I did not then have, nor have I ever had, any insider information about this company.
On news of the delay the stock took a dive, and NRMX was down almost 12% for the day. The FDA is usually pretty good at sticking to its deadlines. If, however, the FDA decides it needs more time to reach a decision it is in its power to take this extra time. The mission of the FDA is protect the health of the public first and foremost.
So, I thought it would be interesting to look at other cases where the FDA issued extensions. My initial assumption was that this is always bad news. I found eleven other cases in which the FDA had taken more time to reach a decision than it initially committed to.
I had hoped to find some glaring pattern as to whether the FDA seeking such an extension had any predictive value on eventual acceptance and was disappointed. To be clear, a sample size of eleven is far from large, but these events also don’t occur often. Of the eleven extensions, six were later approved, three received approvable notices (one of these was later approved), and two were not approvable.
As well, there was no clear correlation between percent change in price (adjusted for market shifts) and eventual approval. So, while I had hoped that news of this type of extension of the FDA review process would be a good signal on which to trade, I ended up disappointed.
Disclosure: As for what will happen with NRMX, right now I think it’s too tough to say which way it will go, and I currently have no position in this stock. The next few months will be interesting, though, as it's expected to release results of a phase 3 study on Alzhemed.