In the last week there have been some interesting and surprising outcomes from FDA Advisory Committee meetings.
On Wednesday (2/22) VVUS received an endorsement from a panel in favor of its weight loss drug, Qnexa.
A previous panel in July 2010 voted against approving Qnexa. This was followed by a CRL in October. Concerns raised included questions about the drugs potential for teratogenicity as well as its impact on cardiovascular health.
Following the panel meeting there seems to be general consensus that a cardiovascular study will be requested by the FDA with the uncertainty resting on whether it is required before approval or can be carried out after launch.
The scheduled Prescription Drug User Fee Act (PDUFA) date for Qnexa is April 17, 2012.
Chelsea Therapeutics (CHTP)
CHTP also had a favorable outcome from an FDA committee last week. On Thursday (2/23) the Cardiovascular and Renal Drugs Advisory Committee voted 7-4 to recommend approval of Northera. There was one abstention and one non-vote.
Northera is being developed for the treatment of neurogenic orthostatic hypotension in patients with primary autonomic failure. The previous week saw some drama for CHTP when the CEO gave details of safety concerns communicated from the FDA. The stock dropped ~40% on the news.
Northera's scheduled PDUFA date is March 28.
Advisory committees provide the FDA with independent opinions and recommendations from outside. The experts are given information about a candidate's application and the FDA's review. Based on this information, advisory committees may recommend approval or disapproval of a drug's marketing application. The committees' recommendations are not binding.
I was interested to see what impact a committee's recommendation had on subsequent FDA decisions. With that in mind I took a look at recommendations over the last two years that have been followed with an FDA decision.
I found 42 meetings over the time period. There were 12 "no" votes and 30 "yes" votes. The 42 drugs subsequently generated 30 approvals and 12 CRLs.
Based on this small data set, it appears that while the recommendations are not binding they are certainly rarely disagreed with - the final decision only contradicted the committee vote in 14% of cases. Furthermore, in every instance in which a committee voted against a drug's approval the FDA followed up with a CRL. When a committee recommended approval, in 80% of cases the FDA agreed.
I also had a look at the implications of the strength of a "yes" vote. Amongst the 30 "yeses" there were 15 unanimous verdicts. Only one unanimous verdict was followed by a CRL. In the 15 other cases in which the vote was less than unanimous there were 5 CRLs.
With regard to VVUS and CHTP where does this analysis leave us? Both received "yes" votes. VVUS had a panel that was 90% in agreement while CHTP's panel was ~60% in approval. Based on historical precedent now is not a good time to be short either of these stocks. In fact, looking purely at recent Advisory Committee recommendations, buying on pull backs might be the best way to approach them.