The Four Telltale Signs of a Bioscience "Blockbuster" in the Making By Ernie Tremblay

The FDA's Expedited Programs help get promising new therapies for seriously ill patients approved as soon as possible.

But they also create an unintended side effect that's a huge advantage for investors: They point exactly to the biggest money-making opportunities in the bioscience industry.

They're like big, green, neon signs that say, "This is an important drug with incredible profit potential."

And this is how you find them...

For a drug to be chosen for one of these quick approval programs, it has to meet two criteria:

• It has to treat a serious condition. "Serious" means the condition interferes with the patient's normal activities on a long-term basis, or is likely to get worse if left on its own, or is lethal. This drug must be intended to save lives or appreciably improve quality of life. In other words, it must have a ready-made market awaiting its arrival.
• It has to fill an unmet medical need. This means there is no other approved, available therapy that adequately treats the condition. In other words, this new drug will have a monopoly in the market place.

So when choosing a biotech stock for investment, here are your first steps:

1. Go to the company's website and locate the link to its pipeline (drugs in development).
2. Locate its leading new drug candidate - often the page will provide a chart showing which drug is furthest along in development.
3. Click on whatever link takes you to more details about the drug.
4. Scan the info on the page for one of these phrases: Fast Track designation; Breakthrough Therapy designation; Accelerated Approval; Priority Review.

If you find any of those four phrases, you've hit pay dirt. 

Now, here's what they mean:

Blockbuster Sign No. 1

Blockbuster Sign No. 2

A Breakthrough Therapy designation accelerates the development and review of drugs that are intended for serious or life-threatening conditions and demonstrate substantial improvement over available therapies for at least one clinically significant endpoint. This designation offers all of the features of the fast track program and includes even more intensive FDA guidance on development.

Blockbuster Sign No. 3

This program speeds up the approval of promising therapies that treat serious or life-threatening conditions and provide a significant benefit over available therapies. This designation allows developers to use "surrogate endpoints," if appropriate, in their research. A surrogate endpoint is a laboratory measure or physical sign that can reasonably substitute for a clinically meaningful endpoint to predict positive outcomes.

For example, improved cholesterol levels have been used in place of actual long-term survival data in assessing drugs that treat atherosclerosis. That's a very helpful shortcut in developing drugs for diseases that take a long time to run their course.

However, the FDA may require a manufacturer to continue testing these drugs even after they reach the market, in order to get a real read on long-term benefit. And if the ongoing clinical trials don't confirm the benefits predicted by the surrogate endpoints, the FDA can withdraw its approval.   

Drugs that receive either a Fast Track or a Breakthrough Therapy designation may also receive an Accelerated Approval designation.

Blockbuster Sign No. 4

A Priority Review designation shortens the review goal date to 6 months from the standard of a 10-month waiting period. Fast Track, Breakthrough Therapy, and Accelerated Approval drugs are all eligible for Priority Review designation.

None of these designations guarantee final FDA approval, of course. The clinical trial data still needs to show safety and effectiveness. But because these programs get the agency more intimately involved in the drug development process, there is less likelihood of last-minute snafus, such as a determination that critical data is missing from the NDA (new drug application) when it's finally submitted for review.

And they DO give a clear signal that the new drug is question an important one - and is far more likely to generate that $1 billion in annual sales that is the hallmark of "blockbuster" status.