Biotech Investing: How to Play Catalysts in the Drug Development Process

STREETWISE THE LIFE SCIENCES REPORT BIOTECH INVESTING HOW TO PLAY CATALYSTS IN THE DRUG DEVELOPMENT PROCESS THE VOLATILITY OF BIOTECH STOCKS PROVIDES AN OPPORTUNITY FOR INVESTORS CATALYST: AN EVENT THAT MOVES THE SHARE PRICE. FROM DISCOVERY TO COMMERCIALIZATION, THE DRUG DEVELOPMENT PROCESS TAKES MANY YEARS. REGULATORY MEETING REGULATORY MEETING CLINICAL TRIAL CLINICAL TRIAL PDUFA DECISION DISCOVERY COMMERCIALIZATION CLINICAL TRIAL CLINICAL TRIAL REGULATORY MEETING PRECLINICAL SOURCE: THE LIFE SCIENCES REPORT DIFFERENT REGULATORY EVENTS AND DATA FROM TRIALS PRODUCES SHARE PRICE VOLATILITY. THIS CREATES AN OPPORTUNITY FOR INVESTORS. BIOTECH DRUG DEVELOPMENT STAGES A. B. SCREENING OF MOLECULES PERTURBING CELL WITH MOLECULES ANIMAL MODEL TESTING INVESTIGATIONAL NEW DRUG APPLICATION A PROPOSAL THAT OUTLINES AND DELINEATES THE PURPOSE OF CLINICAL TRIALS HUMAN CLINICAL TRIALS [SIE] 3000 2500 2000 1500 1000 500 EXCITING FOR SMALL COMPANIES SIGNALS DRUG IS READY TO MOVE ON TO MORE TESTING 10-80 (COULD BE ANOTHER 8-10 YEARS OF RESEARCH AND STUDY) GENERALLY NOT THRILLING FOR INVESTORS (NOT MUCH SHARE PRICE MOVEMENT) REALITY CHECK: A DRUG ENTERING PHASE 1 STUDY ONLY HAS A 1 IN 10 CHANCE OF GETTING THROUGH ALL THE REGULATORY HURDLES TO APPROVAL. 0000 FOCUS IS ON THE PROOF OF CONCEPT AND DRUG SAFETY. 24-300 HIGH VOLUME AND PRICE MOVEMENT BASED ON RELEASES OF PRELIMINARY DATA. 2012 SAW SOME COMPANIES THAT DOUBLED IN SHARE 2012 PRICE, WHILE OTHERS LOST 70% SIGNIFICANT STATISTICAL DATA IS DERIVED FROM | 300-1000 PHASE 2B TRIAL DATA RELEASES AND CAN LEAD TO SHARE MOVEMENT. PIVOTAL STAGE CAN TAKE 3 TO 5 YEARS TO COMPLETE NEW DRUG APPLICATION ALL CLINICAL TRIAL DATA SENT TO FDA FOR REVIEW ADCOM MEETING INDEPENDENT EXPERTS VOTE ON RECOMMENDED APPROVAL OF DRUG CANDIDATES. SHARE PRICE MOVEMENT BEGINS 2 DAYS BEFORE ADCOM MEETINGS WHEN BRIEFING DOCUMENTS ARE RELEASED. Briefing Document FDA NORMALLY AGREES, BUT IS NOT BOUND BY ADCOM DECISIONS I 1000-3000 THE FDA VOTES TO PDUFA DATE! APPROVE OR DENY THE NEW DRUG. PDUFA PRESCRIPTION DRUG USER FEE ACT PDUFA DATE IS THE FINAL STEP IN REGULATORY PATHWAY WHAT IS IT? PDUFA IS A LAW PASSED IN 1992 THAT ENABLES THE FDA TO COLLECT FEES FROM DRUG COMPANIES TO FUND AND EXPEDITE THE APPROVAL PROCESS FOR NEW DRUGS. 12 HAS PDUFA BEEN EFFECTIVE? 3= ACCORDING TO THE PHARMACEUTICAL RESEARCH AND MANUFACTURERS OF AMERICA, DRUG REVIEW TIME WAS CUT ROUGHLÝ IN HALF AFTER THE PASSAGE OF PDUFA DRUG ENTERS COMMERCIALIZATION LONG-TERM OBSERVATIONAL STUDIES CONTINUE TO MONITOR DRUG SAFETY. SHARE PRICE VOLATILITY IS HIGHEST AFTER DIFFERENT IMPORTANT REGULATORY EVENTS THROUGH THE DRUG DEVELOPMENT PROCESS 2011 % 2012 % 25 20 15 10 TRIAL DATA BRIEFING DOCS AdComs PDUFA TRIAL DATA BRIEFING DOCS AdComs PDUFA -5 -10 -15 -20 -25 AFTER A DRUG IS APPROVED, THE PRIMARY CATALYSTS FOR WHAT NEXT? Sales Report SHARE PRICE MOVEMENT ARE QUARTERLY SALES REPORTS FROM THE COMPANY. CONCLUSION DISCOVERING, TESTING, AND APPROVING A NEW DRUG CAN TAKE MANY YEARS. THE CATALYSTS THAT OCCUR AROUND REGULATORY EVENTS ARE IMPORTANT FOR SHARE PRICE MOVEMENT. SAVVY INVESTORS WILL KNOW THE PROCESS WELL AND USE IT TO THEIR ADVANTAGE. Visual Capitalist is committed to providing independently researched content for educational purposes. THE LIFE SCIENCES REPORT Thanks to The Life Sciences Report and Streetwise Reports for covering the production costs of this project. A STREETWISE REPORT Learn more at www.thelifesciencesreport.com VISUAL CAPITALIST Educating a new generation of investors on resource investing and management VISUAL CAPITALIST www.visualcapitalist.com Sources: http://en.wikipedia.org/viki/Prescription_Drug_User_Fee_Act www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/UserFeeReports/PerformanceReports/PDUFA/UCM294101.pdf www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/UserFeeReports/PerformanceReports/PDUFA/UCM294101.pdf www.thelifesciencesreport.com/pub/na/15053 www.fda.gov/Drugs/DevelopmentApprovalProcess/SmallBusinessAssistance/ucm282366.htm PHASE 4 PHASE 3 PHASE 26 PHASE 2a PHASE 1 PRECLINICAL DISCOVERY