Crises are well-known for accelerating change, and the Covid-19 pandemic was no exception. Had the delivery of vaccines and therapies not been urgently fast-tracked, countless more lives could have been lost. Conditional drug approvals were key to the rapid pandemic response, and their success is now opening the door to greater utilisation of this life-saving process.
While the Covid-19 crisis raised awareness of the accelerated route to drug approval, it is nothing new. In the interest of public health, conditional approvals allow a drug company to legally sell a drug before it meets the comprehensive clinical data normally required. This mechanism was introduced in the 1980s by the Food and Drug Administration (FDA) to accelerate the time it took for experimental HIV drugs to reach the market.
For a drug to receive conditional approval, efficacy must be shown using a surrogate marker that is thought to predict clinical benefit. This measurable biomarker depends on the disease. In cancer it can include response rates or ‘progression-free survival’ (PFS), while in diabetes it could be blood sugar levels. Clinical trials must still be conducted to confirm the benefit of the drug, and if the expected benefit is not shown, the drug can be withdrawn – but the use of a biomarker instead of relying solely on lengthy clinical trials can considerably accelerate the time to approval.
Accelerated approvals should be win-win scenarios for both drug developers and patients. Patients can access potentially effective treatments much earlier and companies can launch products into the market sooner, generating sales earlier.
In recent years, granting expedited access to new drugs has been used to great success in the treatment of cancer. Most oncology drugs today are given approval based on PFS, the measure of time until the tumour starts to grow again and no longer responds to the treatment, rather than ‘overall survival’, which assesses whether a drug prolongs life. Overall survival can take many years to establish – time an advanced cancer patient needing to try a new treatment may not have.
However, there are also risks. For drugs with particularly long trial periods, the stakes become very high. For example, when developing drugs to treat Alzheimer’s, progression is so slow trials often take at least a decade to obtain conclusive results.
As a result, the FDA has granted accelerated approval for Biogen’s Aduhelm, which holds the potential to address Alzheimer’s by reducing the levels of plaque in a patient’s brain. However, the link between plaque reduction and clinical benefit will take years to determine. If, in a decade’s time, the data does not demonstrate clinical benefit, Aduhelm would be withdrawn after already exposing patients and society to the costs and possible side effects.
Expanding opportunity set
For biotechnology investors, the incentives created by conditional drug approvals will increase the number of therapeutical areas being addressed, increasing the size of the investment universe.
The process will be particularly positive for areas of unmet medical need, such as many chronic diseases, where it can take so long to demonstrate a drug’s clinical benefits that many patients miss out on better treatments.
For example, the FDA’s standards for showing the clinical benefits to patients suffering from renal diseases was previously so onerous clinical trials would take multiple years, deterring companies from developing treatments. The renal division at FDA has since softened its stance, making it possible to use surrogacy measures to represent a clinical benefit. This has given companies the impetus to start developing drugs in this area, and we are seeing efforts to address several rare and debilitating kidney conditions – including focal segmental glomerulosclerosis (FSGS), autosomal dominant polycystic kidney disease (ADPKD) and IgA Nephropathy (IgAN).
In addition, companies’ path to making profitable returns may become shorter as the time to market for their products is reduced. We are already seeing companies such as Biogen trial expedited drug processes for the treatment of Alzheimer’s, while Sarepta and PTC Therapeutics are developing a drug for the severe muscle degeneration disease Duchenne Muscular Dystrophy.
While the proportion of drugs being approved – or conditionally approved – is rising, it is important not to discount the risk of conditionally approved drugs suddenly and unexpectedly being withdrawn due to lack of efficacy. Questions around patient safety are key and, for the companies themselves, share prices would react particularly badly to the reputational damage and impacted profitability of a drug being withdrawn.
It is important to carefully weigh up the clinical benefits against the likely risk. In order to access this complex but potentially lucrative new development in the biotechnology space, investors should draw from the expertise of experienced biotechnology professionals.
An investor with extensive biotech familiarity is best placed to assess and monitor the risk of drugs being withdrawn from the market. Keeping track of when clinical trial data is due to be published forms part of our risk mitigation strategy, so we can take steps to reduce our exposure to companies where such announcements are expected imminently.