A Note on Approvable Letters

An approvable letter was issued this week for Accretropin, Cangene's recombinant human growth hormone ("rhGH").   "In its action letter, the FDA requested additional support data regarding manufacturing processes. As fulfilling this requirement does not involve further clinical trials, Cangene anticipates being able to respond quickly," according to the company's press release.   

As you may remember, Eye on FDA has been tracking Approvable letters since October 2006.  The list is located on the blog in the left column. 

Bear in mind, that the contents of an approvable letter are proprietary to the company and the FDA does not reveal any information about the letter.    It is interesting then to see how various companies deal with the news and also how the media treat it.

Many times a press release is extremely private, saying only that an approvable letter has been received and that the company will be working with the FDA.  Other releases go into more detail, but still hold back on specifics, while still others are pretty open and upfront.  The issues that everyone cares about is whether there is (i) a safety problem, (ii) an efficacy problem or (iii) a requirement that there be further clinical studies.

Other reasons for an approvable letter could be the brand name of the drug, specific label issues or other more resolvable issues.  That said, it is not impossible for a company to receive an approvable letter on a minor issue and later have a problem crop up that is more serious, causing further delay. 

But the other curious thing is the way media sometimes treat an approvable letter.  Many carry the news that that drug has been "approved" pending resolution of some minor issues, which is not really the case.  Still others put it out there that the drug is "one-step closer" to approval, which is technically true but does paint a rosier picture than the case may be. 

Lastly, it is curious to see the impact on stock price.  For some companies, just getting an approvable letter when there are no products yet out on the market means a big deal and investors sometimes interpret it one way or another - causing the stock to rally if the FDA issues don't appear too big a deal, or causing it to fall if they are - such as demanding new clinical trials.  All of these are variable factors that need to be considered by companies when crafting communications around an approvable letter.  That is not to say spin it - a headline that says "one-step closer to approval" when new clinical trials on safety are being demanded isn't going to fool anyone.  But companies should be aware of the impact of these communications, and if there is the luxury of research available, it would be a good idea to analyze the impact of approvable letters, the ensuing company communications and stock price to gain better insight.