Age of the Special Protocol Assessment
I thought the goal was to approve drugs to help people ?!?
While the alphabet soup is not nearly as densely packed with letterish noodles at the FDA as it is at the Pentagon, biotech investors have to wade through their fair share of acronyms. In this article, I dealt with a number of pre-approval designations. In this one, I covered the different ways the FDA can approve a drug - including the euphemistic "approvable letter."
Now we turn to a program I believe is going to be crucial for successful drug approval going forward: The Special Protocol Assessment (SPA).
At the May 3rd ODAC meeting, we saw a promising cancer drug (Genta's (GNTA:NASD) Genasense) with undeniable clinical activity in metastatic melanoma shot down in an ODAC panel meeting due to statistical technicalities. Differences in interpretation of trial results between the sponsor and FDA statisticians severely dampened this drug's chances for approval in melanoma. This is a consistent problem in the FDA drug approval process where statisticians' views on a clinical trial are held in higher esteem than clinician and patient needs.
Negotiations between the pharmaceutical industry and Congress created the SPA program. The program is an effort by the industry to bind the FDA to a series of agreements about a particular clinical trial. In short, it offers some predictability to dealing with the FDA during the approval phase of a drug's development and limits their ability to change their minds about trial requirements halfway through the process.
An SPA should eliminate most of the ability of FDA statisticians to nitpick about the design of the trial. In many FDA briefing documents, we see long rationalizations by FDA staffers as to why a particular clinical trial did not measure what it was supposed to measure. Under an SPA, the FDA enters into a written, binding agreement that the design of the trial is sufficient to demonstrate an agreed-upon set of clinical endpoints.
In general, the idea is if you sign an SPA with the FDA and conduct the trial as agreed, good results from the trial will be sufficient for marketing approval. This makes securing an SPA especially valuable to both the company and its investors - especially after the FDA's behavior on May 3rd.
It must be noted the FDA still has a few outs when it comes to the SPA:
(1) They can argue that the company did not, in fact, run the trial as they agreed. If they can make this argument stick, the whole SPA goes out the window.
(2) If the director of the FDA division reviewing the application determines "a substantial scientific issue essential to determining the safety or effectiveness of the drug" was identified after the testing began, then the FDA can invalidate the SPA unilaterally. We would note, because the issue has come up in one of the companies we cover, that impressive results from another drug would not qualify under this exception, unless the SPA contemplated orphan or accelerated approval. You might remember that both those approval designations have a requirement for superiority over existing approved treatments.
(3) The information presented by the company to the FDA and used as the basis to formulate the SPA was misleading or inaccurate.
In sum, an SPA is about as binding of a deal as you can get with a government agency.
I'll go out on a limb here: If a biotech company starts a new Phase III pivotal trial and does not have an SPA for that trial, investors in that company should be concerned. The FDA is not being shy about handing out SPAs and the extra 2-5 months it takes to get one of these things negotiated and signed is well worth the time spent.
Note I say "starts" a new pivotal trial. The SPA is not available once a trial has started, so this is a feature you should look for going forward in new Phase III trials. It is also not available in Phase I or Phase II trials unless the FDA judges those trials to be pivotal in nature. While the SPA program has been available since 2002, only in the last 9-12 months have companies begun to take advantage of it.
The reverse of this is also true: Any biotech company who has secured an SPA for their Phase III pivotal trial should receive a higher valuation - all things equal - than a company that has no SPA.
The granting of an SPA does not mean the trial is more likely to succeed. Things still go wrong in pivotal trials. What it does mean is things are less likely to go wrong once decent data are generated by the clinical trial.
While an SPA does not eliminate the risk FDA statisticians will find some mumbo jumbo statistical disagreement with the trial data, it does provide some limitation to those games. That limitation reduces risk in the regulatory process. Even a slight decrease in risk in the biotech environment is important - doubly so on the regulatory side after the display the FDA put on in the May 3rd ODAC panel meeting.
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