FDA more friendly to approvable than approved

You've probably already heard that FDA approvals took a nasty dive last year, with analysts pondering a variety of reasons for the poor performance. Interestingly, Eye on FDA cites new research from Sargient showing that as approvals were sliding, approvable letters from the FDA were spiking--up 40 percent! Michael Hay, senior analyst and product manager for BioMedTracker, says that "The FDA has received a lot of criticism over several high profile adverse events cases including Vioxx, Tysabri and Avandia. This has triggered an overly cautious approach to new drug approvals at the FDA. Other potential reasons for the decline in approval rates cited in our report include an increase in adverse event reports, increased workload for FDA employees, and a high rate of turnover at the FDA." 

Meanwhile, investors are less likely to bid up a stock when they see news of an approvable letter, largely because they are less likely to believe that the drug will be approved. Given the fact that some approvable letters contain a lot more bad news for biotechs than good news, it's likely that investors will be increasingly wary of their impact. 

- here's the press release
- check out the report from Eye on FDA