VVUS' Qnexa Extension Won't Means Approval 0 comments

Recently, MannKind's (MNKD) Afrezza NDA decision was delayed for 'approximately four weeks' with no reason given. The market responded positively, sending MNKD share prices up over 8% on the news, before eventually settling back into its pre-announcement trading range. But what does the delay actually mean for MannKind? And what about the delay for Human Genome Sciences' Benlysta? Is there actually a trend between delays and the eventual outcome of the decision?

Some articles have hastily cobbled together some statistics about delays but unfortunately have fallen short of offering a real analysis. I therefore wanted to take a in-depth look at several NDA action date (aka PDUFA date) delays to dig up some data that might be actionable.

First let's collect the data. Here is a run-down of several NDA action date delays, along with the reasons for the delay and the ultimate decision by the FDA. I've tried to be as comprehensive as possible, but if I've missed something please mention it in the comments and we'll update our data. While the analysis is post-hoc and hardly statistically significant, it should be enough for us to establish some trends pertaining to the aforementioned delays.

Before analyzing the data, an important dichotomy must first be made: many delays were three month extensions, often triggered by submission of additional data, and the others appear to be due to the FDA simply needing more time. There should be much different results from either category based on this important difference. Keep in mind that MannKind's current delay was not triggered by additional data and the delay for Benlysta was triggered by additional data (I'm assuming here, HGSI gave no reason for extension but reasons for a three month extension are almost always additional data).

First, let's look at the 'standard' delays - the delays most pertinent to HGSI. In this case, there were thirteen total extensions that appear to be due to the submission of additional data. Of these extensions, seven resulted in approval and six resulted in a complete response letter (CRL). The approval rate for those NDA decisions, then, was 54%. This falls approximately in line with a 66% first cycle approval rate given by the FDA for 2006.

Perhaps more interesting, though, was the fact EVERY company that got a standard three month extension without providing a reason for said extension got a CRL. Three of three in this case. It may just be a correlation between 'Good managements tend to keep their shareholders informed' and 'Good management tends to have a better approval percentage', but I can't help but wonder if these companies that withheld reasons that could have adversely affected their share prices. Whatever the case, it'll be interesting to see if that holds up on decisions in the future.

HGSI, it should be noted, provided a reason for their three month extension.

For MannKind, on the other hand, we have significantly less data. In total, there is only record of three delays that were not standard three month extensions, four if you count Prasugrel's lengthy unannounced second delay. In these cases, three of the four extensions resulted in approval - a 75% approval rate. The lone CRL, in fact, came from MannKind itself.

Due to the low number of delays similar to those of MannKind's current delay, it's hard to pull anything concrete from the data provided. In a more qualitative sense, however, it would appear that of all the delays given, the delays of Adolor's Entereg and Spectrum's Levoleucovorin are most similar to MannKind's current delay. If you want to go that route, the delay is most certainly a good one; both of these delays resulted in approval.

It's up to you how to interpret the above data, but I hope it provided a better insight into what delays might mean for approval of both Afrezza and Benlysta. My own conclusions, based as much on logical reasoning as it is on the data, are:

• Three month delays due to submission of additional data mean virtually nothing in terms of change in approval odds.
• Companies that receive three month extensions without providing a reason may be worthy of additional scrutiny.
• Shorter delays by the FDA that are not based on additional data submission appear to be a good thing.

The market, then, may have been responding properly when MannKind's share price popped by over 8% on the delay news. The delay of HGSI's Benlysta, on the other hand, is unlikely to mean much of anything in terms of eventual approval odds.