Biotech General Discussion

HRTX announced after hours today that the FDA extended its PDUFA date for HTX-011 for the treatment of post-op pain (http://bit.ly/HRTX20PDUFAext). In this post, I'll answer and explain our Amp view on whether this is bad news:

Our answer is that HRTX's PDUFA extension announcement is pretty good news actually.

Initially, there is some downward pressure on HRTX share price/valuation by the PDUFA delay. This is because the delay postpones revenue for HTX-011 sales by at least 3 months if HTX-011 is approved. Secondly, the delay allows competitors, especially PCRX's Exparel, to continue to establish themselves in the market.

However, from a regulatory approval risk perspective, the news, although of course not nearly as positive as approval, is pretty good. We are not regulatory professionals, but have gained experience on the FDA review process from our biopharma diligence work. Fortunately, although disappointing in the short term, PDUFA date extension by the FDA is good news in the mid/long-term in the vast majority of cases. In fact, we analyzed 2019 PDUFA extensions and we are not aware of any of them receiving a CRL (rejection) by the FDA following the extension*. In fact, FDA rules and regulations indicate that a PDUFA should only be extended if the agency foresees that more info could lead to approval: "5. Review Performance Goal Extensions v. Consistent with the underlying principles articulated in the GRMP guidance, FDA’s decision to extend the review clock should, except in rare circumstances, be limited to occasions where review of the new information could address outstanding deficiencies in the application and lead to approval in the current review cycle (pg 5)." http://bit.ly/FDA_Extensions

Furthermore, HRTX included some good news in their press release in reporting that "the contract manufacturing site used to manufacture HTX-011 has been reinspected by the FDA with no Form 483 observations issued and with a recommendation by the FDA inspector for approval of the site." Thus, a major regulatory risk overhang, approval of the contract manufacturing site, appears to be overcome. Therefore, although the delay in an FDA decision is disappointing and puts negative negative pressure on valuation and share price of HRTX especially in the short term, the negative effect of that delay seems to be at least partially offset by the decreased CMC risk for FDA approval in today's announcement. Thus, for HRTX and long-term HRTX investors, yesterday's PDUFA extension announcement is not terrible news, it's actually pretty good news.

(For more info on the FDA approval CMC risk, watch my recent Amp education QuickE (HERE) on the 3 key risks that drive smid-cap biopharma company share price.)

Footnote

*One exception that we are aware of is a special case because the extension related to the opioid crisis. Nektar and their drug candidate NKTR-181 got caught up in the FDA opioid approval hold in 2019, before pulling their NDA filing after a horrible AdComm result earlier this year.

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#HRTX, HTX-011, #Post_operative_pain, #PDUFA