With BTD Comes More Responsibility. . to Maximize Benefit
[Thursday, February 28, 2019] An interesting study published last week found that the initial investor euphoria fizzled very rapidly after a company secured the highly coveted Breakthrough Therapy Designation (BTD) from the FDA. For small companies with one or few products, grant of the BTD by FDA led to an immediately upsurge in their stock value but the values dropped back to pre-BTD levels usually within 2-3 months post-announcement. For large companies with many commercial products, successful BTD has practically no effect on the stock value of the company (https://www.nature.com/articles/d41573-019-00019-6). The researchers concluded that investors ascribe very little value to successful BTD requests. This may be an over-simplification of the situations. A BTD is based on preliminary clinical evidence of significant improvement with the use of a new product for a life-threatening disease with an unmet medical need. The process for applying for a BTD is tedious and takes time. It would be expected that much before the BTD is applied and granted, the investors in a company are aware of the results of the early clinical trials and are highly committed. Getting a BTD could be seen as a confirmation of the importance of these preliminary clinical results by FDA. Although getting a BTD is a major event in the development of a given product, the developers have to quickly take advantage of the incentives by re-designing the clinical program and other aspects of the product which takes time and resources. The product would require even more support from its investors due to the shortened and expedited, but demanding program. Getting a BTD is just one step in the life of a product and although the BTD program has been hugely successful in achieving its goal of rapid approval of highly promising therapies, get a designation should not be expected to sustain the valuation of a company on its own. That’s what we see for large companies with multiple commercial products where BTD announcements have little or no impact in the overall value of the company as would be expected. The BTD program is one of the most successful expedited approval pathways by the FDA. Every developer eligible for the BTD program must apply for it and take advantage of it not just for creating investor interest by to secure faster access to market. This report will not change that.
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