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FDA In 2007: Not Much Love For New Drugs

Wednesday, 9 Jan 2008 | 1:52 PM ET
CNBC.com

BioMed Tracker, which closely monitors the clinical trial and drug approval process for investors, is out with a new report today on the Food and Drug Administration's record last year.

The drug approval rate went down 13 percent and the number of "approvable letters" went up a whopping 40 percent. An approvable letter has become a euphemism for "delay."

When the FDA sends one it means the agency says it might approve the drug sometime in the future if the company provides more data, crosses T's or dots some I's, or does another clinical trial. Oftentimes, the details of the requests are not publicly disclosed leaving analysts and investors to do a lot of field research or guesswork about how much longer it'll take.

Anyway, BioMed tracker says investors might be getting used to the approvable letter trend. For example, the service says the stocks of companies that received approvable letters last year went down an average of 13 percent vs. a 21 percent drop in 2006.

And this year promises to be an eventful one. BioMed says it expects 68 FDA decisions on applications for approval of new drugs and 41 decisions on applications for approval of new uses for existing drugs.

The unpredictability of a super cautious FDA is one factor that is leading a lot of analysts to tell clients investing in the sector, "Caveat emptor."

But this year already has one drug approval on the board. Yesterday, the FDA said it was ok for Eli Lilly to start selling one-a-day Cialis for erectile dysfunction. Can't wait to see the new ads and commercials for that one.

Questions? Comments? Pharma@cnbc.com

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