Everything investors need to know about Investigational New Drug Submissions
When it comes to paperwork, the clinical trial process for approving new drugs is almost unprecedented. Between a mountain of consent forms and legal documents outlining clinical protocols, pharmaceutical companies are subject to an intense level of scrutiny. For drug developers, this oversight begins with the submission of an Investigational New Drug (IND), which must be cleared by the U.S. Food and Drug Administration (FDA) in order to initiate clinical studies with human subjects. .
In competitive positioning, experience with INDs is a major asset. Indeed, large companies like Johnson & Johnson keep track of the number of INDs their development pipelines submit per year. But casual investors may not have a deep understanding of the process or why it can make or break a short- and long-term action. Let’s see what you need to know about INDs, so you have an idea of how they might influence your pharmaceutical or biotech investment strategy.
What are INDs and why are they so important to pharmaceutical investors?
IND applications are large sets of data that manufacturers submit to regulators to claim that they have developed a drug that is likely safe and plausibly effective, worth testing in a clinical trial. To make this argument, pharmaceutical companies are forced to include data on their product’s performance in animal models like mice before they are allowed to conduct clinical trials on human subjects.
Similarly, drug developers must explain to the FDA the details of how they plan to manufacture the drug while demonstrating that their production facilities are capable of maintaining certain quality standards.
Finally, INDs require detailed documentation of clinical trial protocols offered by the company, ranging from the planned scheduling of doses to the qualification of clinicians supervising the process. If the company makes a strong case in its IND, the FDA gives them the green light to proceed with clinical trials and commits to follow the project.
The FDA understands that the process of submitting an IND can be daunting, especially for smaller companies who may not be experienced with regulatory filings. If the materials a company submits in its IND do not meet regulatory standards, the FDA will reject them and indicate where it believes the company’s data is insufficient to safely proceed with human trials. If this rejection occurs before the start of clinical trials, it is a disadvantage that usually requires spending time and money on additional preclinical development.
IND setbacks aren’t always devastating
If a company’s IND is rejected or withdrawn, its stock can crater, because it means that the corresponding project cannot move forward. In the event of a withdrawal, the FDA essentially forces a halt to the clinical trial process, which can be particularly devastating.
To address the high stakes of INDs, the FDA has a handful of collaboration frameworks with companies working on new submissions. This collaborative process is at the discretion of the applicant company and can begin as early as preclinical studies in animal models if the manufacturer believes FDA guidance will be helpful. In practice, larger and more experienced pharmaceutical companies like Pfizer ( DPF 0.02% ) don’t need help, but young biotechs like Modern (ARNM 1.16% ) probably, so be sure to search press releases and presentations for any clues that they are seeking regulatory advice.
The IND process is not something drug developers can simply set and forget. Once an IND is cleared, the FDA requests periodic updates on the progress of relevant clinical trials. If trial research subjects experience unexpected or unexpectedly severe side effects, the study may be clinically suspended.
For example, trials of Inovio’s candidate were recently suspended by the FDA after the regulatory agency said it had further questions about the treatment. (This is in contrast to Astra Zeneca (AZN 0.18% )who recently voluntarily put his coronavirus vaccine trial suspended after some patients report neurological symptoms.) Clinical outages are common setbacks in the trial process, and their primary purpose is to give regulators and drugmakers time to determine whether the side effects experienced by patients research subjects are caused by the new drug being studied. Regulators can also require clinical holds if they suspect there are manufacturing issues with the drug or if other major issues come to light.
INDs are living documents that investors should pay great attention to, especially if they plan to invest in small companies with many preclinical projects. If a company continues to get its INDs rejected, it could be a sign that its preclinical development operations are flawed. Likewise, investors should appreciate the competitive advantage of companies with a history of successfully submitting INDs, as mastery of regulatory affairs is extremely valuable and quite difficult to imitate.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.