Clinical Trial Process

Before a potential new drug can generate revenues and earnings for a biotechnology company, it has to pass important preclinical, clinical and regulatory hurdles. While positive development updates can cause a steep raise in stock price, failure or delay can lead to depreciation and significant declines in a biotechnology company's share prices.

What is a clinical trial?

Before a biotech drug can be sold over the counter or with a prescription, it must undergo rigorous testing. Clinical trials and research are studies done, with human volunteers, to answer specific questions about new vaccines, therapies, or ways of using known treatments. Carefully conducted clinical trials are the fastest and safest way to test if a biotech drug or treatment is safe and effective in humans. The entire Food and Drug Administration (FDA) approval process can take up to nine years, depending on factors.

What are the phases of clinical trials?

PRE-CLINICAL: Normally, an experimental drug is tested in a test tube or in animals before being used on humans. If the drug appears to be safe, and possibly effective in animals, the company will then provide this information to the FDA, requesting approval to begin testing the experimental drug in humans (via an Investigational New Drug [IND] application). The FDA estimates that only about 0.1% (or five in five thousand) compounds developed in laboratories pass pre-clinical trials and advance to FDA-regulated clinical trials.

PHASE I TRIALS: Researchers test an experimental drug or treatment in a small group of people (20-100 [usually] healthy volunteers, but can include sick patients) for the first time to determine the metabolism and pharmacologic actions of these drugs, their side effects associated with increasing doses, and any early evidence of effectiveness. The study could last up to 2-3 years, and about 70% are approved for Phase II.

PHASE II TRIALS: For a controlled clinical study, the experimental drug or treatment is given to a larger group of people (100-300) to see if it is effective, further evaluate its safety, and to determine the common short-term side effects and risks. The experimental drug must show a unique benefit and/or a unique safety benefit profile. Dramatic remissions or recoveries in treated patients need to be demonstrated. Minimal benefits may be significant for previously untreatable diseases, e.g. brain cancer. This phase could last up to two years, and about 50% of the drugs that enter this phase complete it successfully.

PHASE III TRIALS: The decision to pursue a Phase III study is a big decision given the time and enormous costs to conduct a pivotal trial. Results from the studies will provide the necessary data for the FDA to make its final decision, as well as supply the data for physician labeling. Expanded, controlled, and uncontrolled trials are performed with large groups of people (several hundred to several thousand) to confirm its effectiveness, monitor side effects, compare it to commonly used treatments, collect information that will allow the experimental drug or treatment to be used safely, and to evaluate the overall benefit-risk relationship of the drug or treatment. In general, the studies last several years, and 70-90% of the drugs that reach this phase complete it successfully.

PHASE IV TRIALS: Post-marketing studies to define additional information including the drug's risks, benefits, and optimal use. After a successful completion of Phase I-III testing, a company will submit the results of all of the studies to the FDA to obtain a New Drug Application (NDA). Once the FDA grants a company with a NDA, the company can market the drug to the public. The approval review could take up to one year.

FAST TRACK, ORPHAN, and SUBPART E STATUS: If granted by the FDA, this allows for expedited review and approval. Orphan status is granted to drugs addressing patient populations of less then 200,000. The FDA, through the Orphan Drug Act of 1983, grants seven-year market exclusivity and tax breaks to companies with Orphan drugs.

As the clinical trial process is such an important part of biotechnology drug development, investors who understand this process are most likely to make informed and educated investment decisions.

Please visit the following links which contain information that you may find useful.

ClinicalTrials.gov
ClinicalTrials.gov provides regularly updated information about federally and privately supported clinical research in human volunteers. ClinicalTrials.gov provides information about a trial's purpose, participant prerequisites, locations, and phone numbers. It is a service of the U.S. National Institute of Health, and was developed by the National Library of Medicine.

ClinicalTrials.gov – Clinical Trial Glossary
This glossary was created for consumers wanting to become familiar with the most common terms used in clinical trials.

FDA – U.S. Food and Drug Administration
This section of the FDA's website provides comprehensive information with additional links to specialized topics.

Veritas Medicine
Veritas Medicine is a free confidential resource, providing access to clinical trials and information on treatment options.

For biotech investing questions please feel free to contact *DPEC Partners. 

* InvestBio does not offer any securities. InvestBio’s biotech investment products and services can only be obtained through DPEC Capital, Inc.