[Ed. Note: Dr. KSS writes for the Irregulars about medicine and biotech stocks. He has agreed to our trading restrictions, and his words and opinions are his own. This piece is for reference. You can see all of his articles here.]

For biotech Irregulars, this is a concise overview of what goes on in each phase of drug development. I am posting it in the form of a column with a link for easy reference. A new reader asked yesterday about this area, and when we get up in arms in the threads about trial design or, say, phase 2b results, this will always be an initial source of puzzlement for new readers. Thus, here’s a cipher for what is going on.

The things one reads these days about the horrors of drug development, about how it is Sisyphean, about how you have to start out with x thousand compounds to arrive years later at a single marketed drug, about how you have to haggle with the FDA, and about how it all adds up to billions of dollars spent for each drug that finally gets greenlighted by the FDA: those accounts are mostly very accurate and credible.

Keep in mind, please, that this discussion is mainly about drug development for the American market; such development is arch and sometimes frankly just turgidly overblown. We do, however, have far and away the highest standards of any nation for getting drugs to market. Sometimes what the FDA asks is excruciating for biotech companies. Many companies sometimes sharpen their claws by first seeking marketing authorization in the EU; in this process they work out all the flaws in trial design and use that experience for an assault on the summit, so to speak; approval in the American market.

When regulatory agencies make decisions, they are looking for data in two domains: safety, efficacy. How safety is defined is case by case: many drugs with possibly dangerous downsides are approved if, in the view of the regulator, benefits sharply outweigh risks. Efficacy is hardcore proof that the agent does something as compared with placebo or as compared with standard-of care agents. How much proof do they want? Generally, the EU above all else wants solid proof of safety; if an agent has been shown safe, they are inclined to let it be marketed with flimsier proof of efficacy with the proviso that ...

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