WHY CRLs SHOCK US…BUT SHOULDN’T
On February 16th, 2018 the FDA rejected Vitaros (company: Apricus Biosciences) for the second time and issued another Complete Response Letter (CRL). Prior to the latest CRL, we wrote about the numerous scientific problems Vitaros had to overcome in order to gain FDA approval; so the rejection was not surprising from that standpoint.
Yet the new CRL caught many investors off-guard. In fact, the company’s post-CRL press release mentioned reasons for rejection that some investors didn’t think would affect Vitaros’ chances of approval in the first place.
It could be because these were truly novel issues that APRI was blindsided by. On the other hand, it may have been that APRI was aware of these problems ever since the first CRL but didn’t bother to mention, or at least emphasize, them to investors in a press release.
We may never know exactly what happened but we’ll give APRI the benefit of the doubt; and we’re not trying to pick on them either, since they may have been completely truthful every step of the way.
DOES A COMPANY HAVE TO DISCLOSE THE CONTENTS OF A COMPLETE RESPONSE LETTER?
In any case, neither APRI nor any other company has to disclose anything about the CRL. A CRL is a private matter. There is no law in the U.S. that states a company must reveal the contents of a CRL to the public in any way.
Of course, no law bars a company from releasing the full CRL to the public either.
The majority of companies avoid releasing the CRL likely because it contains information related to trade secrets (and problems) no company would want a competitor to get a hold of.
In any case, all of this begs the question: how much should you trust the contents of a post-CRL press release?
…AND NOW FOR SOME OF THE IMPORTANT STATISTICS
Take a look at the numbers below.
They come from a study conducted by the FDA. The study compared the reasons for rejection outlined in a CRL to the statements made in each respective company’s post-CRL press release.
Remember, these numbers are across-the-board averages and may not apply exactly to every press release the same way.
However, they should lead every investor to a pretty obvious conclusion: don’t trust a company to tell you everything, if anything, with respect to why their drug candidate was rejected by the FDA. While companies may not lie about the reasons for a CRL, almost none of them are fully forthcoming about the reasons either.
The number of CRLs that mentioned safety and/or efficacy issues.
The number of safety and efficacy issues disclosed by press releases.
The number of press releases that revealed all of the reasons for the CRL.
Author: Artem Cheprasov
Lurie P, Chahal HS, Sigelman DW, Stacy S, Sclar J, Ddamulira B. Comparison of content of FDA letters not approving applications for new drugs and associated public announcements from sponsors: cross sectional study. BMJ. 2015;350:h2758.