Replies to post #35435 on Biotech Values

[DewDiligence]

>there must be another reason<

Permission to make a rolling submission. This doesn't mean much but it has some utility.

[quantumdot]

Although many here seem to refute it, there is some empirical evidence that FastTrack designation provides for improved share price performance versus peers.

For this reason alone (i.e. investor perception), let alone the rolling submission etc., companies might as well try and get FastTrack status.

Wealth Effects of Food and Drug Administration Fast Track Designation

Abstract:

The U.S. FDA, which regulates the market approval of pharmaceutical products in the U.S., created the fast track designation to reduce the length of review time for products which are targeted at treating ailments for which there are no current therapies. Once the product enters the market it enjoys a monopolistic status until a competitor therapy emerges. We study the stock price reaction to announcements of such designations by publicly-listed firms and find that stock prices increase by a statistically and economically significant amount. Additionally, we demonstrate that a portfolio containing firms with fast track designated products outperforms a widely-diversified portfolio of stocks over a long period of time. Our results provide support for the idea that a strategy of pursuing the development of drugs that target a life threatening condition is sound.

Journal Title:
Journal of Pharmaceutical Finance, Economics & Policy
Volume: 13 Issue: 3

Contributors: Timothy G. Alefantis, Research Scientist, Vital Probes, Inc., Mayfield, PA, 18433, [e-mail]
Mukund S Kulkarni Ph.D, M.B.A., Associate Professor of Finance, School of Business Administration, Penn State Harrisburg, Middletown, PA, 17057, [e-mail]
Premal P. Vora PhD, MBA, Assistant Professor of Finance, School of Business Administration, Penn State-Harrisburg, Middletown, PA, 17057, [e-mail]