Eight FDA Approvals in December Boosts 2012 to Banner Year for New Drugs

SAN FRANCISCO, CA--(Marketwire - Jan 2, 2013) - The U.S. Food and Drug Administration approved eight new drugs in December pushing the year's total to 39, its highest level since 1996 when the agency cleared a backlog of applications.

Though December's newly approved drugs cover a broad range of conditions, the agency had granted orphan drug status to six of the eight medicines. Orphan drug status confers financial and other benefits to a drug's sponsor to encourage the development of drugs to treat patient populations of 200,000 or less in the United States. In fact, nearly half of the 39 drugs approved in 2012 had orphan drug designations.

"We've seen drugmakers embrace orphan drugs for a variety of reasons including the opportunity to win faster approvals and run smaller, less costly clinical trials, and better chances of success," says G. Steven Burrill, CEO of Burrill & Company, a global financial services firm focused on the life sciences. "The passage in 2012 of new incentives for developing rare disease drugs will only further fuel this trend, particularly as more precision therapies are developed to target subpopulations of patients with a given disease."

Trading activity of biotech stocks echoed the positive year for new drug approvals as life sciences stocks soared in 2012. The Burrill Select Index ended the year up 40.5 percent. That compares to a 7.3 percent increase in the Dow Jones Industrial Average, a 13.4 percent gain for the S&P 500, and a 15.9 percent rise in the Nasdaq Composite Index. An improving economy, clinical advances, new product approvals, and M&A activity drove the gains. Sarepta Therapeutics posted the biggest gain in 2012 with its shares rising 477 percent. The company in 2012 reported that its mid-stage experimental muscular dystrophy drug demonstrably improved the ability to walk for boys taking the drug.

Congress also helped biotech stocks stay on track in 2012 with smooth passage of legislation to renew the Prescription Drug User Fee Act, which provides for the U.S. Food and Drug Administration authority to collect fees from industry for reviewing products in exchange for assurances that it will act on applications in a timely manner. The legislation, approved as part of the Food and Drug Administration Safety and Innovation Act, also provided for accelerated approval paths and other incentives for drugmakers developing new therapies to treat rare disease and could help the development of personalized medicines that target small subpopulations of patients.

With a U.S. Supreme Court decision that left most of President Barack Obama's landmark healthcare reform legislation intact, and Obama's reelection, the fight over healthcare reform is shifting from efforts to repeal the legislation to fights over its implementation.

The past year also saw the passage of the Jumpstart Our Business Startups or JOBS Act, which seeks to make it easier for emerging growth companies to access capital through the public markets. The act provides exemption from compliance with costly regulations for smaller companies. It also allows companies to test investor interest before having to make sensitive information public in securities regulatory filings.

U.S. life sciences companies raised a record amount of capital in 2012 with a total of $71.1 billion in public and private financings, up from $57.4 billion in 2011, a 23.9 percent increase. When the potential value of partnering transactions are included in the numbers, the total for 2012 grows to $91.7 billion, a 13.9 percent increase over the $80.4 billion raised through financings and partnering transactions in 2011.

Global life sciences venture financings totaled more than $12.4 billion in 2012, an increase of nearly 23 percent over 2011. Venture investors, however, are moving away from early-stage financings. Companies are relying more on alternative sources of financing, including accelerators, angel capital, corporate venture sources, and private equity investment. In fact, of the top 10 private financings in 2012, all but one had significant backing from private equity firms or strategic investors.

When venture investors do fund early-stage companies, increasingly they are providing large rounds to carry a company to proof-of-concept when investments can be exited or new financing at higher valuations can be raised. While privately held therapeutics developers grabbed the largest portion of funding with a total of $5.1 billion in 2012, digital health and life sciences information technology deals showed the biggest jump in activity, with a 58.5 percent increase to $748 million.

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Eight FDA Approvals in December Boosts 2012 to Banner Year for New Drugs