Understanding the challenges biotech companies face when developing drugs is vital to assessing risk factors that might hinder a company’s clinical trial program. First, the probability of success is low; approximately 1 in 1,000 potential drugs graduate to human clinical trials after the preclinical testing phase in the United States and almost 9 of every 10 new drugs fail in the human testing phase. Besides challenging failure rates, the time and costs it takes a drug to reach the marketplace is another hurdle. New drug approvals take an average of 12 years from preclinical testing to approval and cost upwards of 1 billion dollars. Finally, one of the most common challenges a company may face during a clinical trial is a clinical hold.
FDA clinical holds have become significantly more common, doubling the historical average. Since 2010, oncology trials have accounted for about 50% of clinical holds, but we have seen a steady increase in the volume of cell and gene therapy, gene editing, and neurology holds in recent years. Typically, clinical holds last an average of 145 days, with an 85% resolution rate in less than a year. The probability of having a clinical hold lifted successfully is about 50-60%.
What to do when you receive notice from the FDA?
Is it a full or partial hold?
A complete clinical hold is the delay or suspension of all clinical work requested under the IND. In contrast, a partial clinical hold is a delay or suspension of only part of the requested clinical work. Clarifying whether dosing can continue without interruption in already-enrolled patients may be critical to preventing disruptions in data collection. A hold could also mean that no new participants may be recruited to the study.
Are clinical holds only due to adverse safety events?
The FDA can issue a clinical hold for concerns regarding chemistry, manufacturing, and controls (CMC), or issues regarding the management and control of the clinical study. A company must learn as much as it can from the FDA’s letter to inform the company’s messaging and “next steps” strategies.
What should your investor relations plan be?
After understanding the purpose behind a clinical hold, a company must assemble its senior management, investor relations, and legal team. The company should evaluate all public guidance and disclosure obligations around the clinical program. Then, assess if clinical timelines will be affected and strategize what the investor relations message should be. Next, develop consistent talking points across the company and a Q&A document applicable to investor calls and scientific meetings. Another issue to consider is what information the company should disclose if it has a quarterly or annual SEC filing or is slated to speak at an investor or medical conference. Lastly, reset guidance if necessary.
Who should be notified?
Sponsors will need a communications strategy to communicate with sites, partners, review boards, and other interested parties who need a clinical hold notification. Additionally, timely disclosure of clinical holds to investors may be required for public companies, depending on the circumstances. If a public disclosure is necessary, drafting the disclosure can be challenging due to the uncertainty and potential development delays that a clinical hold can cause.
Additional Considerations
Before a public disclosure, a clinical hold may be considered material non-public information under federal securities laws. Therefore, companies should consider closing their trading windows or restricting individuals from trading their stock. In addition, keep in mind that once a clinical hold is in place, most investors will pull offerings or pending transactions. Therefore, the company should concentrate its efforts on the response to the FDA, making sure to address all outstanding concerns completely. After submitting the company’s response, the FDA has 30 days to respond with comments or questions, which kicks off another 30-day cycle. So being clear and complete the first time around is advantageous to getting the company’s clinical hold resolved quickly.
The Gilmartin team has years of experience advising public and private biotechs through challenging events. Contact our team for more information on building a successful and strategic investor relations program.
Silinda Neou, Associate Vice President
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