PDUFA Dates Explained
Regulatory
PDUFA (Prescription Drug User Fee Act) dates are among the most important catalysts in biotech investing. Understanding how they work is essential for tracking FDA drug approvals.
What is PDUFA?
The Prescription Drug User Fee Act was first enacted in 1992 to provide the FDA with additional resources for drug review. Under PDUFA, pharmaceutical companies pay fees when submitting drug applications, and in return, the FDA commits to reviewing applications within specific timeframes.
Key PDUFA Terms
| Term | Definition |
|------|------------|
| PDUFA Date | The FDA's deadline to complete review of a drug application |
| Action Date | Another name for the PDUFA date |
| Goal Date | The target date by which FDA aims to complete review |
| User Fee | Payment made by sponsor to FDA for application review |
PDUFA Review Timelines
The FDA has different review timelines based on the type of review:
Standard Review
- Timeline: 10 months from submission
- Used for: Most drug applications
- PDUFA date: Calculated 10 months after FDA accepts the NDA/BLA
Priority Review
- Timeline: 6 months from submission
- Used for: Drugs offering significant improvements over existing treatments
- PDUFA date: Calculated 6 months after FDA accepts the NDA/BLA
Pro Tip: Priority Review designation can shorten the review timeline by 4 months, making it a significant catalyst when granted.
What Happens on a PDUFA Date?
On or before the PDUFA date, the FDA must take one of these actions:
Possible FDA Actions
- Approval - The drug is approved for marketing
- Complete Response Letter (CRL) - FDA identifies issues that must be addressed before approval
- Refuse to File (RTF) - Application is deemed insufficient for review (rare, happens early)
Approval Letter
If approved, the company can begin marketing the drug immediately. This typically results in a significant stock price increase.
Complete Response Letter (CRL)
A CRL outlines deficiencies that must be resolved. Common reasons include:
- Manufacturing facility issues
- Labeling concerns
- Additional clinical data needed
- Safety concerns
Important: The FDA often extends PDUFA dates by 3 months if additional information is submitted late in the review process.
PDUFA Date Extensions
The FDA can extend a PDUFA date under certain circumstances:
Common Extension Reasons
- Major Amendment: Sponsor submits significant new data
- FDA Request: Agency requests additional information
- Manufacturing Inspection: Delays in facility inspections
Extension Timelines
- 3-month extension: Most common for major amendments
- Indefinite: Rare, for serious issues requiring extensive review
Trading Around PDUFA Dates
PDUFA dates create predictable volatility in biotech stocks:
Pre-PDUFA Period
- Stock often rises as investors anticipate approval
- Implied volatility increases in options markets
- Volume typically increases
PDUFA Day
- Binary event: significant move up (approval) or down (CRL)
- After-hours announcements are common
- 20-50% moves are not unusual
Post-PDUFA
- Approval: Focus shifts to launch execution
- CRL: Analyze reasons and path forward
Risk Warning: PDUFA trades are high-risk binary events. Never invest more than you can afford to lose on a single PDUFA date.
Tracking PDUFA Dates
Where to Find PDUFA Dates
Key Information to Track
- Original PDUFA date
- Any extensions or amendments
- Advisory committee meeting dates
- Competing drugs with similar timelines
Historical Success Rates
Based on FDA data, here are approximate approval rates:
| Application Type | Approval Rate |
|-----------------|---------------|
| Standard NDA | ~85% |
| Priority Review NDA | ~90% |
| BLA (Biologics) | ~80% |
| First-in-class | ~75% |
Summary
PDUFA dates are critical catalysts that mark FDA decision deadlines. Key takeaways:
- 10 months for standard review, 6 months for priority review
- FDA must act on or before the PDUFA date
- Extensions are possible and common
- Binary outcomes create significant stock volatility
- Track dates carefully using reliable sources
