Complete Response Letter

When a pharmaceutical company receives a FDA Complete Response Letter it means that a review of the New Drug Application, NDA, was completed and a decision to approve was not reached for the new drug application in it’s current form and with the current information provided. Basically a CRL can be thought of as a rejection letter, but it does not mean that the drug can never be approved. In the Complete Response Letter the FDA will provide a description of the requirements that were not met, and normally any recommendations of actions to gain approval.

Actions Following a Complete Response Letter:

An applicant must respond to the CRL within one year or the application is considered withdrawn unless an extension is granted.
The applicant can respond to the Complete Response Letter in one of three ways:

  • Resubmission – the company can resubmit the new drug application addressing all deficiencies identified in the complete response letter.
  • Withdraw – the application without prejudice, allowing for a subsequent re-submission of the NDA at a later time.
  • Request a hearing – the applicant can request a hearing meet with the FDA and discuss whether there are grounds for denying the application.

If the applicant resubmits the drug application, the FDA will then have a certain amount of time to once again make a decision. This decision may result in approval or another Complete Response Letter. This could go on until the drug is approved or the applicant decides that it is not willing or able meet the FDA requirements.

How does a Complete Response Letter affect your investment?

The reason(s) cited in the the Complete Response letter is what can affect your investment. The FDA rarely ever rejects a new drug application that was a accepted for review, but it does send out the CRL with issues that need to be addressed before it will review the application again. Some issues have an easier remedy than others, but requesting further clinical trials can very really damaging for a pharmaceutical company’s stock price. A CRL that cites manufacturing concerns and not the drug itself, can be remedied having less of an impact on the stock price.

Not disclosing to shareholders that a Complete Response letter was received could cause shareholders to initiate legal action against the company. Since the specific details are not subject to full disclosure, some companies will notify investors that they received a CRL and provide minimal information.

With larger biotech companies this might not be a major event, but with smaller companies it could be catastrophic. Since most smaller biotech companies have a run up to the PDUFA date, if a smaller biotech company receives a complete response letter, it could need additional funding, which could lower it’s stock’s price.

Because the Prescription Drug User Fee Act, PDUFA, requires the FDA to provide a response within 10 months, in cases where FDA may need more data or clarification for a new drug application, it may issue a CRL to satisfy it’s time requirement and request for more information, in other words the FDA could be “buying time”.

Drug Application can receive CRLs for a variety of reasons, but the most common are manufacturing sites, safety, efficacy, bioequivalence, faulty statistics, product quality and stability, and proposed labeling.

Complete Response Letter
Complete Response Letter

Related: Stages of New Drug Development