Running the Correct Trial Isn't Enough

Before you go, we thought you'd like these...
Before you go close icon

MELA Sciences (NAS: MELA) jumped nearly 14% yesterday. But it wasn't because its melanoma detection device, MelaFind, was finally approved more than two years after submitting its Premarket Approval, or PMA, application with the Food and Drug Administration.

No, the move seems to have been in response to a company press release that basically says it ran the right clinical trial. Earlier this week, the FDA issued draft guidance on the design of the clinical trials for PMA applications for medical devices, and MELA claims the trial it ran already fits the bill.

That's great; you can't gain FDA approval without running the right trial. Just as Eli Lilly (NYS: LLY) and Amylin Pharmaceuticals (NAS: AMLN) , which had to run a heart trial that the FDA decided was needed for Bydureon. Or MannKind (NAS: MNKD) , which has to run trials comparing its old insulin inhaler with the new version.

But running the right trial is no guarantee of an approval. You actually have to prove that your drug or device works before the agency will approve it for sale. InterMune's (NAS: ITMN) trials were well designed, but the FDA still didn't accept the 50% success rate.

In the successful-trial category, the MelaFind has mixed results at best. The FDA turned down its approval last year, and a subsequent FDA advisory panel recommended approving the device by the slimmest of margins: 8-7.

Since then, MELA has amended its PMA twice: once to include its use by just dermatologists, and another time to incorporate a training program for users of the MelaFind.

Will that be enough to gain approval? It's hard to know for sure, but considering how negative the FDA was in its briefing documents for the advisory panel, it still seems pretty risky.

Meeting future FDA guidance for trial design doesn't change that risk and certainly doesn't make the company 14% more valuable.

Looking for a better stock? Here are five stocks that The Motley Fool owns and its analysts think you should, too.

At the time this article was published Want to know the latest drug stock we've picked for the Fool's market-beatingRule Breakersnewsletter service? Take a look at all our recommendations with afree 30-day trial.Fool contributor Brian Orelli holds no position in any company mentioned. Check out his holdings and a short bio. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners