Biotech 101: Breakthrough Therapy

The breakthrough therapy designation is a relatively new term, but it's one biotech investors should make sure they're familiar with. The designation gives drugmakers more access to the Food and Drug Administration to speed approval of drugs that look promising.

In theory, at least.

We haven't seen enough drugs with the designation get approved to know if the breakthrough therapy designation is actually speeding approvals. There have been isolated incidences of early approvals like Novartis' Zykadia, which was approved to treat lung cancer four months before the FDA was scheduled to make a decision.

But we saw early approvals occasionally happening before the breakthrough designation was implemented. Medivation's Xtandi, for instance, was approved just three months after submitting its application for the cancer drug.

And then we have companies such as Sarepta Therapeutics , which has told investors that it doesn't think it needs to bother applying for breakthrough therapy designation for its muscular dystrophy drug because it's having plenty of interaction with the FDA.

Watch the following video for more thoughts on breakthrough therapy designation from the Fool's senior biotech specialist, Brian Orelli, and health-care analyst David Williamson.

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Brian Orelli has no position in any stocks mentioned. David Williamson owns shares of Novartis. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. 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.

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