Clinical trials are an essential part of the drug development process and play a critical role in determining the safety and efficacy of new treatments. However, understanding how clinical trials operate can be one of the more difficult concepts to grasp for investors when looking to invest in medical research, drug or device development in biotech companies.
Clinical trials follow a mandatory, highly regulated process before the drug reaches approval as a safe commercial product. The biggest of these regulators is the Food and Drug Administration (FDA) in the United States which provides drug developers and medtech companies with access to the lucrative US healthcare industry.
In Australia, the drug regulator is the Therapeutic Goods Administration (TGA) while in Europe it is the European Medical Agency (EMA).
Understanding the different phases of clinical trials is crucial for investors interested in medical research companies because the closer a drug developer is to delivering the data required for regulatory approval, the greater the value of the drug.
As an example of drug development progression, we can use Pharmaxis (ASX: PXS) to highlight the time progression of their lead drug candidate PXS-5505 which aims to treat myelofibrosis – a bone marrow cancer with a USD $1 billion per annum market opportunity.
What is the difference between preclinical and clinical trials?
Preclinical trials, also known as preclinical studies, refer to the testing of new drugs or therapies on proteins, cells or in animals prior to the start of human clinical trials.
Clinical trials are research studies that are conducted in healthy volunteers or patients to test new treatments, drugs, devices, or procedures to determine their safety and efficacy in treating various medical conditions.
In preclinical studies, researchers typically evaluate the safety and efficacy of a potential new drug or therapy in non-human models, such as animals or cell cultures. These studies are designed to identify any potential safety issues and determine whether the drug has the potential to be effective in treating the targeted disease or condition.
Preclinical studies involve a range of tests and evaluations, including toxicity studies, pharmacokinetic studies, and efficacy studies. In toxicity studies, researchers investigate the potential for the drug to cause harm to the organism being studied. In pharmacokinetic studies, researchers study how the drug is absorbed, distributed, metabolised, and excreted by the body. In efficacy studies, researchers investigate whether the drug has the potential to treat the targeted disease or condition.
The data collected from preclinical studies is used to inform the design and safety of human clinical trials. Preclinical trials are an important step in the drug development process, as they help to identify any safety concerns and provide early evidence of the potential efficacy of a new drug.
Pharmaxis completed preclinical trials of PXS-5505 in June 2019.
The importance of clinical trials
The goal of clinical trials is to determine whether a new therapy is safe and effective, as well as to identify potential side effects and risks associated with the treatment.
Clinical trials usually involve testing the new treatment or intervention in a group of people, initially healthy volunteers but mostly patients, often comparing it to a control group that receives either a placebo or standard treatment. The participants in a clinical trial are usually patients who have the medical condition that the new intervention is intended to treat.
Clinical trials are typically conducted in several phases, with each phase designed to answer different questions about the intervention and are a critical step in the process of bringing new treatments to patients and advancing medical knowledge. They are typically overseen by regulatory agencies, and are subject to rigorous ethical standards and oversight to protect the safety and well-being of study participants.
The Phase progression for clinical trials
Phase 1 trials are the first stage of human testing and typically involve a small number of healthy volunteers or patients. The primary objective of Phase 1 trials is to determine the safety of the drug, learn about the distribution of the drug in the body, identify potential side effects, and ideally establish the proper dose. In some Phase 1 clinical trials it is possible to determine if the drug is interacting with the target protein.
Pharmaxis commenced Phase 1 clinical trials of PXS-5505 on humans in February 2019,
Pharmaxis reported successful Phase 1 trial results of PXS-5505 in April 2020, demonstrating dose-dependent enzyme inhibition with PXS-5505.
Phase 2 trials are designed to assess the efficacy of the drug in a larger patient population and to gather more information about the safety profile. In Phase 2 trials, the treatment is administered to a larger group of patients with the condition being studied to see if it is effective.
Pharmaxis commenced Phase 2 trials of PXS-5505 in February 2021.
Pharmaxis expects to report Phase 2 trials of PXS-5505 in 2023.
Phase 3 trials are the final stage of testing before a drug application is submitted for regulatory approval. Phase 3 trials are conducted on a large patient population to confirm the efficacy and safety of the drug, and to gather additional data to support the regulatory submission.
Phase 4 trials, also known as post-approval trials, are conducted after a drug has been approved by regulatory agencies. Phase 4 trials are designed to monitor long-term safety and efficacy, and to identify any rare or previously unknown side effects.
Why investors must monitor clinical trial results as they progress
Investors should be aware that not all clinical trials are successful, and many drugs that show promise in early trials ultimately fail in later stages.
It is important for investors to consider the potential risks and benefits of investing in a company based on the stage of its clinical trials and the likelihood of regulatory approval.
How many drugs successfully progress from pre-clinical trials to clinical trials and secure FDA approval?
The number of drugs that progress from preclinical development to clinical trials can vary widely depending on the disease or condition being targeted and the specific drug being developed. According to a study published in 2018 by Biotechnology Innovation Organization (BIO), the probability of a drug progressing from preclinical development to FDA approval was estimated to be approximately 9.6%.
The overall success rate of drugs moving from Phase 2 clinical trials to FDA approval was approximately 33.4%. This means that roughly one out of every three drugs that complete Phase 2 trials will ultimately be approved by the FDA, and how progression through the phases can de-risk investors and companies.
The success rate for FDA approval increases further to 58.1% upon completion of Phase 3 clinical trials according to BIO.
In conclusion, understanding the different phases of clinical trials is critical for investors in medical research-driven companies. Clinical trials provide insights into the safety, efficacy, and potential for regulatory approval of new treatments, and help investors make informed investment decisions.