Building Investor Confidence with Regulatory Strategies

The approval process for innovative biotech products is filled with uncertainties, making it difficult to predict outcomes. Regulatory authorities primarily focus on the efficacy and safety of new therapies, which poses significant challenges, especially for products in the biotech and rare disease space, where obtaining long-term safety and efficacy data can be more complex. A robust regulatory strategy can help address these issues. For investors, understanding the regulatory process and identifying potential value and risks associated with an investment is crucial. Start-up companies, on the other hand, face the dual challenge of navigating an ever-changing regulatory environment and securing the necessary funding to bring their products to market. Building trustful and transparent relationships with regulatory authorities and investors is essential for increasing the likelihood of product approval and long-term success. 

While the application and scientific assessment processes are the gold standard for regulatory authorities, each jurisdiction has its own unique nuances. In this blog post, we’ll outline the processes for two of the most attractive markets for biotech companies: the United States and the European Union (EU). 

United States 

In the US, after successful clinical trials, companies submit a New Drug Application (NDA) or Biologics License Application (BLA) to the FDA. This includes all preclinical and clinical data, as well as details on drug behaviour (pharmacokinetics and pharmacodynamics), toxicology in the body and manufacturing processes.  

The FDA reviews the application to ensure the drug is safe and effective, after which the drug can be marketed if approved. Post-marketing studies may be required to monitor long-term effects. 

European Union 

In the EU, several regulatory strategies can be pursued, including national approvals from National Competent Authorities (NCA) for selected member states, a decentralised approach (simultaneous application in multiple member states), or a mutual recognition procedure (leveraging an existing member state NCA approval to apply in new member states).  

Biotechnology products and those for rare diseases, HIV, cancer, diabetes, autoimmune diseases, gene therapies etc. must be approved through the centralised procedure by the European Medicines Agency (EMA).  

Pre-submission activities include eligibility requests, notification of intent to submit, appointment of rapporteurs and a pre-submission meeting. The company then submits a Marketing Authorisation Application (MAA) to the EMA. The responsible scientific committees conduct the assessment, and the Committee for Medicinal Products for Human Use (CHMP) provides its final opinion within 210 days. The European Commission (EC) makes the final decision to approve, reject, or request changes to the MAA based on the CHMP’s verdict. 

Importance of regulatory affairs 

Regulatory approval is the most crucial milestone in bringing an innovative product to market. Having a capable regulatory affairs team driving the MAA process helps build trust that the go-to-market strategy will not fail at this critical stage.  

A strong regulatory strategy, the ability to navigate the regulatory landscape and strong relationships with regulatory authorities can significantly reduce risks and increase the likelihood of fast and successful product approval, thereby boosting investor confidence. 

Effective communication and transparency 

Startups should maintain transparency with investors by providing regular updates, such as quarterly reports detailing the status of the regulatory process. These updates should include operational highlights, milestones achieved, current challenges, critical issues and potential solutions.  

Communication should be tailored to investor preferences, manage expectations and be transparent, all of which helps building a trusting relationship with investors. 

Regulatory strategy and business viability 

A well-defined regulatory strategy contributes to business viability by ensuring compliance, thereby mitigating the risk of penalties, legal disputes, or even the authorisations’ rejection or suspension. And that is business critical.  

It also improves operational efficiency, which is crucial for startups lacking a cash inflow from other products already on the market.  

Furthermore, a strong regulatory strategy facilitates fast market access upon approval and subsequent expansion into new markets, leading to long-term profitability. 

For investors, this means reduced investment risk, improved valuation and a perception of stability and reliability. 

Investors should look for the following key aspects in a regulatory strategy: 

• Clear understanding of regulatory pathways and timelines
• A capable regulatory affairs team driving the project
• Solid relationships with regulatory authorities and compliance with current regulations
• Secure intellectual property and patents
• Suitable data from pre-clinical and clinical trials for regulatory application
• Proper documentation and data management practices
• A solid Quality Management System (QMS) and GxP compliance

Regulatory milestones and investment timing 

Regulatory milestones are critical in the biotech industry as they represent significant events that can dramatically affect a company’s value and its products’ potential success. Achieving these milestones can lead to significant increases in a company’s valuation.  

Investors may seek to invest either before these milestones in order to capitalise on the potential upside or else post-milestone in order to mitigate risk. 

Critical regulatory milestones to monitor include: 

Clinical trials:  

• Initiations and completions of Phases 1-3
• Interim data in Phases 2 and 3
• End-of-phase regulatory feedback and meetings

Market authorisation application:  

• Pre-application meetings
• Submission of applications
• Reviews by external advisory committees in the US and the 210-day scientific evaluation by the EMA