In 1992, Congress passed the Prescription Drug User Fee Act (PDUFA) allowing the U.S. Food and Drug Administration (FDA) to collect fees from drug manufacturers to fund the drug review and approval process. To promote getting novel medicines to patients expeditiously, the act requires the FDA to make its decisions within certain deadlines.

These PDUFA dates provide crucial timing information for biotech investors since FDA approval or lack thereof can create tremendous swings in stock price. Let's explore four companies with PDUFA dates lined up in the first quarter of 2020.

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Jan. 17 marks the PDUFA date forAimmune Therapeutics (NASDAQ:AIMT) and Palforzia, its immunotherapy for peanut allergy in children and teens. The Palforzia powder is mixed into the patient's food to deliver a small daily dose of peanut protein. Submission of the Biologics License Application (BLA) to the FDA occurred in March, while the FDA convened an advisory committee panel in September to weigh in on the drug's data. The Allergenic Products Advisory Panel voted seven-to-two that the efficacy data supported approval. The panel voted eight-to-one in favor of Palforzia based on its safety profile.

Palforzia addresses a market of more than 1.6 million children and teens in the U.S. with peanut allergies. Combine what appears to be favorable data and a large potential need, and Aimmune's stock could be off to the races. The stock has consistently trended upward since summer.

Epizyme (NASDAQ:EPZM) develops novel treatments for cancers with known genetic causes. Tazemetostat, the company's lead compound, targets the protein EZH2 found in a variety of blood and solid tumors. Epizyme faces a PDUFA date of Jan. 23 for tazemetostat as a treatment for epithelioid sarcoma, a rare subtype of soft tissue sarcomas (STS). First, though, the FDA scheduled an advisory panel to be held on Dec. 18. The outcome of this event will greatly influence its subsequent decision.

From a commercial point of view, seeking a subtype of a subtype with a known genetic marker means the company is seeking very specific patients. This personalized approach can be quite successful as an intervention but challenging to educate oncologists to identify the appropriate patients. Unfortunately, STS, the broader group of cancers this falls into, does not have many good treatment options so physicians likely will embrace new tools for treatment.

After reviewing phase 2 clinical trial data presented at the European Society of Medical Oncology Annual Meeting in October 2018, I'm not excited. Tazemetostat works better in patients who did not receive prior treatment, which seems logical. Those with more advanced disease fared worse. The response rates measuring tumor shrinkage were low, but that is common in STS. The benefit is that this oral treatment seems to work in line with other infused chemotherapy products and thus offers a convenient, potentially less toxic way to combat cancer. I await the views of the panel later this month.

Esperion Therapeutics (NASDAQ:ESPR) holds the distinction of having two PDUFA dates just days apart on Feb. 21 and Feb. 26. First up is bempedoic acid, a once-a-day oral treatment to reduce low-density lipoprotein cholesterol (LDL-C) when added to other lipid-lowering medications. The second PDUFA date will see the FDA weigh in on a combination pill of bempedoic acid and ezetimibe to lower LDL-C in patients with primary hyperlipidemia.

According to Esperion, bempedoic acid works in the liver to prevent cholesterol biosynthesis. Phase 3 clinical trials enrolled more than 4,000 patients with over 2,600 receiving bemedoic acid. This gives the FDA quite a bit of data to mine for both efficacy and safety. Keep in mind that this non-statin alternative could potentially address high cholesterol in 96 million Americans using Esperion's estimate. Therefore, the FDA will not take this decision lightly.

Esperion's current $1.4 billion market cap looks cheap should bempedoic acid get approved. However, because of the size of the potential market, the product launch will require substantial investment. I imagine a pharma suitor will emerge to acquire the company following approval.

March 8 is the PDUFA date for Horizon Therapeutics' (NASDAQ:HZNP) teprotumumab as a treatment for active thyroid eye disease (TED). TED, a serious and progressive eye disease, causes a protrusion on the eye called proptosis. This leads to vision impairment including double vision and vision loss. Teprotumumab, potentially the first-ever FDA approved treatment for TED, successfully demonstrated in phases 2 and 3 clinical trials that it improved proptosis, double vision, and quality of life.

The data looks compelling for the FDA to approve teprotumumab for this autoimmune disease. Horizon also boasts a multidrug product portfolio that generated $936.5 million in net sales so far this year. It expects to achieve between $1.28 billion to $1.3 billion in net sales for all of 2019. An approval for Horizon will add yet another product to its stable. However, for investors, any positive share-price reaction will likely be muted compared to other companies where the approval is the first or only product to get approved.

FDA advisory committee reviews and the approval decisions can propel the stocks of drug developers dramatically. Correct predictions of the outcomes can generate substantial returns for biotech investors. Aimmune and Esperion seem to have the greatest chance for success and commensurate stock appreciation.

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4 Healthcare Stocks With FDA Approvals on the Horizon - The Motley Fool