Pharma & Biotech Terms

The list of drug candidates a company is developing and the development stage of each. Biotech companies without revenue are often valued on their pipeline, so the number of candidates and their stages are central to company value.

The disease or condition for which a drug has been approved as effective. Even for the same drug, expanding indications widens the patient population and can raise sales, so news of indication expansion is read as a growth driver.

e.g. A cancer drug gains a breast cancer indication after lung cancer.

Preclinical is animal testing, Phase 1 checks safety in a small group, Phase 2 explores effectiveness and the right dose, and Phase 3 proves effectiveness in a large patient group. The later the stage, the higher the success probability and company value, but costs also rise sharply.

Efficacy means whether the drug works, and safety means whether side effects are acceptable. The primary endpoint is the most important criterion for judging trial success, and whether it is met determines the direction of the stock when results are announced.

The first summary of key results released after a trial ends. It shows whether the primary endpoint was met, so stock prices often jump or drop sharply right after, and detailed data comes later at conferences or in journals.

The risk that development stops because a trial fails to show efficacy or raises safety problems. A biotech with few candidates can lose much of its value on a single failure, so how diversified the pipeline is matters.

Approval to sell a drug from the US Food and Drug Administration (FDA) or Korea's Ministry of Food and Drug Safety (MFDS). Sales begin only after approval, so it is one of the biggest events, and FDA approval is seen as especially important because of the size of the US market.

Filings submitted to the FDA to request marketing approval. Chemically synthesized drugs use an NDA, while biologic drugs such as antibodies use a BLA. Once the filing is accepted, a review schedule is set and approval expectations build in earnest.

The target date by which the FDA has committed to decide whether to approve a new drug. Stock prices can swing sharply on the outcome, so investors typically mark it on their calendars as a key event date.

FDA programs that support faster development and review of treatments for serious diseases. A designation can shorten the time to approval and is taken as a sign that the drug's potential has been recognized.

A designation for treatments of rare diseases with small patient populations. After approval it provides benefits such as a period of market exclusivity and support for development costs, so a company can secure a viable business through high prices and exclusivity even with few patients.

Clinical data released at major medical conferences. Large meetings such as the American Society of Clinical Oncology (ASCO) feature a flood of new drug data, so expectations and volatility in related biotech stocks often rise before and after the presentations.

A contract in which the rights to a drug candidate or technology under development are handed to another pharma company in exchange for payment. It shares development costs and risk and taps the capabilities of large pharma companies, making it a main revenue model for Korean biotechs.

The three forms of payment in a licensing deal. The upfront is paid right at signing, milestones are paid as stages such as trials and approval are achieved, and royalties are a percentage of sales after launch. Headline totals are mostly conditional milestones, so also look at the size of the upfront payment.

e.g. Even in a 1 trillion won deal, if the upfront is 50 billion won, the rest is paid only as milestones are reached.

A foundational technology that can be applied repeatedly to many drugs rather than just one. It can be licensed out multiple times to multiple pharma companies, so it is seen as having great growth scalability.

e.g. Examples include technology that converts a drug to a subcutaneous injection and technology that attaches drugs to antibodies.

Biologic drugs built on antibodies, the body's immune proteins, to act only on specific targets. They are precise and priced high, so many are blockbuster drugs with large sales, and they form the basis of the biosimilar and CDMO industries.

A drug that attaches a potent anticancer agent to an antibody that seeks out cancer cells, delivering the drug only to them. It can raise efficacy and reduce side effects, making it a field with active large licensing deals.

A drug engineered so that one antibody binds to two different targets at once. For example, it can grab an immune cell and a cancer cell together to help the immune attack, and it is drawing attention as a next-generation cancer therapy technology.

Technology that delivers instructions telling the body's cells to make a specific protein. Widely known from vaccines, it is being researched for use in other diseases, such as cancer vaccines.

Medicines that treat disease by processing and reintroducing a patient's cells (cell therapy) or by correcting or inserting genes (gene therapy). They aim for a major effect from a single treatment, but manufacturing is complex and prices are very high, so the pace of commercialization is key.

e.g. CAR-T cell therapy is a leading example.

Drugs that mimic the hormone GLP-1, which reduces appetite and helps control blood sugar. Used to treat diabetes and obesity, the market is growing rapidly, drawing attention to developers, manufacturers and even injection device makers.

Converting a drug from a long intravenous (IV) infusion to a short injection under the skin (SC). It greatly improves patient convenience, and new formulation patents can effectively extend exclusivity, so originator pharma companies actively use it.

An originator drug is the first-developed, patented medicine, while a generic is a copy of an off-patent, chemically synthesized drug made with the same ingredients. Once generics arrive, price competition tends to quickly erode the originator drug's sales.

A copy of an off-patent biologic drug (such as an antibody) made to have similar efficacy and safety. Made from living cells, it is harder to develop than a generic, but it can be sold cheaper than the originator to expand the market quickly.

The sharp drop in sales when a major drug's patent ends and generics flood in. It is a big risk for originator pharma companies but an opportunity for biosimilar and generic makers, so large pharma companies sometimes license in drugs or make acquisitions to secure new products.

A CMO produces other pharma companies' drugs on their behalf, while a CDMO also handles process design at the development stage. Long-term contracts and plant utilization are the key to earnings, and growth opportunities expand as demand for biologics rises.

Government policy that pushes drug prices down. Under the Inflation Reduction Act (IRA), the US has the public insurer Medicare negotiate prices of certain high-cost drugs with drugmakers. If a drug is selected, the drugmaker's future sales outlook can fall.

The approval process required to sell a medical device. In the US, these include the 510(k), which proves a device is similar to an existing one, and the PMA, required for new, higher-risk devices. The process is usually shorter than for new drugs, so it serves as a guide to when a device company's new product may launch.