Biotech Investing Glossary

Plain-English definitions of the 32 FDA, clinical-trial, drug-modality, and biotech-finance terms investors encounter most — from PDUFA dates and Complete Response Letters to cash runway and Form 4 insider filings.

FDA & Regulatory

Accelerated Approval: Accelerated Approval lets the FDA approve a drug for a serious condition based on a surrogate endpoint reasonably likely to predict clinical benefit, with confirmatory trials required afterward. It speeds patient access but carries the risk of later withdrawal if confirmatory data disappoint.
Advisory Committee MeetingAdCom: An FDA Advisory Committee (AdCom) meeting convenes independent external experts to review a drug’s data and vote on whether its benefits outweigh its risks. The vote is non-binding, but the FDA usually follows it, so AdCom outcomes are major pre-PDUFA catalysts.
Biologics License ApplicationBLA: A Biologics License Application (BLA) is the marketing-approval request for a biologic — such as an antibody, vaccine, or cell or gene therapy. It is the biologics counterpart of the small-molecule NDA and likewise triggers a PDUFA date.
Breakthrough Therapy DesignationBTD: Breakthrough Therapy Designation (BTD) is an FDA program for drugs treating serious conditions where early evidence shows substantial improvement over existing options. It grants intensive FDA guidance and eligibility for faster review pathways.
Complete Response LetterCRL: A Complete Response Letter (CRL) is the FDA’s notice that it will not approve a drug in its current form, listing the deficiencies that must be resolved. A CRL is not a permanent rejection, but it typically delays approval by months to years and often triggers a sharp stock decline.
Fast Track: Fast Track is an FDA designation for drugs that treat serious conditions and fill an unmet medical need. It enables more frequent FDA interaction and rolling review, where a sponsor can submit completed sections of an application as they are ready.
Investigational New Drug ApplicationIND: An Investigational New Drug (IND) application is the request a sponsor files with the FDA to begin human clinical trials. Clearance of the IND allows a candidate to move from preclinical work into Phase 1.
New Drug ApplicationNDA: A New Drug Application (NDA) is the formal request to the FDA to approve a small-molecule drug for marketing. Its acceptance sets the PDUFA review clock; biologics use the parallel Biologics License Application (BLA) instead.
Orphan Drug DesignationODD: Orphan Drug Designation (ODD) applies to therapies for rare diseases affecting fewer than 200,000 people in the U.S. It confers incentives including tax credits, fee waivers, and seven years of market exclusivity on approval.
PDUFA DatePDUFA: The Prescription Drug User Fee Act (PDUFA) date is the deadline by which the FDA aims to complete its review of a new drug application and issue a decision. It is one of the most-watched binary catalysts in biotech investing, since the outcome (approval or Complete Response Letter) can move a stock sharply.
Priority Review: Priority Review shortens the FDA’s target review time from the standard ~10 months to ~6 months for drugs that would significantly improve the treatment of a serious condition. It is granted at filing and is often paired with a Priority Review Voucher in qualifying cases.
Supplemental New Drug ApplicationsNDA: A supplemental New Drug Application (sNDA) seeks FDA approval to change an already-approved drug — most often to add a new indication, dosage, or label expansion. Approvals can unlock additional addressable markets for a marketed product.

Clinical Trials

NCT NumberNCT: An NCT number is the unique identifier assigned to a study registered on ClinicalTrials.gov (e.g. NCT01234567). It is the canonical reference for tracking a trial’s status, design, phase, and results.
Phase 1 Trial: A Phase 1 trial is the first stage of human testing, usually in a small group of healthy volunteers or patients, to assess safety, tolerability, and dosing. Efficacy is not the primary goal, though early signals are watched closely.
Phase 2 Trial: A Phase 2 trial tests a drug in 100–300 patients with the target condition to evaluate efficacy, refine dosing, and gather more safety data. Strong Phase 2 results de-risk the program before the larger, more expensive Phase 3.
Phase 3 Trial: A Phase 3 trial is the large, often pivotal study — typically hundreds to thousands of patients — designed to confirm efficacy and safety against a control. Positive Phase 3 topline data is usually the key evidence supporting an FDA filing.
Primary Endpoint: The primary endpoint is the pre-specified main outcome a trial is designed and statistically powered to measure. Whether a study “hits” or “misses” its primary endpoint is the single most important determinant of a readout’s success.
Surrogate Endpoint: A surrogate endpoint is a measurable marker (such as tumor shrinkage or a lab value) used as a stand-in for a direct clinical outcome like survival. Surrogates can shorten trials and underpin Accelerated Approval, but they must be reasonably likely to predict real benefit.
Topline Data: Topline data is the initial high-level summary of a trial’s primary results, released before the full dataset. Because it is the first read on whether a study succeeded, topline readouts are common binary catalysts.

Drug Modalities

Antibody-Drug ConjugateADC: An antibody-drug conjugate (ADC) links a targeting antibody to a potent cytotoxic payload, delivering the drug selectively to cells expressing the target antigen. ADCs aim to widen the therapeutic window versus conventional chemotherapy and are a fast-growing oncology modality.
CAR-T Cell TherapyCAR-T: CAR-T (chimeric antigen receptor T-cell) therapy re-engineers a patient’s own T cells to recognize and attack cancer cells. It has produced durable responses in certain blood cancers but involves complex manufacturing and notable safety risks.
Mechanism of ActionMoA: A drug’s mechanism of action (MoA) is the specific biochemical interaction through which it produces its effect — for example, inhibiting an enzyme or blocking a receptor. Understanding MoA helps investors assess differentiation, competitive overlap, and likely side effects.

Biotech Finance

Burn Rate: Burn rate is the pace at which a company spends its cash reserves, usually expressed per quarter. Rising R&D or trial costs accelerate the burn and shorten the cash runway.
Cash Runway: Cash runway is the length of time a company can keep operating before it exhausts its cash, calculated from its cash balance and quarterly burn rate. For pre-revenue biotech it is a critical risk metric, since a short runway often forces dilutive financing.
Dilution: Dilution is the reduction in existing shareholders’ ownership when a company issues new shares — commonly to raise cash through a secondary or at-the-market offering. Clinical-stage biotechs dilute frequently to fund trials, so investors watch financing risk closely.
Market Capitalization: Market capitalization is a company’s share price multiplied by its shares outstanding — the public market’s valuation of the equity. In clinical-stage biotech, it is frequently compared against cash on hand to gauge how much value the market assigns to the pipeline.

SEC Filings

Form 10-K: Form 10-K is a company’s comprehensive annual report to the SEC, covering audited financials, risk factors, and business overview. It is the most detailed primary source for due diligence on a public company.
Form 10-Q: Form 10-Q is the quarterly report filed with the SEC, containing unaudited financial statements and updates between annual 10-Ks. It is where investors track quarter-over-quarter changes in cash, burn, and runway.
Form 13F: Form 13F is the quarterly disclosure that institutional investment managers overseeing at least $100 million file with the SEC, listing their U.S. equity holdings. It lets investors track which funds are building or exiting biotech positions.
Form 4 (Insider Transaction)Form 4: Form 4 reports a company insider’s purchase or sale of its stock, filed with the SEC within two business days of the trade. Clusters of insider buying are watched as a potential confidence signal, especially in clinical-stage biotech.
Form 8-K: Form 8-K is the “current report” companies file to disclose material events between periodic reports — such as trial results, FDA decisions, executive changes, or financings. Many biotech catalysts are first disclosed in an 8-K.
Form S-1: Form S-1 is the SEC registration statement a company files ahead of an initial public offering (IPO), disclosing its business, financials, and risk factors. It is also used to register shares for certain secondary offerings.