On February 18, 2026, FDA Commissioner Martin Makary and Vinay Prasad, then-Chief Medical and Scientific Officer and Director of the Center for Biologics Evaluation and Research, published a landmark policy announcement in the New England Journal of Medicine that a single adequate and well-controlled pivotal trial — supplemented by confirmatory evidence — is now the FDA’s default standard for approving novel drugs.[1] The agency’s longstanding practice of requiring two pivotal trials has not been a statutory mandate since 1997: at that time, Congress amended the Federal Food, Drug, and Cosmetic Act to provide that data from one adequate and well-controlled trial and confirmatory evidence can constitute ‘substantial evidence’ of effectiveness.[2] In some therapeutic areas, such as in oncology and rare disease, FDA increasingly has approved drugs on the basis of a single clinical trial, but, as a matter of general agency policy, two trials have been the baseline norm for decades.[3] That norm has now changed.
For drug developers, investors, and counsel, this shift has consequences that go well beyond clinical development strategy. Milestone definitions in licensing and collaboration agreements, diligence frameworks for M&A transactions, earnout and contingent value right (CVR) structures, royalty purchase agreement timing, capital markets investor models, and SEC risk factor disclosure all need to be reconsidered in light of an approval pathway that is now has the potential to be materially shorter and less capital intensive than previously assumed. This post addresses six things life sciences companies and their advisors need to know about the new default position.
1. What the Policy Actually Changes — and What It Doesn’t
The Makary-Prasad NEJM announcement states that ‘the FDA’s default position is that one adequate and well-controlled study, combined with confirmatory evidence, will serve as the basis of marketing authorization of novel products.’ This approach is a shift in policy, as opposed to statutory authority. Since 1997, the FDCA’s ‘substantial evidence’ standard (21 U.S.C. § 355(d)) has permitted single-trial approval and confirmatory evidence when the evidence is sufficiently robust to establish efficacy.[4] FDA increasingly has approved drugs based on single pivotal trials, notably in the rare disease and oncology contexts. And, in recent years, FDA has taken steps to shift its official policy in this space; in 2023, FDA issued draft guidance on considerations for demonstrating substantial evidence of effectiveness with one adequate and well-controlled trial and confirmatory evidence.
What changes is the burden of justification. Previously, sponsors seeking single-trial approval needed to convince FDA that two trials were unnecessary or infeasible. Going forward, a single trial with confirmatory evidence will serve as the baseline approach, subject to FDA’s discretion to require a second trial when warranted. This inversion of the default has practical consequences for protocol design, clinical development timelines, and cost structures.
What ‘Confirmatory Evidence’ Means in Practice
The single-trial default does not mean that sponsors need only one study. FDA expects confirmatory evidence alongside the pivotal trial. The NEJM letter and existing agency practice suggest this evidence could include, under certain circumstances:
- Evidence from related indications or other drugs in the same pharmacological class: Evidence obtained with respect to related indications (such as different disease stages or closely related disease states) or other drugs in the same pharmacological class for confirmatory purposes.[5]
- Pharmacological and mechanistic data: Robust pharmacokinetic/pharmacodynamic data, including suitable animal models, that shows a strong treatment effect could support data from a single clinical trial.[6] In addition, approval under the new ‘plausible mechanism’ framework for ultra-rare diseases may be supported by mechanistic or pharmacodynamic data, data confirming target engagement, and exposure-response on biomarkers and clinical outcomes.[7]
- Real-world evidence: Real world evidence, including natural history data or data from registries, which may be particularly helpful for rare diseases.[8]
FDA retains full discretion to require a second pivotal study when it concludes that confirmatory evidence is insufficient, particularly for interventions with poorly characterized mechanisms of action, high-risk safety profiles, or primary endpoints that do not directly measure durable clinical benefit.[9] The shift is meaningful but not unconditional.
2. Regulatory Durability and Legal Considerations
The pivot to a single-trial default standard has not been articulated in an official agency guidance document or notice-and-comment rulemaking, which means it can be modified or reversed by FDA at any time without agency process. Companies building multi-year development programs around a single-trial strategy should factor in this policy risk, as well as the lack of detail around how FDA intends to implement the new policy in practice.
At the same time, this shift places greater weight on the quality of the single pivotal trial. Because FDA’s evidentiary expectations will be centered on one highly scrutinized study, weaknesses in study design or results that might have been balanced across two studies likely will face closer examination when approval depends on a single trial and confirmatory evidence.
| Bottom line: The policy change is real and durable in the near term. Companies with assets in Phase 2 should immediately evaluate whether their clinical development plan is optimized for a single-trial path, and whether the resulting confirmatory evidence package would satisfy FDA’s likely scrutiny. |
3. Clinical Development Strategy Implications
The practical impact on development programs depends heavily on the stage and design of existing studies. Several categories of programs are most likely to be affected:
Programs Currently Planning a Second Pivotal Trial
Companies that were designing or enrolling a second pivotal trial on the assumption it would be required for approval should engage FDA via a Type B or Type C meeting to discuss whether a single-trial path (with appropriate confirmatory evidence, including from a prior trial and/or existing Phase 2 data) would be sufficient. Time-to-market advantages and cost savings can be substantial: a second pivotal trial can typically cost from $50 million to $500 million and add two to four years to the development timeline.
In addition, companies should pay close attention to the regulatory record in their engagement with FDA on clinical trial design, including meeting minutes and responses to information requests. In light of the significant business impact of the success—or failure—of a single pivotal trial approach, companies should make sure to address and incorporate any FDA concerns regarding the appropriateness and design of a single pivotal trial.
Phase 2 Programs Designing Their Pivotal Strategy
Seamless Phase 2/3 adaptive designs are now the optimal framework for many programs. A single adaptive trial that begins with dose-finding and transitions to pivotal confirmation — generating a body of evidence that supports both the pivotal and confirmatory functions — can now serve as the single qualifying trial. Companies at this stage should consider engaging with FDA on the feasibility and appropriate design of a single pivotal clinical trial. For example, FDA’s Complex Innovative Trial Design (CID) Paired Meeting Program, which fulfills a performance goal agreed to as part of the Prescription Drug User Fee Act commitments for fiscal years 2023-2027 (PDUFA VII), is intended to facilitate meetings between the agency and sponsors to discuss and advance novel clinical trial designs.
Rare Disease and Gene Therapy Programs
The combination of the single-trial default and the new plausible mechanism framework for bespoke gene-editing and RNA-based therapies creates significant opportunities for ultra-rare disease developers. Programs where randomized controlled trials were infeasible due to patient population size may now be able to credibly design a regulatory path around a single well-controlled study in the affected population, supplemented by mechanistic and natural history data.
4. M&A Diligence and Deal Structure Implications
The single-trial approval default changes the risk profile of pipeline assets in ways that affect every deal structure in the life sciences M&A toolkit. Four areas require immediate attention:
Milestone Definitions in License and Collaboration Agreements
Milestone definitions in license agreements, collaboration agreements, and royalty purchase agreements were generally drafted on the assumption that development-stage programs would require two pivotal trials. Milestones defined around ‘initiation,’ ‘completion,’ or ‘enrollment’ of a ‘second pivotal study’ or ‘confirmatory Phase 3 trial’ may now be either unreachable (if the sponsor opts for a single-trial path) or may be reached earlier than parties anticipated.
Counsel reviewing existing agreements should flag:
- Milestones defined around second pivotal trial initiation or completion for programs that may now use a single-trial path
- ‘Regulatory approval’ milestone definitions that assume a specific number of pivotal trials as a condition
- License fee structures tied to Phase 3 enrollment numbers or achievement of endpoints that may not be reached under a single seamless trial design
Acquisition Valuation and Earnout Structures
DCF models for pipeline acquisitions have historically embedded the cost and timeline of two pivotal trials in their development cost assumptions. The single-trial default compresses both timeline and cost, increasing the NPV of pipeline assets — sometimes materially. Sellers have an immediate argument for higher upfront consideration; buyers need to revise their financial models.
For earnout and CVR structures in pre-approval acquisitions, the single-trial shift may affect the structure of regulatory milestones. CVRs tied to Phase 3 initiation or NDA submission should specify whether the regulatory pathway assumed is a single-trial or two-trial path. If the single-trial path results in faster approval, milestone payments may be triggered earlier than the acquirer’s model assumed.
Royalty Finance Timing and Net Sales Definition
Royalty purchase agreements are now structurally more attractive for earlier-stage sellers. A program that previously needed two Phase 3 trials before a monetizable royalty stream became visible can now credibly monetize after a single successful pivotal read-out. Royalty buyers should revisit their underwriting assumptions for programs on single-trial paths: faster time to market reduces the discount rate burden on future royalty streams but also reduces the confirmatory data package that buyers traditionally used to underwrite risk.
Diligence Checklist Update
M&A and licensing diligence should now include:
- Does the target’s regulatory strategy contemplate a single-trial or two-trial path? If single trial, what is the confirmatory evidence package?
- Has the target had a Type B or Type C meeting with FDA to confirm acceptability of a single-trial approach for its lead program? Has the target implemented any feedback from the agency on its single-trial approach, and addressed FDA’s concerns, if any, that a single clinical trial may not be appropriate for its lead program?
- Are existing milestone definitions in the target’s in-licenses or out-licenses calibrated to a two-trial assumption that may no longer apply?
- Does the target’s financial model accurately reflect the reduced development cost under a single-trial path, and how does that affect purchase price justification?
5. Capital Markets and Investor Implications
The single-trial approval default has potentially significant implications for how investors price pipeline assets and who is credible as a public company:
- Earlier-stage companies become more credible as public market candidates: Programs that previously could not credibly plan a going public transaction until they had a second Phase 3 underway may now be viable public market candidates after a single well-powered Phase 2/3. The February IPO window (five companies, ~$1.4 billion) is beginning to show an emerging appetite for clinical-stage assets — the single-trial policy accelerates that dynamic. In addition, pre-money valuations that seemed prohibitively high may justify a meaningful step-up in the IPO round.
- Analyst pipeline models need updating: Sell-side models that embedded two-Phase-3 development cost and timeline assumptions are now stale for any program where a single-trial path is plausible. Companies presenting pipeline value to investors should proactively address the regulatory path and confirmatory evidence strategy through public communications and then directly with sell-side analysts, as appropriate.
- Single-trial risk as a new category: Paradoxically, the option to use a single trial introduces a new risk: approval based on a smaller-than-traditional evidence package may face greater post-market scrutiny, labeling restrictions, or payer coverage challenges. Risk-averse institutional investors may discount single-trial-approved products in their investment decisions.
6. SEC Disclosure Obligations[10]
Public companies and those preparing to enter the public markets should assess two dimensions of disclosure:
Opportunity Disclosure
Companies with programs on two-trial paths that could now transition to a single-trial approach may have a material, positive development to disclose — both in terms of reduced development cost and compressed timeline. If the change in FDA policy materially affects a company’s development timeline or cash runway, it may warrant discussion in MD&A or earnings commentary as a ‘known trend’ that is reasonably likely to affect the company’s financial condition.
Risk Factor Disclosure
Companies relying on a single-trial regulatory path should include disclosure that: (i) FDA’s single-trial default is a policy position that can be changed at any time without agency process; (ii) FDA retains discretion to require a second study if it determines confirmatory evidence is insufficient; and (iii) single-trial approval may face additional post-market scrutiny or payer coverage challenges relative to a two-trial evidence package.
* This post is for general informational purposes and does not constitute legal advice. Companies should consult counsel regarding specific regulatory and transactional implications of FDA’s single-trial approval policy.
[1] Martin A. Makary, M.D., M.P.H., and Vinay Prasad, M.D., M.P.H., ‘One Pivotal Trial, the New Default Option for FDA Approval — Ending the Two-Trial Dogma,’ N. Engl. J. Med. (Feb. 18, 2026).
[2] 21 U.S.C. § 355(d) (requiring ‘substantial evidence’ of effectiveness, defined as evidence from ‘adequate and well-controlled investigations’); see also 21 C.F.R. § 314.126 (defining ‘adequate and well-controlled study’).
[3] FDA approves drugs based on single pivotal trials in contexts including rare disease (where recruitment of a second study population is infeasible) and oncology (where overall survival data from a single large trial was determinative). See, e.g., Draft Guidance, Clinical Trial Considerations to Support Accelerated Approval of Oncology Therapeutics (March 2023); FDA, Drug Approval Package for Lumoxiti (moxetumomab pasudotox-tdfk) (Sept. 2018); see generally, e.g., “Almost Half of All New Drug Approvals in 2018 Relied on One Clinical Trial,” Regulatory Focus (May 14, 2019).
[4] See FDA Draft Guidance, Demonstrating Substantial Evidence of Effectiveness With One Adequate and Well-Controlled Clinical Investigation and Confirmatory Evidence (Sept. 2023) (“2023 Draft Guidance”).
[5] Id. at 5-6, 9-10.
[6] Id. at 6-9.
[7] See, e.g., FDA, Draft Guidance for Industry, Considerations for the use of the Plausible Mechanism Framework to Develop Individualized Therapies that Target Specific Genetic Conditions with Known Biological Cause (Feb. 2026), at 6.
[8] See, e.g., 2023 Draft Guidance at 10-11.
[9] Section 3210, Omnibus Consolidated Appropriations Act, 2022, Pub. L. No. 117-328 (authorizing FDA to require trials to be ‘underway’ at time of accelerated approval and providing for expedited withdrawal procedures, including for failure to complete confirmatory trials with due diligence).
[10] For a discussion of SEC disclosure obligations regarding regulatory uncertainty for life sciences companies, see Biotech Briefings, ‘Getting Ready for Your Q3 Quarterly Reports: Updated Disclosure Regarding Tariffs and Government Shutdown’ (Oct. 31, 2025).