Priority Review Voucher

An FDA award given to developers of drugs for rare diseases that can be sold to other companies to accelerate their own drug review timelines.

A Priority Review Voucher (PRV) is an incentive awarded by the U.S. Food and Drug Administration (FDA) to drug developers upon the approval of a treatment for a neglected tropical disease, rare pediatric disease, or medical countermeasure. The voucher grants its holder an accelerated, six-month FDA review timeline instead of the standard ten-month review for a future, unrelated drug application. Because PRVs are fully transferable, they have become highly valuable financial assets. Small, clinical-stage biotechnology companies that earn a PRV often sell them to large pharmaceutical companies that want to bring potential blockbuster drugs to market four months faster. For the buyer, this head start can translate into hundreds of millions of dollars in early revenue and market share dominance. For biotech investors, a pending or completed PRV sale represents a major, non-dilutive source of cash. Unlike secondary stock offerings, which dilute existing shareholders, a PRV sale extends a company's cash runway purely through asset monetization. Investors monitor these transactions closely to assess a company's balance sheet strength and liquidity without the overhang of equity dilution.

Biotech Company A receives a Priority Review Voucher from the FDA and sells it to Pharma Company B for $110 million in cash. Company A has a quarterly cash burn of $10 million. By selling the voucher, Company A extends its cash runway by $110 million / $10 million = 11 quarters (2.75 years) without issuing any new shares.