Biotechnology is often described as an innovation industry, dependent on companies ability to invent and develop new medicines.By that metric, 2023 was a good year. The FDAs main review office approved 55 novel drugs, the most since 2018, while the agencys biologics division cleared 15 more. The clearances offer some counterbalance to a prolonged market downturn, during which the sector has struggled with a range of financial and regulatory headwinds.The next three months could bring more important FDA news. The agency could approve a closely watched Alzheimers disease drug, as well as what could be the first medicine for a prevalent liver disease and a new kind of cancer therapy. Also on deck are verdicts for a drug at the heart of a multibillion dollar buyout and a linchpin asset for one biotechs oncology plans.Here are five decisions to watch in the first quarter, along with a review that merits close attention:Eli Lillys donanemab for Alzheimers diseaseEarly in September, Lillys market capitalization eclipsed $500 billion, an extraordinary mark that made it the most valuable pharmaceutical company in the world.The run-up in Lillys valuation, which rose by almost 50% in less than six months, was driven by the success of tirzepatide, a drug approved for diabetes and weight loss. Tirzepatide puts Lilly at the front of a revolution in how obesity, a condition affecting some 40% of U.S. adults, is treated.But part of Lillys formidable valuation is due to the companys leading position in treating another prevalent scourge: Alzheimers disease. The company, which for years tried unsuccessfully to develop a treatment, finally succeeded with a drug called donanemab. Phase 3 testing showed that it could modestly slow the mental and physical decline due to Alzheimers.The results will make donanemab if approved by the FDA this quarter as expected a competitor to Eisai and Biogens rival Alzheimers drug Leqembi. Analysts view donanemab as a potentially superior treatment, but Lilly will face the same questions around cost and benefit as Eisai and Biogen have with Leqembi.If donanemab wins over regulators, insurers and doctors, Lilly could be a leader in treating two of this centurys greatest health threats. Ned PagliaruloMadrigal Pharmaceuticals resmetirom for MASHFew diseases have confounded drugmakers over the last decade more than metabolic dysfunction-associated steatohepatitis, a condition previously called NASH. Multiple large firms have seen promising prospects fail in testing. And the first drug developer to reach regulatory review Intercept Pharmaceuticals was rejected twice by the FDA and subsequently abandoned its efforts.Madrigal Pharmaceuticals could succeed where others failed. Positive results from a Phase 3 study in 2022 have put the company on the precipice of bringing the first drug to market for MASH, a condition estimated to affect millions of people. Its drug resmetirom, which could be approved by March 14, is supported by data that industry watchers see as more convincing than Intercepts.Analysts at the investment bank Piper Sandler, for instance, called Madrigals filing the most comprehensive clinical data package in MASH to date. We think this drives a compelling risk/benefit profile to the FDA, they wrote in a report last month.If approved, resmestiroms launch will be closely watched. The commercial prospects of MASH drugs have long been debated, as the disease often goes undiagnosed for years and some of its symptoms can be combated with diet and exercise. Analysts are also unsure whether the FDA or insurers will require patients get a liver biopsy before treatment, which would limit uptake.Whats more, popular weight loss drugs known as GLP-1 agonists are also being tested in NASH, making them potential rivals to Madrigal and others following in its footsteps. One study of Lillys drug tirzepatide could produce results before the FDA issues a verdict on resmetirom. Ben Fidler Merck & Co.s sotatercept for pulmonary arterial hypertensionIn recent years, Merck has reprioritized cardiovascular disease research. An important step forward could come this quarter, should the FDA approve a drug known as sotatercept.Sotatercept was originally developed by Acceleron Pharma and was once the focus of a partnership between the biotechnology company and Celgene before research was halted. The drug was revived when it showed promise in pulmonary arterial hypertension, a common and deadly type of high blood pressure in the lungs. Its progress led Merck to acquire Acceleron for $11.5 billion in 2021.Positive Phase 3 study results Merck has since obtained could yield a new direction in treating PAH, a group of physicians wrote in an editorial published in the New England Journal of Medicine. Merck is counting on it, both to justify its investment in Acceleron and help replace the revenue itll lose when its lucrative cancer drug Keytruda goes off patent in 2028.Yet sotatercept faces a crowded market with multiple other drugs and would-be competitors close behind, leading to questions about its commercial potential. On a conference call last year, Merck management claimed a bolus of patients is closely waiting for the drugs approval. That confidence led Leerink Partners analyst Daina Graybosch to suggest in December that sotatercept is one of the companys more underappreciated opportunities.The FDA will make a decision by March 26. Ben Fidler Iovance Biotherapeutics lifileucel for melanomaIn the late 1980s, a team of researchers led by the National Cancer Institutes Steven Rosenberg explored whether a form of personalized cell therapy could be used to treat aggressive cancers like melanoma.The technique they pioneered, which became known as tumor-infiltrating lymphocyte, or TIL, therapy, has taken a circuitous journey in the 35-odd years since. While early attempts were inconsistent, subsequent testing has shown TIL therapy can shrink advanced tumors and even outperform other drugs.By mid-February, the FDA will decide whether to approve the first industrialized TIL therapy, which was developed by Iovance for advanced melanoma.Iovances own journey to get to this point has been prolonged by delays and last month the FDA halted testing of a separate Iovance TIL therapy in lung cancer. Analysts expect the melanoma review to remain on track, but the hold adds some new uncertainty to the FDAs decision.If approval is granted, Iovance will be under pressure to deliver. The companys TIL therapy, called lifileucel, involves a bespoke manufacturing process that takes about three weeks. Ned PagliaruloRegeneron Pharmaceuticals odronextamab for lymphomaRegeneron has spent years trying to build a cancer drug business, but with mixed results. Though the company successfully developed a cancer immunotherapy, Libtayo, it was the sixth of its type to win U.S. approval. Libtayo sales are dwarfed by those of competitors, like Merck & Co.s Keytruda, that bring in billions of dollars each year.Regeneron is looking to a newer set of dual-acting drugs, known as bispecific antibodies, to better compete. The company has a pair in advanced testing for blood cancers and one, odronextamab, could be approved for follicular and diffuse large B cell lymphoma by the end of March.From there, the company plans to develop combinations that are more potent while running tests in earlier treatment settings, executives have said.But Regeneron is again trailing the competition, leading to skepticism from analysts that the drugs will be major revenue drivers. The FDA has already cleared multiple bispecific drugs for lymphoma that work similarly to odronextamab, for instance, and Regeneron hasnt proven its drug is superior.It remains to be seen how the adoption of [odronextamab] will compare, wrote William Blair analyst Matt Phipps, in a December research note. Ben Fidler Bonus: Review of Sarepta Therapeutics Elevidys for DuchenneLast year, the FDA made Sareptas gene therapy the first of its kind cleared for the progressive, muscle-wasting condition. But the approval was limited to a specific group of young boys who can still walk, and conditioned on the therapy succeeding in a confirmatory clinical trial. That study failed to hit its main goal in October, leaving Elevidys future unclear.Sarepta claims that, despite the setback, there were enough encouraging findings to warrant the FDA expanding Elevidys clearance. While treatment didnt lead to a meaningful difference over a placebo on a widely used test of motor function, Sarepta said treated patients consistently benefited on a variety of other measures.Sareptas application to broaden Elevidys use is another test of the FDAs flexibility in reviewing drugs for deadly conditions like Duchenne. The agency approved Elevidys despite questions about its benefits and previously indicated it may consider removing the drug from the market if the confirmatory study failed. But the regulator faces pressure from patient groups to act quickly, and some of its top officials have been closely involved in Elevidys review.Given the totality of the data, our understanding of the agency's interactions with Sarepta up until this point, and the unmet need in [Duchenne], we continue to believe that Elevidys will remain on the market with an expanded label, wrote Leerink Partners analyst Joseph Schwartz, in December.Sarepta has asked for a priority review, which, if accepted by the FDA, would begin a six-month evaluation. The FDA could decide whether to accept the request by late February. Ben Fidler '