Investors are worried about the fate of several experimental drugs for hard-to-treat diseases after a series of recent rejections by the U.S. Food and Drug Administration (FDA).
According to RTW Investments, the FDA has rejected or advised against the use of at least eight drugs in the past year, including gene therapy for Huntington’s disease UniQurea gene therapy for Hunter syndrome Regenxbio and a medication for a blood disorder Intervertebral disc medicine. The authority initially refused to investigate ModernI got the flu shot before reversing course.
In each case, the FDA took issue with the evidence the companies used to support their applications. In some studies, the drugs were not tested against a placebo. Some companies have not directly measured the drug’s effectiveness, instead relying on other factors such as biomarkers to predict how well the treatment might work.
And in each case, the companies have accused the FDA of reversing its previous guidance. That’s raising concerns among investors that a more unpredictable FDA could jeopardize the future of other treatments for hard-to-treat diseases.
“What investors and key stakeholders want from the FDA is consistency, and it feels like it seems to be lacking at the moment,” said Luca Issi, an analyst at RBC Capital Markets.
In recent years, the FDA appeared willing to accept drugs for rare diseases that showed promise in less rigorous trials than the gold standard randomized, double-blind, placebo-controlled trials. That meant helping to deliver treatments more quickly to patients suffering from conditions where time passes, which can lead to loss of functions such as walking or speaking, or even death. It also sparked controversy among critics who said the policy gave patients false hope.
The FDA’s recent decisions have raised questions among investors about whether the agency’s standards have changed for other drugs in the pipeline. In UniQure’s case, the FDA required the company to conduct a new study directly comparing the treatment with a placebo. UniQure said this contradicts the agency’s previous guidance that the company could apply for approval using trial data that compared UniQure’s treatment with an external database of people with Huntington’s disease.
A former FDA official who spoke to CNBC on condition of anonymity and speaking freely called this the worst kind of regulatory uncertainty because companies say they are told one thing and then experience another.
In a statement, an FDA spokesperson said there is “no regulatory uncertainty,” adding that the agency “makes decisions based on the evidence but makes no representations about the results.” The spokesperson said the FDA “conducts rigorous, independent reviews and does not agree with the approvals.”
Analysts point to several other companies they are watching including Dyne Therapeuticswhich is further developing a drug for Duchenne muscular dystrophy; Taysha Gene Therapieswhich is developing a gene therapy for Rett syndrome; Wave Life Sciencesthat is working on a treatment for liver disease; And Lexeo Therapeuticswhich is developing a gene therapy for Friedreich’s ataxia. Shares of all of these companies are down this year.
A Dyne spokesman said the company has had frequent, positive and collaborative dialogue with a consistent group of reviewers over the past 18 months and is confident in its development strategy and path forward based on the strength of its clinical results, the rigor of its study design and ongoing collaboration with the FDA. Taysha, Wave and Lexeo declined to comment.
One looming decision tracking Stifel analyst Paul Matteis is a drug candidate Denali Therapeutics for Hunter syndrome, a rare disease that causes physical defects such as hearing loss and joint problems, as well as cognitive problems. The company’s application for accelerated approval is based on a non-randomized study and data showing that the drug reduces levels of a biomarker associated with the disease.
For Matteis, the data set is harder to argue with than UniQure’s, and the technology used doesn’t pose much risk.
“So if they don’t approve it, I don’t know,” Matteis said. “I mean, I already think the regulatory standards for rare diseases have changed significantly, but if they didn’t allow Denali, if I were at a company I would almost say to myself, ‘Can we really be confident about doing an open trial?'”
In a statement to CNBC, Denali Therapeutics CEO Ryan Watts said the company continues to have constructive discussions with the FDA and is confident in the strength of the data package presented. The FDA has delayed review of the application for three months and is now expected to make a decision by April 5.
Some investors sense a conflict between the flexibility that FDA leaders like Commissioner Marty Makary are publicly promising and the agency’s recent decisions, said Issi of RBC Capital Markets. “This leads some to discount the likelihood of success for companies whose path to market depends on a degree of flexibility in the data the agency accepts,” said Stifel’s Matteis.
For companies whose data is straightforward, the path seems clear, said Christiana Bardon, managing partner of MPM BioImpact. The question for them is how much the FDA should speed up the process to get drugs to patients for diseases with massive unmet needs as quickly as possible.
A senior FDA official speaking to reporters on condition of anonymity and speaking freely on Thursday said the FDA had not changed its position that biomarkers that could reasonably predict efficacy could and would receive accelerated approval and that non-randomized data could receive full approval. For this officer, the bar is clear.
“If you’re doing treatment for Alzheimer’s or Huntington’s and you give that therapy to someone who’s seriously ill, they’ll immediately and dramatically improve,” the official said. “If you put someone with Alzheimer’s in a nursing home and then leave them, or someone with end-stage HD who suddenly no longer has symptoms of HD, you get full regulatory approval for two or three patients.”
“We only ask for randomized data when a condition is heterogeneous, when the will to believe is strong, when the therapy is invasive or potentially harmful, when the effect size is difficult to detect, and when the likelihood of deluding oneself is high,” the official added.
