Investors are concerned about the fate of several experimental drugs for difficult-to-treat diseases after a series of recent rejections by the U.S. Food and Drug Administration.
RTW Investments said the FDA has rejected or withheld at least eight drug applications over the past year, including a gene therapy drug for Huntington’s disease. unicuregene therapy for Hunter syndrome regenxbio Drugs for treating blood disorders disc medicine. The agency initially refused the review. modernaI got a flu shot before turning around.
In both cases, the FDA took issue with the evidence the companies were using to support their applications. Some studies did not test the drug against a placebo. Some companies did not directly measure a drug’s effectiveness, instead relying on other factors such as biomarkers to predict how effective a treatment would be.
And in each case, the companies have accused the FDA of rescinding previous guidance. Investors are therefore wary that further unpredictability from the FDA could jeopardize the future of other treatments for hard-to-treat diseases.
“What investors and key stakeholders expect from the FDA is consistency, and it feels like that’s lacking right now,” said Luca Issi, an analyst at RBC Capital Markets.
In recent years, the FDA has appeared willing to accept rare disease treatments that have shown promise in studies less rigorous than the gold standard, randomized, double-blind, placebo-controlled trials. This means faster treatment can be provided to patients with conditions that over time can lead to loss of functions such as walking and speaking, and in some cases, death. The policy also sparked controversy from critics who said it gave patients false hope.
The FDA’s recent decisions have investors wondering whether the agency’s standards for other drugs in the pipeline have changed. In UniQure’s case, the FDA required the company to conduct a new study that directly compares its treatment to a placebo. UniQure said this contradicts the agency’s previous guidance that it could seek approval using trial data comparing UniQure’s treatment to an external database of Huntington’s disease patients.
One former FDA official, who spoke freely to CNBC on condition of anonymity, said this is the worst kind of regulatory uncertainty, as companies are told one thing and then experience another.
“There is no regulatory uncertainty,” an FDA spokesperson said in a statement, adding that the agency “makes decisions based on evidence but does not guarantee results.” A spokesperson said the FDA “conducts rigorous, independent reviews and does not issue intrusive approvals.”
Analysts say there are several other companies they are keeping an eye on. Dyne Therapeuticsis currently developing a treatment for Duchenne muscular dystrophy. taisha gene therapyis developing a gene therapy for Rett syndrome. Wave life scienceworking on the treatment of liver diseases. and Lexio Therapeuticsis developing a gene therapy for Friedreich’s ataxia. All of these companies’ stock prices have fallen this year.
A Dyne spokesperson said the company has had frequent, active and collaborative dialogue with consistent reviewers over the past 18 months and is confident in its development strategy and future direction based on the strength of clinical results, the rigor of the study design and continued engagement with the FDA. Tayshia, Wave and Lexio declined to comment.
One impending decision that Stifel analyst Paul Mathis is tracking is Denali Therapeutics Hunter syndrome is 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 non-randomized trials and data showing the drug reduces levels of biomarkers associated with the condition.
For Mattis, this dataset is harder to argue with than UniQure’s, and the technology used doesn’t pose any major risks.
“So if they don’t approve it, I don’t know,” Mattis said. “I mean, I already think there’s been a pretty big change in regulatory standards for rare diseases, but if Denali wasn’t approved, if I were still at the company, I’d say to myself, ‘Can we really confidently do an open-label trial?’
Denali Therapeutics CEO Ryan Watts said in a statement to CNBC that the company continues to have constructive discussions with the FDA and is confident in the strength of the data package it submitted. The FDA has delayed its review of the application by three months and is currently scheduled to make a decision by April 5.
RBC Capital Markets’ Mr. Issey said some investors see a contradiction between the flexibility publicly promised by FDA leaders such as Secretary Marty McCulley and recent decisions made by the agency. This has led some to discount the chances of success for companies that enter the market with some flexibility in what data authorities accept, Stifel’s Mattis said.
Christiana Bardon, managing partner at MPM BioImpact, says the path is clear for companies whose data is straightforward. The question for her is how much the FDA should speed up the process of getting drugs to patients as quickly as possible for diseases with huge unmet needs.
A senior FDA official told reporters Thursday, speaking on condition of anonymity to speak freely, that the agency has not changed its position that biomarkers with a high likelihood of predicting efficacy can and will be approved early, and that nonrandomized data can earn full approval. For those involved, the hurdles are clear.
“If you create a drug to treat Alzheimer’s disease or Huntington’s disease, take someone with a serious illness and give them that treatment, they immediately start getting dramatically better,” the official said. “If you put someone with Alzheimer’s disease in a nursing home and then come out of that, or someone with late-stage Huntington’s disease who suddenly no longer has symptoms of Huntington’s disease, two or three patients will probably get full regulatory approval.
“We only ask for randomized data when symptoms are heterogeneous, when the will to believe is strong, when the treatment is invasive or potentially harmful, when effect sizes are difficult to detect, and when it is likely that we are fooling ourselves,” the official added.
