Investors are concerned about the fate of several experimental drugs intended to treat difficult-to-treat diseases, following a series of recent denials by the U.S. Food and Drug Administration.
Over the past year, the FDA has denied or discouraged the use of at least eight drugs, according to RTW Investments, including a gene therapy for Huntington’s disease. UniQuregene therapy for Hunter syndrome Régenxbio and a medicine for a blood disease from Disc Medicine. The agency initially refused to review Moderngot a flu shot before changing course.
In each case, the FDA challenged the evidence the companies used to support their claims. Some studies did not test the drugs against a placebo. Some companies have not directly measured drug effectiveness, but instead rely on other factors such as biomarkers to predict treatment effectiveness.
And in all cases, the companies accused the FDA of reversing its previous guidance. That makes investors wary that a more unpredictable FDA could jeopardize the future of other treatments for hard-to-treat diseases.
“What investors and key stakeholders are hoping to see from the FDA is consistency, and that seems to be lacking at the moment,” said Luca Issi, an analyst at RBC Capital Markets.
In recent years, the FDA has appeared willing to accept drugs for the treatment of rare diseases that have shown promise in studies less rigorous than the gold standard randomized, double-blind, placebo-controlled trials. This meant helping to bring treatments more quickly to patients suffering from illnesses in which the passage of time could lead to the loss of functions such as walking or speaking, or even death. It also sparked controversy from critics who said the policy brought false hope to patients.
The FDA’s recent decisions have investors wondering whether the agency’s bar has changed for other drugs in development. In UniQure’s case, the FDA asked the company to conduct a new study directly comparing its treatment to a placebo. UniQure said this contradicts previous agency guidance that the company could seek approval of trial data comparing UniQure’s treatment to an external database of people with Huntington’s disease.
A former FDA official who spoke to CNBC on condition of anonymity to speak freely called it the worst kind of regulatory uncertainty, as companies say they’re told one thing and then experience another.
Analysts name several other companies they are watching, including Dyne Therapeuticwhich offers a drug against Duchenne muscular dystrophy; Taysha Gene Therapieswhich is developing a gene therapy for Rett syndrome; Wave Life Scienceswho is working on a treatment for liver disease; And Lexeo Therapeuticwhich is developing gene therapy for Friedreich’s ataxia. All of these companies’ stocks are down this year.
A Dyne spokesperson said the company has maintained frequent, positive and collaborative dialogue with a consistent set 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 trial design and its ongoing engagement with the FDA. Taysha, Wave and Lexeo declined to comment.
One looming decision that Stifel analyst Paul Matteis is following involves a drug candidate from Denali Therapeutic for Hunter syndrome, a rare disease that causes physical defects like hearing loss and joint problems, as well as cognitive problems. The company’s request for accelerated approval is based on a trial that was not randomized and on data showing the drug decreases levels of a biomarker associated with the disease.
For Matteis, the data set is harder to challenge than UniQure’s, and the technology used doesn’t pose much risk.
“So if they don’t approve of that, I don’t know,” Matteis said. “I mean, I already think there’s been a pretty significant change in the regulatory standard for rare diseases, but if they don’t approve Denali, if I was at a company, I would almost be like, ‘Can we really be sure that we’re doing an open-label study?'”
In a statement to CNBC, Ryan Watts, CEO of Denali Therapeutics, said the company was continuing its constructive discussions with the FDA and was confident in the strength of the data set it had submitted. The FDA delayed review of the application for three months and is now expected to make its decision by April 5.
Some investors feel a conflict between the flexibility that FDA leaders, like Commissioner Marty Makary, publicly promise and recent decisions made by the agency, said Issi of RBC Capital Markets. That leads some to downplay the likelihood of success for companies whose path to market relies on a certain level of flexibility in what data the agency will accept, Stifel’s Matteis said.
For companies with simple data, the path seems clear, said Christiana Bardon, managing partner of MPM BioImpact. The question for her is how much the FDA should speed up the process of getting drugs to patients for diseases with enormous, unmet need as quickly as possible.
A senior FDA official, speaking to reporters Thursday on condition of anonymity to speak freely, said the FDA has not changed its position that biomarkers reasonably likely to predict effectiveness can and will get accelerated approval, and that nonrandomized data can get full approval. For this manager, the bar is clear.
“If you develop a treatment for Alzheimer’s disease or Huntington’s disease, and you take someone who is seriously ill and you give them that therapy, and their health starts to improve immediately and dramatically,” the official said. “You take someone in a nursing home with Alzheimer’s, and then they’re discharged, or someone with terminal Huntington’s disease, and they suddenly have no symptoms of Huntington’s disease, you’ll get full regulatory approval with 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 dangerous, when the size of the effect is difficult to detect, and when the possibility that you are wrong is high,” the official added.