Investors are concerned about the fate of multiple experimental drugs for difficult-to-treat diseases following a series of recent rejections by the U.S. Food and Drug Administration.
According to RTW Investments, the FDA last year denied or discouraged applications for at least eight drugs, including a gene therapy for Huntington's disease. UniQurea gene therapy for Hunter syndrome Regenxbio and a medicine for a blood condition Disc Medicine. The agency initially declined to review modernThe flu vaccine before reversing course.
In each case, the FDA took issue with the evidence the companies used to support their claims. Some of the studies did not compare the drugs with a placebo. Some companies did not directly measure the drug's effectiveness, but instead relied 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. This has investors fearing that a more unpredictable FDA could jeopardize the future of other treatments for difficult-to-treat diseases.
“What investors and key stakeholders expect to see from the FDA is consistency, and that seems to be lacking right now,” said RBC Capital Markets analyst Luca Issi.
In recent years, the FDA seemed willing to accept drugs for rare diseases that showed promise in studies less rigorous than the gold-standard, randomized, double-blind, placebo-controlled trials. That meant helping to bring treatments more quickly to patients who have conditions in which the passage of time could mean the loss of functions such as walking or talking, or even death. It also sparked controversy among critics who said the policy brought false hope to patients.
Recent FDA decisions have left investors wondering whether the agency's rules have changed for other drugs in the pipeline. In the case of UniQure, the FDA asked the company to conduct a new study that directly compared its treatment to a placebo. UniQure said that contradicts the agency's previous guidance that the company could seek approval with trial data that compared 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 this the worst kind of regulatory uncertainty, because companies say they are told one thing and then experience another.
Analysts point to other companies they are watching, including Dina Therapeuticsthat is advancing a drug for Duchenne muscular dystrophy; Taysha Genetic Therapieswho is developing a gene therapy for Rett syndrome; Wave life scienceswho is working on a treatment for a liver condition; and Lexeo Therapeuticswhich is developing a gene therapy for Friedreich's Ataxia. Shares of all those companies 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 continued engagement with the FDA. Taysha, Wave and Lexeo declined to comment.
One looming decision that Stifel analyst Paul Matteis is monitoring is for 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 request for accelerated approval is based on a trial that was not randomized and data showing that the drug reduces levels of a biomarker associated with the condition.
For Matteis, the data set is harder to argue with than UniQure's, and there isn't much risk with the technology used.
“So if they don't approve it, 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 were in a company I would almost say to myself, 'Can we really have confidence in doing an open-label study?'”
In a statement to CNBC, Denali Therapeutics CEO Ryan Watts said the company continues to have constructive conversations with the FDA and is confident in the strength of the data package it submitted. The FDA delayed its review of the application by three months and is now expected to make a decision by April 5.
Some investors feel a clash between the flexibility that FDA leaders, like Commissioner Marty Makary, are publicly promising and recent decisions the agency has made, said Issi of RBC Capital Markets. That's leading some to discount the likelihood of success for companies whose paths to market depend on a certain level of flexibility in the data the agency will accept, said Stifel's Matteis.
For companies whose data is simple, 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 to get drugs to patients as quickly as possible for diseases with huge unmet needs.
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 efficacy can and will get accelerated approval, and that nonrandomized data can get full approval. For this official, the bar is clear.
“If you develop a treatment for Alzheimer's or Huntington's, you take someone who is seriously ill and apply that therapy, they begin to improve immediately and dramatically,” the official said. “If you take someone in a nursing home with Alzheimer's and then they get out of there, or someone with end-stage Huntington's and suddenly they don't have Huntington's symptoms, you're going to get a full regulatory approval with two or three patients.
“We only request 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 possibility that one is being deceived is high,” the official added.
