The FDA’s reversal on UniQure and Moderna approvals has investors worried

Investors are concerned about the fate of several experimental drugs for difficult-to-treat diseases after a series of recent rejections from the US Food and Drug Administration.

The US Food and Drug Administration (FDA) last year rejected or discouraged the use of at least eight drugs, according to RTW Investments, including a gene therapy for Huntington’s disease from… UniQureGene therapy for Hunter syndrome RegeneXbio And a medicine for a blood condition Disc medicine. The agency initially declined the review ModernaFlu vaccine before reversing course.

In each case, the FDA objected to the evidence the companies were using to support their applications. Some studies did not test drugs versus placebo. Some companies did not directly measure the effectiveness of the drug, instead relying on other factors such as biomarkers to predict how well the treatment was working.

In each case, the companies accused the FDA of reversing its previous guidance. This makes investors worry that an unpredictable FDA could jeopardize the future of other treatments for difficult-to-treat diseases.

“What investors and key stakeholders are hoping to see from the FDA is consistency, and that appears to be lacking at the moment,” RBC Capital Markets analyst Luca Isi said.

In recent years, the FDA has seemed willing to accept drugs for rare diseases that have shown promising results in less rigorous studies than the gold standard, randomized, double-blind, placebo-controlled trials. This means helping to deliver treatment more quickly to patients with conditions where time could mean 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 decisions by the FDA have left investors wondering whether the agency’s bar has changed for other drugs in the pipeline. In the case of UniQure, the FDA asked the company to conduct a new study directly comparing its treatment to a placebo. UniQure said this contradicts the agency’s previous guidance that a company could seek approval through trial data comparing UniQure’s treatment to an outside database of people with Huntington’s disease.

One former FDA official, who spoke to CNBC on the condition of anonymity to speak freely, called this the worst kind of regulatory uncertainty, because companies say they are told one thing and then try another.

Analysts point to several other companies they are monitoring, including… Dyne Therapieswhich is developing a drug to treat Duchenne muscular dystrophy; Taisha Gene TherapiesWhich is working to develop a gene therapy for Rett Syndrome; Wave life sciencesWhich works to treat liver condition; and Lexio treatmentswhich is developing a gene therapy for Friedreich’s ataxia. All shares of those companies have fallen this year.

A Dyne spokesperson said the company has maintained a 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 trial design and its continued engagement with the FDA. Taisha, Wave and Lexio declined to comment.

One looming decision that Stifel analyst Paul Matteis is tracking is a drug candidate Denali treatments Hunter syndrome, a rare disease that causes physical defects such as hearing loss and joint problems, in addition to cognitive problems. The company’s request for accelerated approval is based on a trial that was not randomized, and data shows that the drug reduces levels of biomarkers associated with the condition.

For Mathis, the dataset is harder to argue with than UniQure’s, and there are no significant risks with the technology involved.

“If they don’t agree to it, I don’t know,” Mattis said. “I mean, I do think there’s been a pretty big change in regulatory standards for rare diseases, but if they hadn’t approved Denali, if I were at a company I would almost say to myself, ‘Can we really be confident in doing an open-label study?’

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 it has presented. The FDA delayed review of the application for three months, and is now expected to decide by April 5.

RBC Capital Markets’ Essie said some investors sense a clash between the flexibility that FDA leaders like Commissioner Marty McCurry are publicly pledging and recent decisions made by the agency. This leads some to discount the possibility of success for companies whose paths to market depend on some level of flexibility in the data the agency will accept, Stifel’s Mattis said.

For companies whose data is clear, the path seems clear, said Christiana Bardon, managing partner at MPM BioImpact. The question is how much the FDA should speed up the process of getting drugs to patients as quickly as possible to treat diseases with huge unmet needs.

A senior FDA official, who spoke to reporters Thursday on the condition of anonymity to speak freely, said the FDA has not changed its position that biomarkers that are reasonably likely to predict efficacy can get accelerated approval, and that nonrandomized data can get full approval. For this official, the obstacle is clear.

“If you do a treatment for Alzheimer’s or Huntington’s disease, and you take someone who is severely ill and give them this treatment, they will start improving immediately and dramatically,” the official said. “If you take someone in a nursing home who has Alzheimer’s disease and then comes out, or someone who has end-stage Huntington’s disease, and suddenly they don’t have symptoms of Huntington’s disease, you’ll get full regulatory approval with two or three patients.

“We only request random data when the condition is heterogeneous, when the will to believe is strong, when the treatment is invasive or potentially harmful, when the size of the effect is difficult to detect, and when the probability of fooling yourself is high,” the official added.