Anyone looking for a convenient weather vane to determine the reaction to Scott Gottlieb’s abrupt departure from the FDA need go no further than the $XBI. The S&P Biotech ETF took a 4% hit. And it was down another 1.8% ahead of the bell on Thursday.
The market and the industry loved Gottlieb, as we underscored on several occasions with industry surveys highlighting the intense enthusiasm for someone who advocated for collaborating with the drug industry. Biopharma had a partner in Gottlieb, and they all knew it.
Vaping and the opioid epidemic — while big public policy issues — meant absolutely nothing to the industry. An agency committed to pushing approvals while embracing innovation at a time some landmark therapies are being approved at a more rapid pace: That was pure gold. And it wasn’t just lip service. In this brave new world J&J could slip around the gold standard on depression drug data and score an OK this week for esketamine, a drug they plan to make a blockbuster. A few years ago, that likely wouldn’t have happened.
The one thing that could settle investors and execs back down would be a new head of the FDA that could walk the line between maintaining the somewhat weakened gold standard on pivotal data and a free-for-all that would clearly abandon a commitment to approving safe and effective drugs that met the risk/benefit analysis.
Gottlieb emerged early as a favorite for the FDA job. He had experience at the agency, he fit into the Trump administration’s orb with vows to speed things up, and an amazing number of industry insiders knew him and liked him.
He quickly became a rock star in biopharma, tweeting his way through every day about policy.
So how do you replace him and maintain the same level of enthusiasm in biopharma? The usual suspects don’t cut it.
We’re not even sure right now who will be the interim chief. Stephen Ostroff has taken the helm on a strictly interim basis before, but he retired last fall. Amy Abernethy was named principal deputy commissioner just 2 months ago, coming to the FDA from a senior scientific position at Flatiron after a stint at Duke. She’s been tapped as the likely interim chief, and will definitely make the rumor mill as possibly the next head of the FDA. But she’s still largely an unknown in the industry, so don’t expect much enthusiasm right off the bat.
On the other hand, if she gets the interim job, she’ll have a chance to shine. And President Trump doesn’t seem pressed to get big jobs filled fast in Washington DC, so the interim role could last awhile.
National Cancer Institutes director Ned Sharpless has emerged as one of the most frequently cited candidates for the FDA job, with an early push from the Wall Street Journal, which also quickly named Brett Giroir, assistant secretary at HHS, as another possible successor.
Jim O’Neill evidently had a shot at the job a couple of years ago, but the industry was shocked by the fact that Peter Thiel’s candidate was even in the running. He’s been associated with some loony endeavors, like seasteading and the hunt for immortality, and the industry sees him as a disaster waiting to happen. In this environment, that makes O’Neill a credible threat again, though it seems far fetched.
But he’s still going to make everyone’s list. Funny how that works.
How about Richard Pazdur, the oncology czar at the FDA whose commitment to rapid drug reviews has played a material role in revolutionizing oncology R&D over the last 5 years? It’s been suggested. But when it comes to agency insiders, though, no one outshines Janet Woodcock at CDER. She not only knows where the bodies are buried at the FDA, she often helped put them there. Maybe she could cap a decades-long run as FDA chief?
Stranger things have happened.
Two years ago I called Gottlieb the Republican shadow commissioner, out front offering positions on reforming the FDA. We don’t seem to have one of those now, by virtue of the fact that no one expected Gottlieb to stand down so soon. And with a national election looming next year with a wildly controversial president, anyone who does get the job may ultimately prove an interim chief in any case.
Biopharma hates regulatory uncertainty of any kind. This year we’ve had a government shutdown followed by an abrupt resignation by Gottlieb. Uncertainty at the FDA appears to now be the rule.
In a note to investors, Jefferies’ Michael Yee noted that whoever steps in will find an agency that has established a “pro-innovation” approach that won’t suddenly end now, regardless of who gets the job.
That sounds reasonable, but it won’t stop the fretting that’s going on now. Approaches are one thing, execution is another.
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