FDA Pushback on AbbVie Drug Raises More Alarms for Biotechnology
(Bloomberg) -- The Food and Drug Administration’s extension of a review for AbbVie Inc.’s already-approved Rinvoq dealt another blow to biotech investors who are grappling with a recent wave of surprising moves from the regulator.
Regulatory setbacks for drug applications from Acadia Pharmaceuticals Inc., Athenex Inc., and FibroGen Inc. have caught Wall Street flat-footed in the past month alone, as analysts debate whether the FDA is getting more conservative over approvals. The uncertainty has started to show with gains for biotech stocks coming in at about half the returns for the broader market this year.
Investor pessimism was apparent in Wednesday’s trading as the Nasdaq Biotechnology Index, a closely-tracked barometer of the industry, slumped as much as 1.6%, a deeper drop than the broader market. The SPDR S&P Biotech ETF (XBI), which is more exposed to smaller biotechs that typically depend on successful development of singular drugs, dropped as much as 2.4%.
Worries that there could be a moving bar for drug approvals add to the recent jolt from reports that antitrust enforcers have their eye on mergers between drug developers. The biotechnology industry relies heavily on successful drug development and partnerships and acquisitions to push forward new technologies for patients while keeping investors flush with cash.
The extended review of AbbVie’s filing on Rinvoq as a treatment for adult patients with active psoriatic arthritis sent shares of the drugmaker spiraling the most in about a year. The stock fell as much as 7.3% as Wall Street weighed what was next for the up-and-coming blockbuster medicine.
Bloomberg Intelligence analyst Sam Fazeli wrote that peak yearly sales hopes of $8 billion would be “severely hampered” if the medicine gets a strict warning for the threat of bloodclots like Pfizer Inc.’s Xeljanz has.
©2021 Bloomberg L.P.