How Will the FDA Shutdown Affect the Biotech Industry?

The government shutdown is now at a record 27 days, and the US Food and Drug Administration (FDA) is gearing up to close its doors.

Scott Gottlieb, the FDA commissioner, announced over Twitter (NASDAQ:TWTR) on Monday (January 14) that the agency has reduced its burn rate to a minimum and intends to stay open for about five more weeks. This is due to funding restrictions based on the ongoing shutdown.

The FDA currently cannot accept any new medical product applications that require a fee payment. This includes investigational new drug and new drug applications (NDAs), among others. Previous applications with fees submitted before the lapse on December 22, 2018 will continue to be reviewed.

Even non-user fee program applications, such as blood and allergenic extract products, cannot be processed with the FDA during this time. This is due to limited funds from carryover user fee funding from before the shutdown. Gottlieb ended the announcement by reiterating that the FDA is only doing emergency work involving safety of human life.

These product categories are not associated with a user fee program. As a result, during the lapse, FDA activities for products are limited to emergency work involving safety of human life, such as monitoring for adverse events and, if warranted, taking action to protect patients

— Scott Gottlieb, M.D. (@SGottliebFDA) January 15, 2019

The beginning of the year is generally a booming time for the biotech industry, with investor and company enthusiasm stemming from events such as JP Morgan (NYSE:JPM) week. However, worries about the government shutdown are cutting some of this excitement, as companies that rely on FDA communication and processes are left in limbo.

Moving forward there could be a domino effect for company outlooks and 2019 plans if these essential applications cannot be submitted on time.

Sarepta Therapeutics (NASDAQ:SRPT) is one of a few companies that successfully submitted its NDA right before the shutdown. This means its application should be honored and assessed in a timely manner — depending on the severity of the shutdown. Sarepta’s NDA for golodirsen was submitted on December 20, and the drug is a potential treatment for Duchenne muscular dystrophy patients with a genetic mutation subject to skipping exon 53.

It may still be early in the year, but Celgene (NASDAQ:CELG) announced in its Q1 2018 financial results that it would resubmit a NDA for ozanimod in Q1 2019. Celgene has developed the drug as a treatment for relapsing multiple sclerosis. The application was previously rejected due to insufficient data.

Another company ready to submit an NDA in 2019 is Alnylam (NASDAQ:ALNY). It is working on approval for its drug virosiran, an investigational RNAi therapeutic for the treatment of acute hepatic porphyria.

The company agreed to a rolling submission of the application in 2018, meaning it can submit completed sections of the application until all information is available. The rest of the information for the application will be available in mid-2019.

Ultragenyx (NASDAQ:RARE) announced in November that it plans to submit a NDA in mid-2019 for UX007. The drug could be a treatment for patients with long-chain fatty acid oxidation disorders.

Investors are encouraged to follow developments on the government shutdown and how it is affecting companies’ regulatory plans. Until the FDA shuts down, there could be more updates from Gottlieb on Twitter about the agency, especially if the shutdown ends.

There hasn’t yet been any information released on how the FDA intends to manage the possible influx of drug applications once the shutdown has ended. Click here for more information on how the shutdown is affecting life science IPOs.

Don’t forget to follow@INN_LifeScience for real-time updates!

Securities Disclosure: I, Gabrielle Lakusta, hold no direct investment interest in any company mentioned in this article.