US FDA approvals bounce back in 2023, sparking hopes of a biotech recovery

Crispr Therapeutics AG

02/01/2024 18:22

By Manas Mishra and Pratik Jain
       Jan 2 (Reuters) - The U.S. Food and Drug Administration
approved nearly 50% more novel drugs in 2023 than in 2022,
putting it back on pace with historical levels, an improvement
analysts and investors said could lead to increased investment
in biotech firms.
    FDA nods for innovative therapies containing an active
ingredient or molecule not previously approved, rose to 55 in
2023, up from 37 in 2022 and 51 in 2021. Historical data shows
the FDA typically green lights about 45-50 new drugs a year and
hit a peak of 59 in 2018. 
    The agency approved several high-profile therapies such as
Eli Lilly's  LLY.N  obesity drug Zepbound and Eisai  4523.T  and
Biogen's  BIIB.O  Alzheimer's treatment Leqembi. It also
approved five gene therapies in addition to the 55 novel drugs, 
   including a sickle cell disease treatment from Vertex
Pharmaceuticals  VRTX.O  and CRISPR Therapeutics  CRSP.BN  using
the latter's innovative gene editing technology. 
    "It is good to see the FDA approvals go up," said John
Stanford, executive director of Incubate, a Washington-based
group of life sciences investors. He called the advance of gene
editing technology particularly encouraging. 
    "Our scientists can do a lot more, and from that perspective
we are excited about what's coming down the pipeline, not just
in 2024, but beyond that," he said.
    The FDA in a statement said, "the number of novel drugs
approved varies from year to year, and may be due to a variety
of factors." Those include the complexity of new drugs in
development as well as advances in scientific understanding of
diseases and disease targets, it said.
    The agency did not provide a specific reason for the big
drop in approvals in 2022. 
    TD Cowen analyst Ritu Baral said the COVID-19 pandemic was
likely a factor. When the pandemic hit, the agency moved from
approving drugs at record pace to operating with a remote
workforce, which caused disruption and issues such as delayed
inspections that affected drug reviews.
    "We're back at those peak levels, which hopefully means that
the workflow disruptions, staffing and bandwidth issues and,
most importantly, communications with developers, have hopefully
been improving, Baral said, adding that she expects a similar
level of FDA approvals in 2024.
    
    INVESTMENT DECLINES
    Investment in biotech companies over the past two years has
been a fraction of historical levels. 
    After 108 initial public offerings (IPOs) in 2021, there
were only 18 each in 2022 and in 2023 as of mid-December. A
basket of biotech-focused funds tracked by Piper Sandler saw
$15.8 billion in capital outflow in 2023, the largest ever going
back to 1992, according to the brokerage. 
    "2023 has been a year where the market was selective in the
companies able to access capital," William Blair analysts said
in a December note. 
    They noted that companies developing GLP-1 weight-loss
treatments, the same class as Novo Nordisk's  NOVOb.DE  wildly
popular Wegovy and Lilly's Zepbound, have had better access to
the IPO market.     
    Industry analysts also said lingering investor concern about
high interest rates and government scrutiny of drugmakers could
hamper a full funding recovery.
    "While we don't expect capital markets to return to peak
2020-21, we do think that conditions will improve and that the 
window will open up," Jefferies analyst Michael Yee said.
   Incubate's Stanford said some investors may remain on the
sidelines due to increased oversight of deals in the sector, the
government's drug price negotiation plans and the threat that
the Biden administration is looking to seize patents of
medicines developed with government funding if the prices are
deemed to be too high.
    

 (Reporting by Manas Mishra, Christy Santhosh and Pratik Jain in
Bengaluru; Editing by Caroline Humer and Bill Berkrot)
 ((Manas.Mishra@thomsonreuters.com;
www.twitter.com/Manaswrites15;))