Shares of BioMarin Pharmaceutical (NASDAQ: BMRN) recently plummeted after the U.S. Food and Drug Administration (FDA) refused to approve the company's experimental gene therapy for the treatment of hemophilia until it provides more evidence -- evidence that will take a long time to produce. The FDA's unexpected request for durability data is an abrupt change in direction from the agency, one that could threaten more drug developers in a hurry to launch their own one-shot treatments.
The FDA didn't require such long development timelines before approving some currently marketed gene therapies, and most investors are probably right to worry about future demands for evidence that takes years to produce. Before freaking out, though, let's examine how things went sideways for BioMarin to see whether investors who are exposed to other gene therapy stocks should be right now.
According to BioMarin, the FDA had already agreed on the extent of data required to support approval of valoctocogene roxaparvovec (valrox), a potential new gene therapy for patients with severe hemophilia. Patients with this rare bleeding disorder require frequent infusions of expensive therapies to avoid lethal uncontrolled bleeding events.
A single administration of valrox helps patients produce so much of their own blood-clotting factors, or coagulants, that they no longer rely on factor-replacement therapy. Results from a phase 1/2 study that began in 2015 show patients treated with valrox barely need any factor-replacement infusions to prevent bleeding episodes.
The FDA had been willing to approve valrox based on short-term successful results from a 134-patient phase 3 study while using long-term results from the phase 1/2 trial that started in 2015. Unfortunately, more recent data from the phase 3 study suggests the treatment doesn't remain effective as long as phase 1/2 results suggest.
BioMarin doesn't expect the last patient to complete the required two years of follow-up observation until November 2021. That gives SPK-8011, another experimental gene therapy for the same small population of severe hemophilia patients, time to catch up. The drug is made by Roche's gene-therapy subsidiary, Spark Therapeutics, and should begin a phase 3 trial in 2021.
A problem for everyone?
Gene therapies are meant to be single-administration solutions that benefit patients for the rest of their lives. Sadly, it's impossible to prove a drug will remain effective for any length of time without running clinical trials that take longer to complete.
Relatively swift approvals for Zolgensma from Novartis and Luxturna from Spark Therapeutics led the biopharmaceutical industry to believe long-term success from small early stage clinical trials, plus short-term success from subsequent phase 3 studies, would support similarly swift approval of their gene therapy candidates. But if the BioMarin news leads the rest of the industry to assume that gene therapy applications don't have a chance at approval until after companies invest in years-long phase 3 trials, clinical-stage businesses in this space can forget about receiving any juicy buyout offers from big pharma.
If you're holding shares of companies like Uniqure (NASDAQ: QURE) that have a pipeline full of gene therapy candidates but still don't have product revenue to fund their development, the FDA's shifting stance should make you nervous.
There are thousands of rare diseases with a genetic basis that don't have any available treatments yet, and the FDA will likely continue offering accelerated approval pathways for gene therapies that address them. In the case of hemophilia and other diseases where treatment options exist, though, long waits for complete phase 3 trial results could become standard practice.
If BioMarin eventually produces phase 3 results for valrox that confirm suspicions about its durability, selling any gene therapy at a high price with the promise of lifelong benefits could become next to impossible.
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