Health Check: Biotechs recover as peace descends on the FDA – for now

Global and US biotech shares have recovered from their lows on signs that the chaos created by the Trump administration is subsiding.

Biotechs globally are benefiting from an outbreak of peace as new FDA chief Marty Makary promises stability. Pic via Getty

• The US health sector shows signs of stabilising as chaos subsides

• Immutep will meet with the FDA following “excellent” follow-on trial results

• When it comes to its sagging share price, Immuron leaves blame-shifting to the defeated Liberals

Has the US healthcare scene reached peak mayhem?

After the tariff uncertainties, Food & Drug Administration (FDA) staff cuts and the gutting of the National Institutes of Health, conditions appear to be settling.

This is reflected in the Nasdaq biotech index, which has recovered 15% from its April 8 nadir – then a 33% decline from August 2021 peak levels.

Year to date the index has fallen 1.6%.

Bell Potter notes new FDA Marty Makary has stressed the agency’s staff cuts – 3500 out of an 18,000 strong workforce – have not involved case reviewers and other science-y roles.

“This corroborates feedback from many ASX companies advising FDA engagements in recent months have been conducted per agreed timelines,” the firm says.

After announcing the company’s US partnership worth up to $940 million, Dimerix (ASX:DXB) chief Dr Nina Webster said a meeting with the FDA to discuss the use of surrogate endpoints in a trial was “held on time and the review team was intact.”

Makary has also flagged streamlining the post-marketing review process for rare disease drugs, to enable them to be approved faster in the first place.

This benefits Dimerix, which is eyeing potential fast-track approval for its rare kidney disease drug.

Bell Potter describes Makaray as a “relatively pragmatic Commissioner unlikely to plunge the FDA into chaos.”

Alterity is in the fast lane

As if on cue, the FDA has also granted fast-track designation to Alterity Therapeutics (ASX:ATH) for its investigational drug to treat multiple system atrophy (MSA).

This follows positive results from the company’s phase II trial, which showed a “statistically significant” improvement in how patients go about their daily lives.

A so-called Parkinsonian disorder, MSA results in similar gait problems, shuffling and tremors.

On January Alterity shares more than doubled after the company released the phase II results – and they perked up about 10% on this morning's news.

Fast-track status enables more frequent and earlier communication with the FDA, with any new drug application reviewed on a quicker rolling basis.

Alterity’s therapy also has orphan drug designation, which confers benefits such as marketing exclusivity and higher pricing.

Immutep shares surge on cancer trial results

Still on cancer immunotherapy, Immutep (ASX:IMM) will seek a meeting with the FDA after reporting “excellent” results for its phase IIb head and neck cancer trial.

Aimed at head and neck squamous cell carcinomas (HNSCCs), the trial combines the company’s Efti therapy with the standard of care Keytruda.

The company reports the combination resulted in median overall survival of 17.6 months, in a 31-patient cohort with a low incidence of the biomarker PD-L1.

Overall survival is how long a patient lives from the time of diagnosis or treatment until their death, regardless of the cause.

The data “compares favourably” with standard of care approaches resulting in overall survival between 7.9 months and 11.3 months.

Earlier, the company reported multiple complete responses (the cancer had gone away).

The company says these patients have a high unmet medical need, given the lack of available treatment options without chemotherapy.

“We will meet with regulators to discuss next steps and potential paths to approval,” says CEO Marc Voigt.

The company is also evaluating the protein eftilagimod – Efti to friends – for non-small cell lung cancer (NSCLC) and metastatic breast cancer.

The FDA has accorded fast-track status to Efti as a first-line treatment for HNSCC and NSCLC.

Last week, the Nasdaq-listed ALX Oncology said its combination trial for HNSCC failed to meet primary endpoints in a phase II trial.

The company has abandoned the program.

Imugene explains share rout

The US chaos has resulted in radical share moves for US-exposed ASX biotechs over the last month, such as cancer drug developer Imugene's (ASX:IMU) 23% sell-off.

In a missive to shareholders, Imugene executive chair Paul Hopper and CEO Leslie Chong  last week offer “transparent explanations” as to why the company is worth $200 million today, compared to $3 billion in late 2021.

They must have missed the memo about blaming challenging macro conditions and short-term investors, etcetera.

They acknowledge slower than expected progress on Imugene’s two key trial programs, CF33 and Oncarlytics.

Another likely culprit is the lack of licensing deal, especially for the company’s legacy program, Her Vaxx.

The duo says the market perceives the company as a high cash-burn business – which is kinda right because drug development inherently is not cheap.

In the meantime, short sellers account for an elevated 5.2% of the company’s share register.

“We think this has had a knock-on effect to other sellers/investors who view a short position as an expectation that the share price will fall, and possibly this has dragged other sellers in.”

Management has no control over that one.

Health winners from Alban-easy victory

Given he brandished his well-worn Medicare card during his victory speech, Anthony Albanese is expected to deliver swiftly on Labor’s promise to expand the availability of bulk-billing doctors.

If more patients visit their doc, there will be an expected rise in flow-on referrals to pathology and radiology providers.

While the overall market opened slightly lower this morning, shares in Sonic Healthcare (ASX:SHL), Healius (ASX:HLS), Australian Clinical Labs (ASX:ACL) and Integral Diagnostics (ASX:IDX) enjoyed a faint Albo glow.

But it remains to be seen whether subdued volumes return to historical levels.

Originally published as Health Check: Biotechs recover as peace descends on the FDA – for now