The Pharmaceutical Stock That Nobody Watched Just Tripled on a Single FDA Announcement

The pharmaceutical industry specializes in a certain kind of cruelty, such as when a company spends years or even decades creating a treatment for one of the most deadly illnesses known to science, only to have a regulatory request come in on a Friday afternoon and wipe out a third of its market value before the weekend even starts. That’s precisely what happened to UniQure.

Then, a few weeks later, the whole narrative was completely turned upside down by something that hardly anyone had predicted.

UniQure is not a well-known brand. It lacks the floor space that Bristol Myers Squibb or Merck command at investor conferences. At JPMorgan Healthcare, it is not the company whose pipeline is whispered about with reverence. Developing a gene therapy for Huntington’s disease, a disorder that gradually destroys the nervous system and for which there is currently no approved treatment that significantly slows progression, is the type of biotech that exists slightly below the noise level of mainstream financial media.

Catheters are inserted into tiny holes drilled in the skull to administer the company’s experimental therapy, AMT-130. That detail is not conducive to comfortable reading. The FDA’s subsequent request was particularly remarkable because of this particular detail.

Earlier this month, the agency, led by Vinay Prasad at the Center for Biologics Evaluation and Research, informed UniQure that it desired a new Phase 3 trial that included a controlled sham procedure for the placebo group. To put it simply, the FDA was requesting a trial in which participants in the control group would have skull holes drilled without any kind of treatment. European regulators had already made it clear that this was unethical. UniQure said it was taken aback by the request. To say that I’m surprised would be an understatement.

In a single day, the stock dropped 33%. 33 percent. The market’s message was almost clinically brutal for a company working on a disease that affects about 30,000 Americans and for which there has been little hope: the path is closed, at least for the time being. As it happened, it was difficult to ignore the significance of that number for people other than trading screens, such as the patients, their families, and the researchers who have dedicated their careers to this.

Then Friday arrived, almost as an afterthought, late in the day. The Wall Street Journal was informed by the FDA that Prasad intended to depart the organization the following month. UniQure had gained 26% by the end of Monday. During the same session, Regenxbio, another rare-disease company that had a rough encounter with the FDA while Prasad was in charge, closed about 20% higher. When it came to his tenure, the market was not being subtle.

Prasad had turned into a truly divisive figure, not in the impersonal sense that regulators are occasionally criticized by experts. He had a specific, documented, and significant involvement. In addition to the UniQure case, he had contributed to the initial decision to reject review of Moderna’s mRNA-based flu vaccine, which was later overturned after the company consented to submit more supporting information. In a note on Monday, Raymond James analyst Chris Meekins said that Prasad’s actions caused the administration a great deal of operational and political friction. That’s what analysts say: this was starting to become an issue.

It’s possible that some of the criticism aimed at Prasad isn’t totally justified. Rigidity in regulations is not always a bad thing. The FDA’s purpose is to pose difficult questions, and the natural tendency to seek additional data before authorizing treatments that are administered directly into brain tissue is not inherently illogical.

The particulars of the sham surgery request, which appeared to put trial design orthodoxy ahead of the practical and ethical realities of what this therapy actually entails, seem to have crossed a line, at least in the opinion of many in the rare-disease community. According to Joseph Schwartz of Leerink Partners, a positive interaction with sponsors while upholding scientific integrity would be a much-needed break.

This one is part of a larger story that is currently taking place in the pharmaceutical industry. The industry is navigating a time of unprecedented regulatory complexity, which has been influenced not only by science but also by political appointments, leadership choices, and the personalities of those in important agency positions. Senior partner Ron Lanton of Lanton, Lanton & Sosa Law, who closely monitors FDA policy, recently noted that the agency’s move toward single-trial approval pathways for some medications creates new uncertainties of its own.

According to him, manufacturers will probably develop more internal risk management procedures and rely more on initiatives like the National Priority Voucher, which can shorten review periods from six months to one or two months, as long as a company’s work is in line with administration priorities regarding unmet need, affordability, and domestic manufacturing.

Within all of this lies UniQure’s predicament. The company is fighting for the approval of more than one medication. It involves negotiating a setting where the scientific community, the legal system, the ethics of trial design, and the personal convictions of individual officials are all moving simultaneously.

In such a setting, the market capitalization can fluctuate by hundreds of millions of dollars over the course of a weekend due to a single departure announcement. It’s still unclear if the new director will bring the kind of involved, science-first attitude that analysts are secretly hoping for, or if the leadership change at CBER will result in a significantly different outcome for AMT-130.

It is evident that the markets think it is important. And that belief, for the time being, is making real money in the peculiar, condensed logic of biotech investing, where a company creating a brain-delivered gene therapy for a deadly neurological disease can lose a third of its value on a Friday and recover much of it the following Monday based on a personnel announcement. It’s likely that the families who are awaiting Huntington’s research have more nuanced feelings about it all. Usually, they do.