- This week’s sackings and re-hirings at the FDA suggest limits to the Trump administration’s efficiency drive
- ASX companies with approval applications in train appear to be okay, but it’s nervous times for the rest
- Optimists believe the overly bureaucratic FDA processes may be streamlined for the better
In a dramatic week for the US Food & Drug Administration (FDA), the agency was forced to fire hundreds of employees as part of the Trump administration’s zealous efficiency drive.
A couple of days later, they were reportedly back at their desks.
We say ‘reportedly’ because the agency – which has thousands of staff overall – has not confirmed the quantum of any comings and goings.
The de-hirings reportedly were within the Center for Devices and Radiological Health, which has sprawling responsibilities.
Other reports suggest the artificial intelligence team was in the (literal) firing line, if only because it consisted of newer employees who were let go as part of a ‘last on, first out’ policy.
“There is no question that this has all the makings of a fiasco,” says Professor Andrew Wilks, who co-developed the FDA-approved, Australian-developed myelofibrosis drug Ojjaara.
Adding to the anxiety, Endpoints News today reports that a meeting by a panel of science advisors to choose flu strains to include in a vaccine has been abruplty cancelled.
This raises concerns that new health czar and anti-jabber Robert F. Kennedy Jr (RFK) may already be influencing US vaccination policy.
Threats and opportunities
Most advanced-stage ASX device or drug makers are likely to front the FDA’s imposing portals of Maryland HQ at some stage – and indeed a conga line of hopefuls has done so already.
No company will admit to being affected individually or, more likely, they just don’t know at this stage.
But there’s rampant speculation about approval timelines being delayed or marketing applications knocked back altogether.
Some pundits fear approval dossiers will be shunted from staffer to staffer, resulting in rampant inefficiencies as the new person gets up to speed.
Before the cuts were reversed, Biden-era FDA commissioner Dr Robert Califf dubbed the cuts as “anti-efficiency”.
He said many recent hires had been recruited to fill knowledge gaps (including in artificial intelligence and food-chemical safety).
On the flipside, it’s hoped that tortuously bureaucratic processes will become more streamlined.
One CEO with an approved product recalls 27 FDA reps being on the line at a key consultation meeting.
“You only need one person to flag an objection and that can cause delays”.
Dog day for DOGE
One US-based CEO of an ASX-listed biotech says the faux sackings show the level of opposition that will be encountered by the Department of Government Efficiency (DOGE).
(Earlier, hundreds of National Nuclear Security Administration employees were swiftly re-hired when the razor gang realised they weren’t just pen pushers, but responsible for assembling the country’s warheads.)
“There is great appetite in the US for eliminating waste and fraud in government spending, but not for reducing important functions of government,” the CEO says.
“There was almost universal pushback against the firing of FDA staffers”.
But the rehirings certainly don’t imply that it’s business as usual.
Certain functions are likely to be emphasised or de-escalated, according to the whims of RFK and new FDA chief Martin “Marty” Makary.
Expect delays …
Companies with current FDA applications include heart device companies Artrya (ASX:AYA) and EBR Systems (ASX:EBR), nerve-regeneration play Orthocell (ASX:OCC), radiopharmacy giant Telix Pharmaceuticals (ASX:TLX) and wound healer PolyNovo (ASX:PNV).
Echo IQ (ASX:EIQ) is seeking a pre-submission meeting with the FDA about its AI-enabled heart failure support tool, EchoSolv HF.
The agency last August approved the company’s aortic stenosis device, Echo Solv.
“The short version is that it is too early to tell for anyone,” says Echo IQ chief commercial officer Deon Strydom.
“The longer version is that we believe pharma/device companies should anticipate delays in scheduled reviews, extended review timelines, and reduced access and collaboration with lead reviewers for deficiency resolution.”
He adds that none of this should impact Echo IQ.
“Internally we are not expecting any major delays and have our next meeting scheduled with the FDA on March 5.”
The company is also heartened that contrary to the AI sackings-that-weren’t, the agency intends to prioritise AI products.
“This obviously puts us in a favourable position.”
… and efficiencies?
Polynovo has multiple approval applications with the FDA, to extend the use of its wound-healing product to more applications.
A well-known ASX biotech figure, chairman David Williams says it is “uncertain” how it will affect the company.
“But I think there is much of a chance that efficiency and speed might pick up and be in our favour.”
He says the whole sacking scenario may have been overstated.
“I am told unless they have been in the job for less that 12 months it is not possible to sack federal workers, so I expect a lot of FDA sacked workers will come back.”
And that appears to have transpired.
“A little more chaotic”
Cyclopharm (ASX:CYC) CEO James McBrayer is relieved that the agency has already approved its lung-imaging technology Technegas (a combination of a drug and a device).
He says approval was also for “as broad an indication you could possibly get” in respiratory conditions, rather than just for the initial indication of pulmonary embolisms.
“That’s a rare and unusual position to be in and I’m relieved the process is done and dusted.”
For other applicants, he says there’s a danger that the agency might struggle to meet its statutory requirement of deciding on approvals within a set time.
“The person handling your application has to be intimately aware of the inputs, so if that person walks away someone else has to start again.”
The so-called PDUFA deadline – the FDA’s statutory approval timeline – can be delayed if the agency ‘stops the clock’ by requesting further information.
He adds: “things are happening so quickly that it will become a little bit more chaotic before we find some rhythm in terms of what the new normal is going to look like.”
Hold on to your hats
In the meantime, speculation about the new-look FDA is likely to result in more share volatility in the sector.
“Investors hate uncertainty,” says Bianca Ogden, the long-time portfolio manager for Platinum Asset Management’s global health sciences fund.
“When corporate restructurings happen, uncertainty prevails and [this] draws out project timelines,” she says.
“The changes at the FDA are akin to corporate restructuring so I assume delays to approvals.”
She expects the agency may re-prioritise projects and timelines and later review processes.
“For instance, there may be a more stringent approach to accelerated approvals, or when looking at biomarkers [to approve] neurodegenerative diseases.”
Whether they are sanguine or otherwise, industry figures collectively hope the new regimen won’t result in less scientific rigour, resulting in flawed therapies coming on to the market.
“The FDA is a beacon,” says Andrew Wilks. “An imperfect one, of course, but the best we have.”
At Stockhead, we tell it as it is. While EBR and Orthocell are Stockhead advertisers, they did not sponsor this article.
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