By David Wainer

For months, investors have feared that Health and Human Services Secretary Robert F. Kennedy Jr. and his Make America Healthy Again movement would derail biomedical innovation. His ousting of Peter Marks -- a senior official at the Food and Drug Administration and key proponent of faster drug approvals -- sent biotech stocks tumbling last month and stoked concerns that the agency was being politicized and turned against science.

A more nuanced narrative is now taking shape.

While heightened vaccine scrutiny and sweeping FDA staff cuts remain serious threats, recent signals have been more upbeat. In an interview late last week, newly appointed FDA Commissioner Marty Makary -- a former Johns Hopkins surgeon -- delivered a relatively bullish message for the biotech sector. Speaking with Megyn Kelly, Makary said he would speed up approvals for rare-disease treatments, cut reliance on animal testing by incorporating computational models and shorten the industry's typical 10-year drug- development timeline.

He also vowed to reduce pharmaceutical companies' influence over the FDA approval process and end what he called the agency's "cozy" relationship with the industry. Importantly, he emphasized a commitment to protecting innovation and maintaining a science-based approach to regulation.

The comments helped fuel a rally in riskier biotech names on Monday -- even as the broader market fell sharply. Stocks such Intellia Therapeutics, Avidity Biosciences and Regenxbio -- small-cap developers of cutting-edge gene-editing and RNA therapies -- jumped. "Megyn Marie Kelly has saved the sector for a day," quipped Mizuho healthcare strategist Jared Holz.

Much of what Makary proposed wasn't entirely new. A push to reduce reliance on animal testing and to accelerate the approval of drugs for certain conditions has long been under way at the FDA. The real question is whether he can execute the reforms at a time when FDA staffing is being slashed. Makary claimed in the interview that there have been no layoffs among scientists, reviewers, or inspectors. But The Wall Street Journal has reported that significant delays in core FDA functions -- such as reviewing trial amendments and guiding companies through drug development -- are already slowing the pace of drug development.

For investors, though, the bigger picture is that fears of Kennedy dismantling the U.S. drug ecosystem might be overblown. His vaccine skepticism and embrace of fringe theories have called the scientific credibility of HHS under his leadership into question and hurt vaccine-focused companies. But at this stage, his subordinates don't appear to be out to undermine innovation. Just on Friday, the FDA approved Regeneron's Dupixent for chronic spontaneous urticaria, a severe skin condition.

"I think you might hear some noise at the high policy level, but I'm hopeful that at the actual day-to-day decision-making level, agency experts will continue trying to get safe and effective drugs out there," Leonard Schleifer, Regeneron's co-founder and longtime chief executive, said in an interview. Schleifer added that Makary needed to surround himself with experienced, knowledgeable people if he wanted to support innovation effectively.

For now, Makary is signaling that he intends to do just that.

"A lot of very smart people are applying for that job," he said, referencing the biologics and vaccines position vacated by the exit of Marks. Makary also indicated that he would stick to or even step up efforts to more quickly approve drugs for rare diseases. In cases where placebo-controlled trials are impractical, he suggested drugs could be granted conditional approval, with patients monitored closely afterward. That isn't very different from what Marks was doing during the Biden administration when he overruled FDA staff to approve a therapy for a rare muscular disease.

The Trump administration is also sending positive signals when it comes to how it plans to negotiate certain Medicare drug prices with pharmaceutical companies. While the pharma industry is awaiting new developments on the tariff front, it caught a break with an executive order last week that seeks to correct what the industry calls the "pill penalty" in the drug-price negotiation program, which was embedded in the Biden administration's Inflation Reduction Act. The program now allows pills to become eligible for negotiations sooner than injections. Since the law's passage in 2022, the industry has pushed to address the eligibility requirements, which it says discourage development of pills. The order directs Kennedy to work with Congress to modify it so pills and injected drugs are treated equally.

There is still plenty for investors to worry about -- from tariffs to vaccine skepticism -- but the Trump administration is clearly trying to telegraph that it isn't out to kill biotech innovation. For now, that is a win for investors.

Write to David Wainer at david.wainer@wsj.com

(END) Dow Jones Newswires

April 22, 2025 05:30 ET (09:30 GMT)

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