What Pharma Investors Should Expect in the Current Regulatory Environment

Marty Makary is the latest key leader at HHS to leave their role over the past two years. Aside from the coming and going of important roles, the current administration also has plans to majorly overhaul FDA and the drug approval process.

As a result, the industry is struggling to keep up with the changes. Under Makary’s leadership, a number of surprising CRLs were issued. While biotech companies attempt to adjust their strategies, investors are also changing their view of the industry.

David Crean, chief business officer at MedicNova, recently spoke with Pharmaceutical Executive about the industry’s attempts to improve communication and coordination with FDA. He also addressed the issues investors are paying attention to, which are primarily related to seeking greater regulatory certainty.

Pharmaceutical Executive: What should pharma investors expect in the current regulatory environment?
David Crean: Investors would love certainty, just like on Wall Street. And right now, it's not something that you're really getting. Investors generally like to see that predictability.

What investors are doing is further due diligence, if you will. They're asking for companies to have commitments on the on the regulatory side, and this, as I mentioned just in the preliminary comments.

Regulatory uncertainty is the single most cited investor concern. Not only last year, now it's going into this year. You're seeing it in generalist investors not really coming in. Specialist investors are still there, but you also have changes or lack of a tremendous amount of IPOs going on right now.

Deal flow is certainly taking a little bit longer. Capital is there, but regulatory uncertainty is still the single biggest factor that investors are wanting to get a better understanding about.

Investors are not abandoning biotech, but they're repricing it, if you will. They're demanding greater regulatory certainty in terms of lower entry valuations, more structured deal terms, and tighter milestones.