Modern Communication Between FDA, Biotech, and Investors: Q&A with David Crean

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: How are pharma companies adjusting strategies for changing FDA dynamics?
David Crean: FDA is certainly moving very fast. They want to move fast AND harder on some of the assets that it likes, while slowing down certain areas that they don't like. And so, the variance has gone up.

The issue is with predictability. You see so many changes going on at the agency, whether that's at Cedar or CBER. What biotech is having to think about the need to adjust regulatory strategies in response to either the staffing changes, uncertainty, or even delays at FDA.

Companies are pushing for written confirmation of their type B, type C, or special protocol assessment outcomes. You got to get this verbal alignment, and that's certainly very important.

Also, on the on the investor sponsor side, organizations are building redundancy. They're going to Europe or Asia Pacific to have backup plans, because if there's any US pathway slip that that creates more deals or uncertainty.

Lastly, looking at deal structures, whether that's with investors or partnering, you're seeing some more contingent value rights being baked into deal structures.

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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.

Pharmaceutical Executive: How would the industry rate FDA communication and engagement?
David Crean: I would say it's very mixed. I think their ideas going forward are well intended, but it's they're poorly executed, if you will. It's tough when you start eliminating a lot of people, a lot of institutional knowledge at the agency, whether it's at Cedar or CBER or even CDRH and other health and human service organizations.

From the industry perspective, what I see as an operator is that we're really trying to get a better handle on communication and getting in earlier. For example, if I was an early stage biotech company, I'd be utilizing free INDs and earlier communications with FDA to try and get regulatory commitment and guidance. I’d do this as opposed to waiting until later on, like a phase two, when you start to go to them and get hit with a surprise.

Well, here's what you should have known, that before you got to a phase two, you should really do it much earlier. We're trying to establish better and better communication with the agency.

Pharmaceutical Executive: How will the relationship between biotech and FDA evolve in the coming months?
David Crean: You're still going to see some continued bifurcation. We had PDUFA back in the 90s. Now we have a lot of other things that have been layered on top of that.

You have the national priority review shrinking that that period of time from about 10-to-12 months to just one to two. You have the discussion about having one phase three as a default. There are other mechanisms or pathways to accelerate assets that the FDA generally wants to accelerate.

Those are all very good. I certainly think the execution part still needs to be looked at to make sure that investors and companies understand which lane is going on.

Secondly, with so much going on with AI, it's a little bit of bifurcation. You have AI being done at FDA, with Elsa looking at things, but they're a little bit behind in terms of how they're giving guidance to industry.

There's this gap in the marketplace. There’s a lot of things going on internally with AI at FDA, but externally, we're a little bit behind in terms of getting guidance from FDA and how they're going to shape the next decade of regulatory architecture in that area.