Biotech stocks slide as Marks resignation seen being negative for sector

Shares of several biotech and biopharma names are under pressure on Monday following the resignation of the head of the Food and Drug Administration’s Center for Biologics Evaluation and Research, Peter Marks. RBC Capital says the development is “not good for the biotech industry even beyond vaccines.” Voicing a similar opinion, BMO Capital told investors this morning that it sees the news as a “significant negative” for the biopharma and biotech sectors.

“NOT GOOD” FOR BIOTECH SECTOR: RBC Capital believes the resignation of the head of the FDA’s Center for Biologics Evaluation and Research, Peter Marks, is “not good for the biotech industry even beyond vaccines.” Marks had been a key advocate for more flexible, efficient approval processes for drugs, particularly those for orphan diseases such as gene therapies, the firm tells investors in a research note. 

Additionally, the news highlights risk of further attrition among leaders and personnel at the FDA potentially frustrated with Robert F. Kennedy Jr.’s “lack of expertise/experience, which could slow engagement with drugmakers and drug review processes,” contends RBC. The firm expects some weakness for biotech stocks “as uncertainty continues to be perpetuated.” RBC believes the companies in its coverage that could see the greatest impact include Sarepta (SPRT), Legend Biotech (LEGN), Gilead (GILD), Regeneron (REGN), Vertex Pharmaceuticals (VRTX), PTC Therapeutics (PTCT), Galapagos (GLPG), Regenxbio (RGNX), Avidity Biosciences (RNA), Dyne Therapeutics (DYN), Moderna (MRNA), Karyopharm (KPTI), MeiraGTx (MGTX), and Pacira (PCRX).

“SIGNIFICANT” NEGATIVE: BMO Capital analysts view the departure of Peter Marks from the FDA as a “significant negative” for the biopharma and biotech sectors. The FDA’s independence is “rooted in sound scientific rigor is critical for their efficient functioning,” the firm tell investors in a research note. BMO says that while it is positive on the confirmation of Marty Makary as FDA commissioner, “anti-science, politicization of FDA runs counter to the agency’s mission.” The firm believes Marks resignation “does nothing to reassure investors or provide relief.” BMO anticipates several gene editing and therapy tickers will be under pressure following Marks’ resignation, namely Beam Therapeutics (BEAM), Crispr Therapeutics (CRSP), Precision BioSciences (DTIL), 4D Molecular (FDMT), Metagenomi (MGX), Neurogene (NGNE), Intellia Therapeutics (NTLA), Prime Medicine (PRME), Rocket Pharmaceuticals (RCKT), Taysha Gene Therapies (TSHA), and Verve Therapeutics (VERV).

PRICE ACTION: In morning trading, shares of Sarepta have dropped almost 9%, Legend Biotech and Precision BioSciences have slipped over 5%, PTC Therapeutics, Intellia and Regenxbio have slid more than 11%, Avidity Biosciences has dropped about 6%, Dyne has slid more than 12%, Moderna and Beam have slipped 13%, MeiraGTx and Prime Medicine have dropped about 7%, Crispr, Verve and 4D Molecular have slid 8%, Neurogene and Rocket have slipped over 14%, and Taysha Gene has plunged about 34%.