Sarepta Therapeutics (NASDAQ: SRPT) and other cell and gene therapy (CGT) developers, battered in recent months by clinical, regulatory, and/or commercial setbacks, will likely benefit from the sudden departure of Vinayak (Vinay) Prasad, MD, as director of the FDA’s Center for Biologics Evaluation and Research (CBER), five analysts have told investors in recent days.
Prasad—who took on additional roles as the FDA’s chief medical and scientific officer—succeeded Peter Marks, MD, who suddenly tendered his resignation after clashing over vaccine policy with Robert F. Kennedy Jr., Secretary for the Department of Health and Human Services (HHS), which oversees the FDA.
Prasad’s appointment was announced on May 6. His brief, less than three-month tenure at CBER was marked most dramatically by the agency confronting Sarepta over patient deaths tied to its marketed Duchenne muscular dystrophy (DMD) gene therapy Elevidys® (delandistrogene moxeparvovec-rokl)—a conflict from which the company and agency have pulled back.
“The controversy around a neuromuscular gene therapy, SRPT’s Elevidys for Duchenne
muscular dystrophy (DMD) most likely led to this development,” John Newman, PhD, a senior biotechnology analyst with Canaccord Genuity, wrote in a research note on Prasad’s FDA exit.
Prasad previously criticized the FDA’s approval of Elevidys, which Marks championed by overriding staff reviewers twice to grant the DMD gene therapy an initial accelerated approval in 2023, followed by expanded approval last year. The criticism reflected Prasad‘s more conservative approach than Marks’ to evaluating drug approval applications—for example, randomized controlled trials (RCTs) with clinically meaningful rather than surrogate endpoints.
Yet during a June 5 roundtable meeting with cell and gene therapy (CGT) leaders and officials, including his boss, FDA Commissioner Martin A. Makary, MD, Prasad said the FDA would be flexible enough to “make available therapies at the first sign of biological efficacy.” And while noting the value of RCTs, he also expressed a desire to explore other trial designs, citing “iceberg plots” and “parachute trials.”
Decisions against CGT developers
At CBER, Prasad’s approach led to FDA decisions on applications against CGT developers that torpedoed their stocks, including:
Capricor Therapeutics (NASDAQ: CAPR)—Shares tumbled 33% from $11.40 to $7.64 on July 11 after the FDA rejected the company’s Biologics License Application (BLA) for Deramiocel, an allogeneic cardiosphere-derived cell therapy candidate for DMD, instead issuing a Complete Response Letter (CRL).
Ultragenyx Pharmaceutical (NASDAQ: RARE)—Shares nosedived 29% over two days from $41.44 to $29.51 on July 11 after the FDA issued a CRL rejecting Ultragenyx’s BLA for UX111 (ABO-102), an adeno-associated virus (AAV) gene therapy for Sanfilippo syndrome type A (MPS IIIA). The FDA requested additional information and improvements related to specific aspects of chemistry, manufacturing, and controls (CMC), citing recently completed manufacturing facility inspections.
Replimune Group (NASDAQ: REPL)—Shares plunged 76% after the agency on July 22 rejected Replimune’s BLA for RP1 (vusolimogene oderparepvec) in combination with nivolumab to treat advanced melanoma with a CRL stating that Replimune’s IGNYTE trial (NCT03767348)—data from which supported the BLA—was not considered an adequate and well-controlled clinical investigation that provides substantial evidence of effectiveness.
Prasad’s preference for overall survival as a cancer endpoint over surrogate endpoints such as progression-free survival or tumor shrinkage explains why he likely played a key role in RP1’s rejection, Wedbush analyst Robert Driscoll opined, according to several published reports.
As for Capricor, STAT reported, citing an unnamed source, that Prasad canceled a planned meeting of the Cellular, Tissue, and Gene Therapies Advisory Committee scheduled for July 30 to review the company’s application for Deramiocel because he “was skeptical about the treatment.”
The advisory committee meeting had been scheduled by Nicole Verdun, MD, super office director of CBER’s Office of Therapeutic Products (OTP), who along with her deputy Rachael Anatol, PhD, were placed on administrative leave June 18. “Long-simmering tensions over Verdun’s management style” may have also explained the action, according to the news report.
An HHS statement hinted at friction between Prasad and Verdun and Anatol: “Center directors deserve to be supported by managers who are aligned with aggressive goals to expeditiously advance therapeutics for rare diseases using the gold standard of science.”
Largely “a positive”
Evan David Seigerman, an analyst with BMO Capital Markets, wrote of Prasad’s exit in a research note: “We largely view this as a positive, as a new entrant would likely be more permissive of innovation than what we have seen to date.”
“It remains to us uncertain whether Replimune’s denial of RP1 could be or will be reconsidered with a new CBER director, but such a possibility alone will likely benefit shares,” Seigerman added.
Seigerman’s analysis proved correct Wednesday as Replimune shares more than doubled, soaring 101% from $3.75 to $7.55 on the first trading day after Prasad’s exit. Capricor shares jumped 21%, from $6.74 to $8.18, while Ultragenyx shares continued to slide, dipping about 2% from $27.66 to $27.14.
Sarepta shares also bounced back Wednesday, rising 6% from $15.83 to $16.75. The stock slid 5% the rest of the week, however, to $16.42 on Thursday and $15.91 on Friday.
“We see Dr. Prasad’s resignation as positive, as we believe he held controversial, negative views on oncology approvals, clinical study design, and other areas,” Newman commented. “Accelerated approvals in oncology may pick up in light of Dr. Prasad’s departure—a major plus for the sector; Dr. Prasad was highly critical of the pathway. His departure could allow more flexibility at FDA regarding trial design for accelerated approvals in oncology.”
Newman also predicted “clear silver linings,” as in smoother approval pathways, for drugs in development for rare neurological diseases such as amyotrophic lateral sclerosis (ALS), Huntington’s disease, and Rett syndrome, in which regulatory flexibility can be important. He holds the same optimistic forecast for drugs indicated for larger patient populations, such as Alzheimer’s disease and other forms of dementia, Parkinson’s disease, and neuropsychiatry/mental health indications, where precision targeting and/or biomarker-based strategies are gaining importance.
However, Jefferies equity analyst Andrew Tsai defended Prasad’s decision-making on CGT applications.
“Regulatory decisions have not necessarily been irrational, nor has the FDA been more dysfunctional,” Tsai wrote in a research note. “If anything, we felt Dr. Prasad thought more rationally (and conservatively) around FDA approvals, requiring sponsors to produce more supporting clinical evidence (and to take fewer ‘shortcuts’).”
“As such, events have seemed relatively more predictable under Prasad, as there was a sense of structure, framework, and merit behind CBER’s decisions (perhaps SRPT could be an exception),” Tsai continued. “In addition, CRL letters seem fairly transparent.”
Clashing with Sarepta
Most dramatically under Prasad, the FDA requested that Sarepta pause shipments of Elevidys to ambulant patients following the death of a third patient tied to the Duchenne muscular dystrophy treatment, an 8-year-old boy in Brazil. It’s a request that Sarepta initially refused on July 18 before agreeing to the agency’s wish three days later.
Then, on July 25, the FDA sided with Sarepta by recommending that the company resume shipments of Elevidys to non-ambulant patients. The FDA publicly explained its shift by citing Brazilian authorities who ruled out treatment with Elevidys as a factor in the boy’s death.
However, news reports since Prasad’s exit have painted a different picture behind the scenes, in which Prasad’s get-tough approach to Sarepta was reversed in part after DMD patient advocates got busy petitioning the FDA to end the pause via a Change.org petition that drew 896 signatures as of 5 pm ET Thursday. Advocates also wrote letters to and met with members of Congress, Pat Furlong, founder of the nonprofit group Parent Project Muscular Dystrophy, told Bloomberg News.
“The patient community is an important voice, and the FDA will continue to listen to and respond to thoughts from the community impacted by DMD,” the FDA stated in announcing the end of the pause on July 28.
That raises an important question going forward for the FDA, according to Tsai of Jefferies.
“Dr. Vinay Prasad’s sudden departure makes us wonder if the FDA is more prone to being influenced by external factors (e.g., patient advocacy groups, politics, media),” Tsai commented. “If Prasad’s departure is meaningfully tied to SRPT dynamics, then we’d argue patient advocacy groups can be a dominant force going forward.”
The influence of patient groups could reflect what four Leerink Partners analysts identified as division within the FDA.
“The recent back and forth between FDA and Sarepta underscored tension within the organization and suggests disagreement between senior members of FDA,” according to a Wednesday research note written by analysts Joseph P. Schwartz, Daina M. Graybosch, PhD, Mani Foroohar, MD, and David Risinger. “With Dr. Prasad’s time as director of CBER now over, we wonder if his departure could signal a shift toward the more permissive, patient advocacy centered ‘right to try’ wing of the MAHA movement vis-à-vis rare disease indications.”
Right-to-try laws allowing patients greater access to experimental treatments yet to be approved by the FDA have been among the priorities of supporters of President Donald Trump, who favor MAHA (Make America Healthy Again) policies like those championed by Kennedy at HHS.
Conservative leaders weigh in
Another factor was opposition to Prasad and his approach to Sarepta among conservative leaders: Sen. Ron Johnson (R-WI) told Politico he expressed concern about the FDA’s approach to Elevidys to Kennedy (who set up a call with Makary), and also texted Trump himself to alert him to the situation. Also, Rick Santorum—a former U.S. Senator from Pennsylvania turned commentator and parent advocate after his daughter Bella, now 17, was diagnosed with the rare genetic disease trisomy 18—called Trump administration officials, according to an unnamed source cited by Bloomberg.
“Our Bella is a miracle, a blessing, a joy, but like all children at times a trial. She is the heart of our family because in her simplicity, fragility, and disability, she reveals the gift God plants in all his children, His pure love,” Santorum shared on Bella’s 13th birthday.
“America First” influencer Laura Loomer posted a 642-word broadside against Prasad on X, citing several of his posts on X from 2020–2022 supporting progressive politicos such as Sen. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA), as well as Anthony S. Fauci, MD, the longtime director of the NIH’s National Institute of Allergy and Infectious Diseases (NIAID) whose oversight of the federal response to the COVID-19 pandemic proved deeply unpopular with conservatives, in part due to NIAID funding during his tenure of “gain of function” research by the EcoHealth Alliance, which worked closely with the Wuhan Institute of Virology to transport infected bats from caves to Wuhan for study. The Trump administration declared the institute in April as the source of COVID-19.
“Vinay Prasad is a trojan horse in Trump’s FDA. It’s my recommendation that he be FIRED from the Trump admin,” Loomer concluded.
Prasad and HHS took the proverbial high road in a statement. “Dr. Prasad did not want to be a distraction to the great work of the FDA in the Trump administration and has decided to return to California and spend more time with his family,” HHS stated, adding: “We thank him for his service and the many important reforms he was able to achieve in his time at FDA.”
Makary has named George Tidmarsh, MD, PhD, director of the FDA’s Center for Drug Evaluation and Research (CDER), as interim director of CBER. Tidmarsh—named by Makary to run CDER just last week—joined the FDA from Stanford University School of Medicine, where he was an adjunct professor, pediatrics and neonatology.
Tidmarsh was also the founding co-director of Stanford’s Master of Translational Research and Applied Medicine (M-TRAM) program, led clinical development of seven FDA-approved drugs, and was founder and CEO of several biopharmas—including Horizon Therapeutics, which Amgen acquired for $27.8 billion in a deal completed in 2023.
Tsai of Jefferies sees continuity in Tidmark’s new role: “Similar to Dr. Prasad, Dr. Tidmarsh has also been quite vocal against Dr. Peter Marks, citing Elevidys (DMD) and [controversial and since-halted Biogen Alzheimer’s disease treatment] Aduhelm as examples.”
Leaders and laggards
Celcuity (NASDAQ: CELC) shares nearly tripled, skyrocketing 193% over three days, after the company announced positive topline results from the PIK3CA wild-type cohort of the Phase III VIKTORIA-1 trial (NCT05501886) showing the combination of gedatolisib, fulvestrant, and palbociclib lowered the risk of disease progression or death by 76% vs. fulvestrant alone, with a median progression free survival of 9.3 months vs. 2.0 months. Shares zoomed from $13.77 to $36.79 on July 28, then continued climbing to $38.50 the following day, and to $40.30 on Wednesday. The gedatolisib-fulvestrant combination reduced the risk of progression or death by 67% vs. fulvestrant alone (7.4 months vs. 2.0 months). VIKTORIA-1 is designed to assess gedatolisib plus fulvestrant, with and without palbociclib, vs. fulvestrant alone in adults with hormone receptor-positive, HER2-negative, PIK3CA wild-type, locally advanced or metastatic breast cancer, following progression on, or after, treatment with a CDK4/6 inhibitor and an aromatase inhibitor.
Merck & Co. (NYSE: MRK) shares dropped 7% between Tuesday and Thursday, after Merck announced plans to cut $3 billion in annual expenses through an “optimization initiative” that includes eliminating “administrative, sales and R&D positions”—6,000 jobs, 8% of its global workforce, Merck later disclosed. Merck tweaked its 2025 sales guidance to investors from a range of $64.1 billion–$65.6 billion to $64.3 billion–$65.3 billion, and its non-GAAP earnings per share guidance from $8.82–$8.97 to $8.87–$8.97. On Thursday, Merck was one of 17 biopharma giants to which President Donald Trump wrote letters requesting they lower Medicaid drug prices and promise not to sell drugs at lower-than-U.S. prices. Trump’s letter also called for enabling drugmakers to sell treatments directly to patients and raising drug prices internationally as long as the revenues go toward lowering U.S. prices. Shares tumbled from $84.06 to $82.63 Tuesday, skidding to $81.75 on Wednesday and $78.12 Thursday, before rebounding 1.5% to $79.29.
Novo Nordisk (NASDAQ Copenhagen: NOVO-B and NYSE: NVO) shares nosedived nearly 32% over four days after the longtime sales leader in GLP-1 diabetes and obesity treatments cut its full-year 2025 sales and operating profit guidance to investors. Sales are now expected to grow 8–14%, compared with the 13–21% previously forecast, while operating profit is now projected to rise 10–16% vs. 16–24%, all at constant exchange rates. Novo Nordisk announced the guidance reduction along with the appointment of Maziar Mike Doustdar as its new president and CEO, effective August 7, succeeding Lars Fruergaard Jørgensen, who unexpectedly stepped down in May. Doudstar joined Novo Nordisk in 1992 as an office clerk in Vienna and is now executive vice president, international operations. Shares on NASDAQ Copenhagen tumbled Tuesday from DKK 451.15 ($69.99) to DKK 346.90 ($53.81), continued to slide Wednesday to an even DKK 325 ($50.42), and fell further to DKK 314.50 ($48.79) Thursday and DKK 308.80 ($47.90) Friday.
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