Biotech stocks took a beating Monday after Peter Marks, a top Food and Drug Administration official, resigned rather than contend with what he described as the new health secretary's "misinformation and lies."
Analysts were not surprised by Marks' clash with Robert F. Kennedy Jr., the new secretary for Health and Human Services. Kennedy is a well-known vaccine skeptic. For 13 years, Marks led the FDA's Center for Biologics Evaluation and Research, the department in charge of reviewing and approving vaccines, genetic medicines and cell therapies.
Marks has been a key proponent for regulatory flexibility and an efficient approval pathway for drugs, especially those that treat rare conditions.
But his resignation "is not altogether shocking," RBC Capital Markets analyst Brian Abrahams said.
"Marks has been a vocal stickler for science, and RFK Jr.'s controversial views on vaccinations has become somewhat of a flashpoint, but the news is not good for the biotech industry even beyond vaccines," he said in a report. "Marks has been a key advocate for more flexible, efficient approval processes for drugs — particularly for orphan diseases."
The SPDR S&P Biotech exchange traded fund, a key barometer for the health of biotech stocks, slumped 4%, closing at 81.07.
The biggest hits came to vaccine-tied companies including Vaxcyte, Moderna and Novavax. Moderna shares fell 8.9%, while Novavax tumbled 8.4%. Vaxcyte collapsed a whopping 45.6%. Notably, Vaxcyte also reported mixed results from a study of its pneumococcal vaccine in infants.
The gene therapy space was also slammed as Sarepta Therapeutics and Crispr Therapeutics fell by 9.4% and 8%, respectively.
Uncertainty Clouds Biotech Stocks
Marks laid out his grievances in a resignation letter posted by the New York Times. He noted the work the FDA's CBER division did to accelerate the availability of Covid vaccines in 2020 vs. the ongoing measles outbreak wreaking havoc across the country.
The latter is "what happens when confidence in well-established science underlying public health and well-being is undermined," he said.
Since Kennedy's confirmation in February, there have been sweeping changes to health care in the U.S. Notably, some 3,500 positions at the FDA are on the chopping block as part of a 10,000-job cut across the Department of Health and Human Services.
Multiple reports also suggest other high-profile officials could be on their way out "imminently." Paul Kluetz and Marc Theoret, deputy directors of the Oncology Center for Excellence, are mulling their departures, William Blair analyst Matt Phipps said in a report. There are concerns that Richard Pazdur, who heads up the oncology unit, also could be leaving, he said.
Marks did have his critics, however. He was instrumental in pushing through the approvals of Sarepta's Duchenne muscular dystrophy treatments Exondys 51 and Elevidys, though staff members disagreed with the decision. He also played a role in the approval of Biogen and Eisai's Alzheimer's drug, Aduhelm. Aduhelm was ultimately a commercial flop.
Still, analysts say his departure could spark a dark time for biotech stocks.
"Given Dr. Marks' influence on the development of biologics and uncertainty as to who will replace him and how his legacy might continue, his departure will create a significant near-term overhang for the Smidcap biotech space, particularly for vaccine, gene therapy/editing, and cell therapy developers, until the residual impact is better understood," William Blair's Phipps said.
Who Will Replace Peter Marks?
His replacement will be key. Marty Makary, a pancreatic surgeon and health researcher with Johns Hopkins, was confirmed earlier this month as the new FDA commissioner. With his confirmation, "there is some hope that his influence will ensure a suitable candidate," Phipps said.
It's also possible Makary could face the same fate as Marks, Leerink Partners analyst David Risinger said in a client note. But Politico, which cited multiple FDA insiders, reported Makary knew about the plan to push out Marks before it took place. Pink Sheet, also citing insiders, said Makary was sworn in on Friday before Marks issued his resignation letter. Pink Sheet reports on the biomedical space.
The FDA website doesn't reflect when or whether Marks was sworn in.
Biotech stocks have fallen markedly since Election Day. Investor's Business Daily's 720-stock Medical-Biomed/Biotech industry group has lost more than 21% since President Donald Trump's election. At the time, Trump said he would let Kennedy "go wild on health" in the U.S.
Analysts say Marks' resignation adds another layer of uncertainty to the space.
Overall, "we expect sentiment in the space could weaken further given that Dr. Marks was a cheerleader for innovation in biotech and strong supporter of new modalities," William Blair analyst Matt Larew said in a report.
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Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
