The U.S. Senate voted Thursday to put Robert F. Kennedy Jr. in charge of health in the U.S.
Kennedy, also called RFK Jr., is a known vaccine skeptic who has pumped up the benefits of psychedelic treatments in some mental health conditions. After the 52-48 vote, he will head up the Department of Health and Human Services, the agency in charge of the Food and Drug Administration, the Centers for Disease Control and Prevention, and the National Institutes of Health.
His long-term impact on biotech stocks remains to be seen. Biotech shares have largely trended lower since President Donald Trump announced his plan to appoint RFK Jr. to the HHS secretary role in November. But they were moved marginally higher Thursday.
RBC Capital Markets analyst Brian Abrahams expected Kennedy to clinch the role. Republicans have a narrow majority in the Senate. Every Republican, with the exception of Mitch McConnell, representing Kentucky, voted in favor of confirming Kennedy. All 45 Democrats and both independents — Bernie Sanders, of Vermont, and Angus King, of Maine — voted against the confirmation.
"Key areas of possible change in the next several years may include vaccine use and development, U.S. drug pricing power, patent life and [direct-to-consumer] advertising, drug development in chronic diseases, and use of pharmacological interventions in mental health disorders, though the psychedelic space might receive greater recognition," Abrahams said in a recent report.
But much is still unclear. Is RFK Jr. "an unpredictable renegade inclined to upend the U.S. healthcare system," or "an agent to carry out Trump's agenda?" Abrahams asked.
RFK Jr. And Vaccines
The Senate Finance Committee this month voted 14-13 to support Kennedy's nomination. Sen. Bill Cassidy, the committee's chair and a physician, had previously expressed concern with RFK Jr.'s views on vaccines. But Cassidy flipped his stance in the vote.
"I've had very intense conversations with Bobby and the White House over the weekend and even this morning," Cassidy said in a Feb. 4 post on the social media platform X. He thanked Vice President JD Vance for his "honest counsel."
Leerink Partners analyst David Risinger said there appear to be "encouraging potential vaccine guardrails on RFK Jr."
Kennedy will maintain the Advisory Committee on Immunization Practices, a CDC office that makes vaccine recommendations, and messaging on vaccine benefits. He has also promised not to enact any parallel vaccine safety monitoring systems and will adhere to existing review processes. Further, RFK Jr. and Cassidy will keep a close working relationship, and Kennedy agreed to seek congressional input on any vaccine policy changes.
Sen. Thom Tillis, R-N.C. has said his only "real problem" will be if RFK Jr. takes an issue with the safety of proven vaccines. He noted that Kennedy said he will allow scientists at CDC, NIH, the Biomedical Advanced Research and Development Authority and other agencies to work independently.
Still, vaccine stocks have taken a header since RFK Jr.'s nomination and the Senate Finance Committee vote. Mizuho Securities analyst Salim Syed notes Vaxcyte stock has fallen from about 120 to 80 a share from November to January. He says the move is "overblown." On Thursday, Vaxcyte stock fell almost 2%.
Fellow biotech stock Moderna has also taken it on the chin. However, Moderna shares rose more than 4% following the vote.
Kennedy Is Asking Questions
Dr. Yan Katsnelson, a cardiac surgeon and chief executive of USA Clinics Group, says there's nothing wrong with asking questions — and that's all Kennedy is doing. USA Clinics Group has more than 160 clinics nationwide.
"In medicine, many times we have a position where certain points of view went unchallenged for decades," he told Investor's Business Daily. "Even the same researchers in the beginning of their career had one theory and in the second portion of their career, they completely dismantle the same theory."
Katsnelson expects RFK Jr. to focus on chronic disease.
"We meet patients too late," he said. "He wants to meet the problem before it arrives. Make food healthier. Do what we can to prevent disease. It goes against the business of medicine. The business of medicine is to treat patients as long as possible. To produce revenue."
To accomplish this, Kennedy has testified he plans significant NIH reform. Part of that will be a "break" in funding research for infectious diseases. Instead, he would allocate funding to chronic diseases.
He also plans to designate about a fifth of the NIH budget to running studies that replicate early scientific findings he believes should be called into question, Canaccord Genuity analyst Kyle Mikson said in a report. On top of that, he plans to cut roughly 600 jobs from the 20,000 employees currently.
Psychedelics Could Get An RFK Jr. Boost
The psychedelics space could get a boost under RFK Jr. There are very few biotech stocks in that area.
Cybin Chief Executive Doug Drysdale is excited about the enthusiasm Kennedy is bringing to the table for psychedelic treatments.
"Mental health is a bipartisan issue," he told IBD.
Cybin is testing synthetic versions of the active ingredient in mushrooms and ayahuasca to treat depression and anxiety, respectively. Drysdale's first take on Kennedy's nomination was that it would be "not negative," but now he's feeling more bullish on it.
"He seems very eager to see the data and find a way to accelerate approval," Drysdale said. "Who knows what will happen? It's very encouraging to know that he is positive about these treatments."
RBC's Abrahams says this could be positive for biotech stocks Mind Medicine and Compass Pathways. Cybin stock jumped 1.4% following the vote, while Mind Medicine shares rose 1.7% and Compass stock rose nearly 2%.
All three stocks, though, trade under 10 a share. Mind Medicine stock has a strong IBD Digital Relative Strength Rating of 88, which has improved from 69 a month ago. The RS Rating is a 1-99 score of a stock's 12-month performance. Compass and Cybin, though, have poor ratings of 8 and 15, respectively.
Other Nominees Have Medical Background
Though RFK Jr. has talked a big game, it's also possible he could have a fairly muted impact on health care and biotech stocks, Leerink Partners analyst David Risinger said in a report.
Kennedy isn't a doctor. But other nominated health officials — potential FDA Commissioner Dr. Marty Makary, potential CMS head Dr. Mehmet Oz and Dr. Jay Bhattacharya, the potential NIH lead — have significant medical experience.
"It is unclear to what degree President Trump and the Republican Party want RFK Jr. to disrupt U.S. healthcare," Risinger said. "We point out that President Trump's administration has specific policy priorities related to immigration, tariffs, taxes, anti-DEI, etc. ... but healthcare is not one of them."
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
