What the FDA is really like from a small biotech’s perspective (hint: they’re terrifying)

I’ve been following the discussions around the FDA recently with great interest. COVID has made everyone a lot more aware of the FDA, which I think is why Scott Alexander’s recent post about the FDA prompted so much furious discussion.

I wanted to add a different voice to the mix: the voice of small biotech. When people think about who interacts with the FDA, they often think about large biotech, like Biogen and Pfizer. But, as with any industry, there are many more small players than there are large players. And, as with any industry, it is much more intimidating dealing with regulators as a small player than as a large player.

As the president of a very small, very early stage biotech company, this is a matter of personal interest to me. (Side note: if you’re interested in the mission of treating autoimmune diseases by repurposing generics, drop me a line!)

But, this is isn’t about me or my company. This is about a much larger (but still small), much later stage biotech: Axsome Therapeutics. They have a market cap that, until 3 days ago, was hovering around $2 billion, and a drug that, until 3 days ago, looked to be approved very soon for treating major depressive disorder.

What happened 3 days ago? The FDA happened. To put it bluntly, the FDA wrecked their shit.

You see, Axsome thought they were in a good place, as did the stock market. Axome had a drug, bupropion-dextromethorphan, which had done well in their phase 3 trials for major depressive disorder. The next step after that is to submit the drug for approval to the FDA, which, when there are such clear indications of improvement, is usually a layup. An annoying layup, filled with lots of paperwork, but a layup.

But that’s not what happened. Instead, the FDA sent Axsome a letter on July 30 saying that they found “deficiencies” that prevented them from moving forward with the approval. What are those deficiencies? Oh, the FDA doesn’t say. They don’t even give a hint. They just told them to hang tight until August 22.

It’s impossible to overstate how devastating a letter like that can be for a biotech. At this point, Axsome has undoubtedly sunk millions of dollars and around 9 years into this drug. Even worse, in preparation for a commercial launch, Axsome has undoubtedly hired dozens of sales people, marketers, and people who are experienced navigating the incredibly complicated landscape of insurance reimbursement. Every month that those people are on the payroll is probably at least another million burned.

The FDA, with a single letter, put all of that in jeopardy. They made Axsome’s share price halve, caused Axsome to burn at least a million dollars, and may yet bankrupt the whole company. And they did that without even saying why.

This is what it’s like for a small biotech dealing with the FDA. It’s terrifying and perpetually anger-inducing. It is hard enough to develop a drug, both scientifically and financially. Getting to the end of a phase 3 trial with positive results takes so much luck and so much hard work. For the FDA to come in at the end of that and say, “Hey, we might cancel your drug. We’re not sure yet. Talk to you in a month!”? Well, you can imagine how that feels.