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Biopharma stocks tumble as drug supply chain risk mounts

Biotech indexes lost considerable ground during Monday’s trading session amid concerns of global supply chain disruptions due to the COVID-19 outbreak, although biotechs were generally spared the worst of the day’s losses, dipping by a slimmer percentage than indexes that measured the broader markets.

FDA and U.S. trade associations continue to express confidence in the U.S. supply chain, while the European generic trade association is asking regulators to step in to prevent shortages.

In Monday’s session, the NASDAQ Biotechnology Index (NBI) was off 2.7%, while the NASDAQ Composite was off 3.7%. The NYSE Arca Biotechnology Index (BTK) fell 2.9% and the BioCentury 100 was down 3.2%.The Dow Jones Industrial Index fell more than 1,000 points, closing down 3.6%.

FDA’s Center for Drug Evaluation and Research did not respond to specific inquiries about an Axios report that said about 150 therapies are on a list of at-risk drugs compiled by FDA, citing two undisclosed sources familiar with the list. CDER's response used similar language to a Feb. 14 statement, saying FDA is “keenly aware that the outbreak could impact the medical product supply chain, including potential disruptions to supply or shortages of critical medical products in the U.S.”

“It’s worth noting that there are no vaccines, gene therapies, or blood derivatives licensed by the FDA that are manufactured in China,” FDA wrote in both statements. “Raw materials used in manufacturing do come from China and other locations in Southeast Asia and we are in contact with biologics manufacturers to gauge any supply concerns regarding raw materials.”

The Axios report said the at-risk drugs included “antibiotics, generics and some branded drugs without alternatives”; it was not clear whether any biologics were on the list.

FDA Commissioner Stephen Hahn had said on Feb. 7 that the agency had “received no reports from manufacturers of disruptions to the pharmaceutical supply chain” up to that point (see “Outbreak Has Not Disrupted Supplies”).

Call for EU regulators to act

In a Feb. 18 letter, Medicines for Europe urged EMA regulators to take specific steps to mitigate vulnerabilities to supply chains.

“China is by far the leading supplier of API or key intermediates (i.e. in a near global monopoly situation) for certain essential medicines such as pain killers or anti-infectives,” the group wrote. “In addition, Chinese manufacturers are large producers of ingredients for almost all medicines so a major production blockage could impact global production across most therapeutic areas.”

The group said there is “limited immediate risk” to European production or supplies at this time, but warned that the situation could worsen.

“The scarcity generated by the interruption of Chinese ingredient production and exports could hypothetically impact the price of those ingredients with a knock-on effect on the cost of goods of pharmaceutical production globally,” the letter said. “As most European countries apply some form of regulated pricing policy, often combined with price control policies such as maximum ceiling prices for tenders, there could potentially be an unsustainable market situation in the months ahead. This would affect not only manufacturers but also the distribution chain for medicines.”

The group called for cooperation between industry and regulators, including expedited reviews.

“Manufacturers will need authorisation from regulators to prevent further disruptions in the supply chain and to maintain medicines supplies. We advise that the Commission and regulatory agencies consider Medicines for Europe’s recommendations to address potential shortages -- notably the possibility for emergency variation procedures and accelerated regulatory reviews for both active ingredients and for finished products.”

In the U.S., the Association for Accessible Medicines said it had not sent a similar letter to FDA. “AAM is working closely with all stakeholders, including the U.S. government, to address the needs of patients in the United States for high-quality, FDA-approved generic and biosimilar medicines. There appear to be no current disruptions for brand-name or generic drug makers that are leveraging existing stock to cover production and distribution needs. Many pharmaceutical companies, brand and generic, have planned for potential instances of significant supply chain interruptions and do not anticipate near-term disruption.”

Gilead among gainers

A handful of biotechs with programs addressing the outbreak posted gains, contrasting the overall trend. Shares of Gilead Sciences Inc. (NASDAQ:GILD) rose $3.20 to $72.90, adding about $4 billion to the company’s market cap, after a World Health Organization official suggested its remdesivir may be the most effective treatment for COVID-19.

“There’s only one drug right now that we think may have real efficacy, and that’s remdesivir,” said Bruce Aylward, assistant director-general at WHO, speaking at a press briefing in Beijing. He said an ongoing clinical trial is “having trouble recruiting patients not just because the numbers are falling, but also because we’re doing lots of other studies with things that are less promising. And we have got to start prioritizing enrollment into those things that may save lives and save them faster. That’s a global issue.”

WHO had previously named the nucleotide analog as the most promising candidate for COVID-19 (see “Preclinical Potencies”).

Others countering the overall trend include Inovio Pharmaceuticals Inc. (NASDAQ:INO), which gained $0.22 to $3.96; and Moderna Inc. (NASDAQ:MRNA), which gained $0.36 to $18.59. Each is developing a vaccine against the virus that causes COVID-19, funded by grants from the Coalition for Epidemic Preparedness Innovations (CEPI). Moderna said Monday that it has shipped vials of mRNA-1273, an RNA-based vaccine encoding the SARS-CoV-2 spike protein, to the National Institute of Allergy and Infectious Diseases for a Phase I trial.

BioCentury Washington Editor Steve Usdin contributed to this report.

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