By Maggie Fick
LONDON (Reuters) -Some U.S. biotech companies are considering moving early-stage trials of new medicines outside the United States as worry grows that layoffs and policy changes at the drugs watchdog under the Trump administration may delay regulatory reviews, executives, investors, and consultants told Reuters.
The U.S. Food and Drug Administration is seen as the global gold standard for drug regulation and companies typically seek American approval first because it provides access to the world’s most lucrative drug market.
But mass layoffs, leadership exits and the restructuring of the FDA under President Donald Trump are prompting some smaller biotechs to rethink traditional pathways for bringing new medicines to market.
Reuters spoke to seven biotech executives, investors, and consultants who said that the staff departures and policy changes at the FDA had prompted some firms to consider launching trials in other international markets – such as the European Union and Australia – and engaging with regulators in those regions earlier in the drug development process.
“We know that across our companies, the discussions include whether to go ex-U.S. because of recent FDA uncertainty,” said Peter Kolchinsky, managing partner at RA Capital, a major investor in early-stage biotech firms and publicly traded companies with approximately $9 billion in assets under management.
The FDA did not respond to a request for comment. U.S. Health Secretary Robert F. Kennedy Jr. has said that the agency’s restructuring aims to streamline functions such as IT and communications, and reduce conflicts of interest among its staff and advisors.
Consultant Matthew Weinberg of ProPharma Group said his firm is fielding more inquiries from biotech companies about preparing filings with the European Medicines Agency and setting up clinical trials – a shift he attributes to growing concerns about FDA stability.
“Historically, companies went to the U.S. first. That may be changing,” he said.
It is unclear if biotech companies’ increasing engagement with the EMA marks a real shift or a tactic to pressure the FDA, given the importance of the U.S. market, a source with knowledge of the matter told Reuters.
An EMA spokesperson said it has not seen an increase in scientific advice requests or clinical trial applications, noting it would be early for any such shifts to be reflected in submissions.
NEW APPROACHES
A loss of confidence in the FDA could reshape drug development, reduce U.S. leadership in innovation, and increase costs for the struggling biotech sector, five of those interviewed said.
“What’s happening has forced all of us to discuss other approaches,” said Sabrina Martucci Johnson, CEO of Dare Bioscience, a San Diego-based women’s health biotech worth $25 million that received FDA approval in 2021 for its first product. “We are definitely looking at Europe first for certain products where the need is great and the U.S. regulatory path has become more uncertain or slower.”
Trump on Monday signed an executive order directing drugmakers to lower the prices of their medicines in line with other countries. Commenting on the executive order, Swiss drugmaker Roche on Tuesday said it is concerned that the order “will undermine the U.S.’ position as the world’s leading pharmaceutical and healthcare ecosystem.”
Some biotech executives spoke about early-stage testing on condition of anonymity to avoid drawing attention to their companies or risking retribution for criticising the Trump administration.
One biotech CEO said their company plans to seek approval from the EMA to run early-stage clinical trials of its oncology treatment in three European countries – in addition to the trial of the same treatment it launched in the U.S. last October.
The expanded European strategy will cost about $1 million in additional filings, consultants, and contract research organisation support – plus several million more to run the trials.
“We cannot just hope that things will turn around and that the cuts at the FDA will not have any impact on our business,” the executive said. “The irony of this is it goes against the grain of ‘America First’, because we are offshoring away from the U.S. over to Europe.”
SLOWER BUT STABLE
Another U.S. biotech told Reuters it opted to run two early-stage trials in Australia this month rather than in the U.S.
Although some small biotechs had already started to conduct their first in-human trials outside the U.S., particularly in Australia where it is 30% to 40% cheaper, the biotech CEO said that in their firm’s case, the decision was driven by FDA staffing cuts and uncertainty.
A third biotech CEO said at least two members of the eight-person FDA team reviewing its early-stage trial for an mRNA rare disease therapy have left. They worry this turnover could delay FDA review of trial data.
When asked about the impact of shifts at the FDA during earnings calls this month, executives from several big pharma companies including GSK, Merck & Co and Sanofi said they had so far not experienced any changes in their interactions with the regulator.
Companies typically file for regulatory approval in the U.S. first to gain access to a market worth approximately $635 billion annually.
Even a month or two delay in a regulatory step with the FDA could be existential, said the biotech CEO with the mRNA rare disease therapy.
Executives stressed they still intend to run late-stage trials in the U.S. to launch products there.
“Europe has been perceived as a little slower, but it has benefited — and is benefiting now — from being stable,” said Owen Smith, a partner at 4BIO Capital, a London-based venture capital firm that invests in early-stage biotech companies.
(Reporting by Maggie Fick; Additional reporting by Emilio Parodi in Milan; Editing by Josephine Mason and Suzanne Goldenberg)
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