Welcome back to the Business of Biotech. I'm your host, Ben Comer, Chief Editor at Life Science Leader. And today I'm thrilled to have a Business of Biotech MVP and longtime friend of the show, Allan Shaw, back for a new conversation on risk in the form of unpredictable FDA decision- making. Allan is a five-time public company CFO and a seven-time public company board member, and is currently an independent director at Evecxia Therapeutics and Calci Medica. We'll talk about current perceptions of the FDA and how it's working, uh, what implications uh new agency risks and politicization have for biotech investor behaviors, capital allocation, public markets and deal making, and more. We'll get Allan's expert advice on managing and navigating those risks as a biotech leader as well. It's great to have you back on the show, Allan.
Allan ShawUh, thanks, Ben. Always great to be here and uh glad we can get together again.
Ben ComerMe too. Me too.
I I thought maybe we could start off with uh identifying what some of these risks are. Uh, we know that drug development is a risky endeavor. Uh in any circumstance, in the best of circumstance, unpredictability at the FDA or or even the perception of unpredictability only heightens that risk. So um what what new risks are surfacing in the in the current FDA administration? Um, what are companies and investors concerned about?
Allan ShawYou know, I guess the easiest thing to say is that it's the FDA is now part of the dialogue when you're evaluating a company's risk profile. You know, it was certainly something that you always had to consider, but I would say it's certainly much more elevated, potentially, and also depending on what the company's actually doing, uh its novelness, uh, etc. You know, but setting aside the broader political dynamics and the talent attrition from the FDA, the central concern that I'm hearing from everybody I'm observing uh in real time as companies are are uh addressing this is the erode is is um the erosion of institutional knowledge there at the FDA and the growing gap. And I think this is the one I would underline and and put exclamation points, is the gap between the FDA what the FDA is saying and signaling and what it's actually doing. It's almost akin to the you know, the head and the hands aren't necessarily aligned right now. And that disconnect is showing up as reduced predic predictability and perceived inconsistency in decision making, effectively, you know, flip-flopping. Um, for companies and investors that translates directionally into risk. When regulatory expectations are not clear or shift during development, it complicates the trial design, it increases the likelihood of delays or additional studies, and ultimately raises the cost of capital. You know, when you make decisions and you embark on these development programs, you know, you're doing them with five, ten-year time horizons. You know, it's not so easy to pivot. And you know, and particularly when you when you when you when you you have had prior discussions with the FDA, you know, you would hope that the guidance that you got from the institution withstands the change in personnel due to political appointments. And and we're not seeing that.
Yeah, I and that I want to add, Alan, you you know, you've worked in the industry for a long time through uh a number of different FDA administrations. Is it are you sensing a kind of different? And you know, the FDA has leaned uh more liberal or more conservative uh in the context of you know making drug approval decisions over many years. Um, is it does it strike you as a difference in kind right now with this FDA? Uh, or is it something, you know, that seasoned biotech executives will sort of recognize as uh, you know, something they just need to manage as they have in the past?
Allan ShawYou know, uh, you know, I think what we're seeing is kind of viewed as a bit extreme. Yeah, and it's really undermining, you know, I think there's a reputational crisis going on at the FDA now, because there it's really introduced this level of unpredictability, this inconsistency really can impact the way people are approaching this. And I think some of the funds are actually reducing the allocation of capital to some of them. Um, you know, and I think a lot of people feel that this is hopefully a passing storm, you know, uh on a on a lot of levels. But but right now, uh a lot of people would just kind of say we don't know what's going on. But I what I would come back to is that I think some of this, and I think a lot of people are hoping for this, is that the person who is running CBER um, you Vinay Prasad, you know, that his influence, he unduly meddled and influenced a lot of these uh situations that we're seeing. And and people are hoping now that he's gonna be leaving his seat again at the end of April, um, that that will provide an impetus for change. I've also heard a lot of rumblings about RFK Jr that after the midterms that he he may be jettisoned. So, you know, so I think there's some hopefulness in that regard. And when I was talking to an investor recently, when he I asked him about FDA risk, uh and he he kind of looked at it this way he says, all the bad news is out. Wow. He says, I only see upside right now. Interesting.
Ben ComerSo the unpredictability is uh is is kind of built into the investment thesis. Is that what you're saying?
Allan ShawIt certainly impacts the investment thesis, and and you know, and if and that impacts the company's ability to execute or not. So, you know, depending on what where you sit right now, you know, going back to your question, you know, there's there's there you you have a uh let's just say that the developing drugs are not easy. And when you've got some of these dynamics in place, it it fundamentally increases the level of difficulty for those particular areas of of focus. And you know, and I I think I I heard I I heard this said uh recently that you know people have alternative investment choices. Right? There's a lot of investment choices out there. Outside of biotech. Outside of biotech, but even within biotech. You know, I mean, all right, maybe I don't want rare disease, I can do something else, you know. You know, there's really a plethora of really, really interesting companies out there. The science is amazing. And so there's an opportunity cost with any of your investments. So, you know, if you're seeing something that has elevated risk or elevated uncertainty, you know, those things kind of go hand in hand. Um you people are gonna go the other way. And I think the issue we got is that there's been a real fundamental change in the way people view regulatory risk.
I think one thing that's interesting is this perception of kind of unpredictability at the FDA uh in terms of its day-to-day functioning um by company leaders, people working in the sector, investors, against this backdrop of FDA uh really shouting from the mountaintops a number of different uh, you know, new programs to expedite drug review, uh new policies to try to um speed up various processes at the FDA. Um you know, there's a new AI initiative, there's a new voucher uh pathway. Um, you know, maybe we'll move away from uh uh, you know, two pivotal studies, even though maybe that's not always required anyway. But uh we've, you know, the agencies come out and said you you probably don't need uh more than a single pivotal study for uh for drug approval. What do you uh what do you make of that, Alan? Um, you know, the I I guess the the difference between um you know the the perception on the ground and what FDA is out there saying uh about itself.
Allan ShawThat's there's a lot to unpack though on that question. So uh let's let's try to peel the onion a little bit and and and and take the different thoughts, ideas, initiatives in context, because I think they each uh many of them provide a story. Um I I will just I guess the easiest, lowest hanging fruit, the one that I I have a particular issue is is the uh the national the commission is national priority voucher. Yeah to be that just speaks to the taking the politicalization of the FDA to a whole nother level. You know, I I recently had the benefit of hearing Rob Califf speaking, you know, and he says, you know, there's no denying that the FDA is a political function. You know, uh, you know, I was a political appointee.
Ben ComerYeah, it's an appointed role, the commissioner.
Allan ShawYeah. It's political. There's no there's no getting around it by definition. But the voucher system is taking it now beyond that. It's now giving the ability to provide uh favors and trading and and has political consequences to earn favors. You know, it's really uh there's no real criteria around it other than discretion. So that that from my perspective, uh I see no good coming out of that.
Ben ComerI mean, I think the agency, for as long as I've been covering at least, has always pushed back against the idea that single individuals in the agency were making, you know, thumbs up, thumbs down decisions uh about drugs, or that it was, you know, a very evidence-based um procedure and you know, um procedure-based, you know, uh pathway or or or organization that the agency used to make these decisions. So it's it does strike me as uh curious to have you know a voucher program that is literally the Commissioner's voucher program, a single uh a single individual.
Allan ShawNo, when I was hearing Makary speak recently on this, you know, I just had to bite
my tongue. I mean, it was uh it, you know, for all the reasons we said, you know, for but from an operational standpoint, you know, there's a lot of concern and and questions about, you know, particularly given the the attrition of people, the institutional knowledge, as I mentioned before, that's been lost, is the ability for it to really function and support the industry. And uh, and you know, if you look at drug approvals as a metric in 2025, you know, the FDA appears to be performing relatively well compared to prior periods. But that said, uh, you know, my belief is that that may actually be a lagging indicator because the the results of 25 benefited from the operational momentum of 2024 going in before all the disruption and and chaos was introduced into the function. So, you know, I I would say I would be looking at approvals in 2026 as more indicative of the implications of the productivity of the of the FDA. You know, uh I'm hearing some things are slipping, you know, a lot of you know, it's certainly not working as well as it was, but you know, I don't I'm not hearing anybody ringing the uh the firebells at this point, but but it is causing concern. And for companies, you know, I I saw a uh I read something recently about a company that got caught up on on this and had to go into become insolvent. I would have said that they should have probably planned better. Yeah, but but it's still a sad tale. Nonetheless, uh you know, at the at um at the ground level, I think the comp company leaders and investors are experiencing a more mixed picture. You know, there's still a perception of uneasy decision making, longer timelines and certain divisions, and increased unpredictability, all of which influences capital allocation and development strategy. You know, you could certainly uh, you know, in terms of pre um flexibility, you know, I I think it's I think you know, for certain disease indications, particularly new modalities where there aren't a lot of comps or in often drugs where there aren't a lot of patients where you need, you know, there's ethical issues and then there's also the ability to run a powerful study, you know, you need to use surrogates like natural history or uh other other measures to get the point across. And it doesn't seem like there's been any empathy for the patient in some of these decisions at all. They the patient centricity has come completely uh overlooked in in my in my view. And as as as a consequence, you know, it it's it's it's a problem. You know, I I do applaud the agency's modernization efforts. You know, I I think there's a lot of legacy practices uh in place, and I think the AI initiatives in conjunction with streamlining things are important as necessary steps,
particularly as the US risks losing its global uh competitiveness to regions that are operating a lot more efficiently. You know, I've I've spoken before that, you know, over 60% of first in human studies are going offshore. You know, as a business strategy, I would always are I I would certainly advocate that you know you probably want to do your first in human studies offshore. Australia offers a much more uh liberal and flexible regulatory framework. Only the only rub with Australia is that they don't have enough patience.
Ben ComerYeah.
Allan ShawUm to bet to help. You know, I think China is offering kind of a little bit of both. You know, they certainly have a a very liberal regulatory framework, and they have a lot of patience. Um, so and so you can really do things a lot quicker, a lot more efficiently. You know, it's all about time and money. And as I've said before, you know, humans translate so much better than animals. And so so, you know, that that's a that's an area that I think is is really important. And the FDA, I think, has spoken to the they've acknowledged this as a problem. Yeah, you know, and I think it's like alcoholism. You've got to acknowledge the problem before you can cure it. And so I think I think that that is a that is fundamental. You know, the I think that we need to see this translate into more action at the end of the day. And I certainly think the efforts of of trying to move away from animal studies is in the spirit of trying to do that. Um I'm just not sure whether or not the clinicians are gonna be as comfortable with dosing patients with drugs that haven't been in any sort of living organism before. Nobody wants to be killing a patient with an investigational drug. So, you know, that's gonna be something that I uh I'm not sure how that plays it out, but I've heard people speak to that and and qu and question that.
Ben ComerYeah, opinions are are definitely divided on that. I've heard uh people kind of uh on either extreme, uh, but I think you know, all of what you're talking about speaks to this modernization uh need, really, Alan. I mean, when companies are going to other regulators outside of the US for early clinical studies, I mean, that's uh that's the best sign that I I know of that you know something needs to change if if the US FDA is gonna, you know, maintain its league global leadership in terms of uh drug approvals.
Uh and and you do you think that uh this AI initiative, you know, is that real? Is that something that could, you know, help modernize the FDA uh to an extent that you know it starts to bring people back into quicker INDs or you know, getting trials started faster? Uh I mean, what's your what's your take on that?
Allan ShawI I I think it it I think at a high level, yes, it should be very helpful. I think we need to, I mean, certainly with the workflow, the paperwork, you know, I think there's a lot of back office and a lot of inefficiency that that that can certainly compress. Um, I think also folks can get information a lot easier and be a lot more informed than they've ever been before. So I think there are there are opportunities, you know, and you know, are you gonna get into the are you gonna get away from human reviewers? Probably not, but you probably can leverage a lot of the a lot of the mechanical stuff to AI and then leave it for, you know, somebody to wrap up the review after all the analytics and analysis have been done and the benchmarking and all the things that they would do internally. So I think that that can be streamed up. Um, you know, it's uh this this seems to me that this is a classical management consulting exercise of you know bringing people in and looking at the processes, going back to my earlier point, seeing because you need to know how things are done. And if you got nobody there to tell you how things got done, it's gonna be a little hard to figure out how you optimize that. So that you know, that's why I kind of referenced earlier that I feel like it's being done a little half-assed backwards. But, you know, there's a lot of inefficiency here, you know. I mean, you've I've said this before, and I'll say it again. You know, I when I was earlier in my career, I used to sit people down and I tell them, why did the order to cross the road? And they look at me dumbfounded, like, what's wrong with this guy? But the answer was because they did it last year. And and and you know, that really speaks to you know how night follows day, and we need to move from that paradigm. You know, somebody recently mentioned that, you know, it's ironic, but the FDA is a late, uh, late innovator. You know, it doesn't embrace change very well, it's very bureaucratic. Right. And and so with that bureaucracy, the idea of streamlining it makes sense. I think it's just about how how you streamline it and how do you make it efficient. And what may have made sense, you know, uh 50 years ago may not necessarily still make sense. Um, and certainly, you know, I think on animals, we got to just focus on what's necessary from a safety vantage point, uh and and whether or not you can reduce it, whether you can replace it. Uh those are all constructive things for us to be working at and sorting through. You know, I think the way we approach clinical, I I think, you know, where I think AI can be really interesting is trying to figure out how we do clinical studies a lot more efficiently. You know, I I think, you know, the phase one, phase two, phase three, is that really the way we should be developing drugs anymore? Should we just be breaking it down in a different approach? Um so there's a lot, there's a lot to be said, and I think you know, there's a lot that we can do and we need to do because we are losing it. And you know, before the FDA was arguably an enabler of drug development, right now I would say they're almost sitting on the back end of just the proving things as opposed to enabling things. And as I said, drug development is very, very um complicated. Uh I would also be, you know, in terms of some of your earlier uh your earlier question, I would also be very cautious about over-interpreting some of the public messaging. You know, particularly around reducing pivotal study requirements. You know, the FDA actually does not universally require two phase three studies. You know, the legal standard is substantial evidence, which has generally historically been interpreted as an a as two adequate well-controlled studies, uh, i.e. phase two and phase three.
Ben ComerUm so they have and they so you know not necessarily a confirmatory pivotal trial in phase three.
Allan ShawExactly. So I kind of feel that that comment is full full of a bit of uh a lot of empty calories in that. You know, while while while the rhetoric suggests acceleration, the day-to-day reality still feels much more measured and and in many cases uncertain from really from both from investors, operators, uh, as well as advocacy groups.
Um Yeah, well, let me pick up on advocacy groups. You mentioned rare diseases, uh, and there's been you know some some coverage. I know the New York Times ran an article uh in March uh that kind of laid out the stories of uh recent FDA experiences. Experiences at Unicure, uh, at Ultragenics, at RegenX Bio. Um, so there that and it there was a sense, at least from the company side, that there was some moving of the goalposts there. Um, but what you know what so so or can we say that the rare disease category is one that's uh more risky, I guess, at this point than maybe some um some other development areas, other uh therapeutic areas or or modalities?
Allan ShawUh, it's an interesting uh question. And I definitely think that there are definitely areas that are now perceived as high risk. As you indicated, rare disease and gene therapy are probably at the top of that, my from my perspective. You know, uh uh on the rare disease side, the historical model, small data sets, high unmet need, and a bit more regulatory flexibility feels like it's tightening a little bit, which is kind of ironic because you know, I've actually written articles for the life science leader talking about that you know, the rare disease model was so capital efficient. Yeah.
Ben ComerUm and and and I think that really led to uh a proliferation of rare disease development, which was a lot of new medicines for those patients that had no, you know, not nothing, nothing to choose from.
Allan ShawNo, i exactly. And there's been a lot of initiatives put in place to facilitate that. That didn't exactly happen by accident, yeah.
Ben ComerThe Orphan Drug Act as a major, you know, driver, of course.
Allan ShawNo, it exactly. Um, so you know, the FDA is the FDA is asking harder questions now. You know, uh it certainly uh and it goes back to what we said about Pasad. You know, uh, you know, Passad had a different view, and he was a lot more rigorous. Uh and not to say that some of his ideas were all wrong, but I think it comes down to what we've learned growing up that it's about time and place and you know, and and judgment and and discretion. You know, if we're gonna be using discretion for vouchers, we should be using discretion for making the efficacy decisions here. Uh, which which which was not was not happening. Um so so you know, it's it's it's it's it is uh it's it's a it's a real irony of how the pendulum swang swings, you know. Um but you know, I I I I would also go on to say that because of this level of scrutiny, you know, the pendulum may be swinging back now, you know, with a new new appointment in terms of uh facade. You know, there's speculation around that even at HSS that Kennedy could be out after after the midterm elections. So, you know, that you know, as they've always said, it's the tone at the top. And you know, the the FDA has actually really been in the news a lot, right? And you know, if you really think about it, the FDA should not be heard, it should not be in the news. Um, you know, it's kind of like akin to the offensive line of a football team. You know, no one cares about them until there's a penalty on the field. Yeah, you know, they're they're they're they're not to be heard or seen, really. Just stay out of the way.
Ben ComerUm, right, do your job.
Allan ShawExactly. And you know what, you know, from what I'm saying, what and from what I'm seeing, particularly on the rare disease side, that it's not just coming from one source. You know, there's a chorus here that that that is really banging the drums. I mean, just just last week there was uh a recent letter sent to Washington to Trump, to HSS Kennedy, I think Macari was copied on it, that brought together investors, patient advocacy groups, uh, and company executives. And when you get that kind of alignment across stakeholders, it suggests something more systemic is going on uh around expectations and predictability and just focus the focus on the patient. Somehow we that that somewhere we've lost our way. You know, this is all about the patient. And it's you know, we're getting into these intellectual debates. You know, if you looked at the unicorse um debacle, you know, they actually did everything that was agreed on, and then, you know, that the FDA reneged on it actually suggested that there potentially be sham surgeries done on people who were, you know, to be on the placebo side. You know, there's been a lot of back backpedaling after that, but anyway, that that that was what came out of all of that. You know, um, and you know, that underscores why gene therapy is is also, I think, in in not in the doghouse, but it's there, it seems to be getting held to a higher standard than it may have been. Uh you know, obviously safety is front and center, long-term follow-up is critical, and the agency is clearly being a lot more cautious.
Ben ComerYeah. Do you, I mean, um, we we've talked uh about rare diseases, um, I think most of which are are not, you know, traditional small molecules. Um, where we're talking about riskiness associated with gene therapies and and new drug modalities, I think all of which are the province of Seber and Dr. Vene Prasad. Do you I mean, and and I I know that uh Dr. Prasad leaving at the end of April? Well, I don't know. Let me ask that question. Do you do you think that that's a major cause of the unpredictability uh that you know companies and investors are are seeing? I mean, is it you if you get the right person into Sebra at the end, you know, at the beginning of May, do it are are things fixed, or or is it a is it a deeper problem?
Allan ShawNo, it's it's it's a good question. And I think a lot of people are are favorably predisposed with Pisad leaving. I think the market traded up the day that was announced. Uh, I think that says it all. And and I think everyone is is encouraged by it. The question is, and I think that was a little bit of the spirit of the letter that was sent to Washington, was to get somebody in the seat that that work and work with everybody and not fight with everybody, right? I mean, that that's a fundamental perception of how the job is to be done. And it's not the fight, you know, it's about setting the right standards to facilitate drug development safely so you can bring better outcomes to patients. And and we we get lost in this uh time time time and again. You know, in terms of your question about Pasad, you know, I I I think we're encouraged. Uh, I think he, you know, going back to his influence, he certainly seemed to be at the epicenter of this. You know, I mean his fingerprints seem to be on a lot of things. You know, I don't know quite know how the sausage got made, but he he's he seemed to be having a lot of input on the recipe.
Ben ComerYeah. Uh yeah, I mean, I'm reminded of the the Moderna kind of um back and forth in February, where they weren't going to review Moderna's new flu vaccine, uh, and then six days later they were. I mean, that that strikes me as uh pretty unpredictable. Ultimately, uh Moderna got, you know, the outcome that they wanted, which was to have their flu vaccine reviewed. But I I think there was a lot of surprise, at least based on the amount of media coverage it got when when uh FDA declared that one and refused to file and whatever the first week of February.
Allan ShawYeah. I mean that I mean that that to me was really I mean, it was definitely flip-flopping. There's no that's that fits the literal definition of that. But I would also say that that was so political, right? I mean, that's really you could see the politics working out, you know. I'm not I'm not you know, this is only conjecture, but I would assume the original reason it hit hit the wall was it probably came out of HSS, and then you know, uh and then I think because of a kind of demonization of mRNA uh coming from uh from Kennedy, you know, uh he certainly hasn't been easy on that or vaccines, so the combination of both would seem to me to be right there. So I yeah, I don't think you have to be Clousseau or Colombo to connect the dots on this thing, and then I think the political heat got too hot, and you know, somebody higher than that, right? There's always somebody higher that sits on the wall, and and that's what got that done. So it really it it unsadly, while I think they got to the right answer, you know, the objectivity seemed to get lost in all this in terms of how you got there, right? You know, you got to the right answer, but you know, the way you got there leaves a lot.
Ben ComerYeah, well, I mean, speaking of RFK, I I think most Americans are not super jazzed about, you know, the the measles outbreak uh currently happening in the U.S. I mean, my my parents live in South Carolina, which is like one of the uh current epicenters of that outbreak. And uh, I know they're they're concerned about it, they're worried about it, you know, they're kind of wondering why people aren't getting vaccinated. Um, so I mean that's that's not the FDA directly, but it it is messaging coming from HHS that it is, you know, at the very least is is contributing to that phenomenon, I think.
Allan ShawOh no, to totally uh totally. You know, uh I would also say, you know, from from that perspective that when I speak to investors, they think because of the risk of the FDA has been so in so so so well documented and known and and discounted in the market, you know, they almost view that there's upside to the FDA at this point from a capital markets uh perspective.
Ben ComerUm so because it's because it's kind of hit a low uh in terms of you know like how bad it's gotten.
Allan ShawYeah, I think in some respects that you know it's priced in. I guess that's probably the easiest way to say it. It's priced into the market. So that's so if FDA outperforms, that's the upside. That's upside, that's exactly right. You know, if they don't screw things up more.
Ben ComerYeah, right.
Allan ShawYou know, it's a low it's becoming a lower bar. I I I I I I I would say. And I and going back to the measles, I guess one thing I would have added on that is that that may actually turn out to be the trigger that that that brings Kennedy down, you know. Um so maybe there's a silver lining.
Uh I wanted to ask you just about the kind of broader landscape for funding and financing uh in the context of this increased FDA risk, we'll call it. Um, is it affecting the IPO market, in your opinion, Alan? Uh or uh or the way that companies and investors are are thinking about public and private uh investing?
Allan ShawUm it's certainly impacting investing decisions uh on a broader level. You know, uh I just heard uh Rod Rod Rwong speaking recently from RTW, and he said, you know, there they have made a conscious decision to steer cash away from rare disease companies. So it it it's definitely impacting that. You know, I I would say the couple of things on on the IPL market. Uh I would certainly say the war hasn't been helping any uh in that, but the you know, I'd say the follow-on issuances are going, but I don't see people necessarily pushing new companies out the door yet. When you look at the performance of the companies that went earlier this year, the majority of them are broken issue. And so I I think it begs the question is do more people want to get into deals that there's still price discovery after you've bought the stock, right? Yeah, that's and people are losing money. And and you know, generally investors stay away from that. So I think the IPO market will come back. I think there's I I'd say the capital markets are very, very constructive right now for biopharma uh on a lot of levels, notwithstanding where interest rates are right now. I think you know people see it as from a number of different areas. It's insulated from the whole AI impact in terms of dislocation, um, what is its value proposition? You know, there's more questions and answers on that. And I think people feel a little overexposed, but they're also wanting to get a little bit more juice in their portfolio. Um I think there's a benefit of that. I think people also see you know biopharmaceuticals as somewhat defensive in a in a weaker economy and where we are. So, you know, I think we're the specialists investors are certainly carrying on and conducting themselves with a lot more vigor, a lot more confidence, um, but being very selective. You know, it's not it's not a constructive market for everybody, I'll tell you that. But it is a very constructive market, and there's money out there. And you know, I think they're looking at recapitalizations. You know, basically whether you do an IPO or you do a uh reverse merger or um, you know, you're you're you're fundamentally, you know, these are all club deals. Um, so the stocks don't really trade. So, you know, I see them recapitalizing companies as well. You know, the bar to do an IPO has become increasingly, increasingly hard.
Ben ComerYeah, you know, I um like uh a lot of others coming out of JP Morgan this year, uh was very um optimistic, uh, at least in my coverage of you know how the industry was feeling in January with respect to deals and the IPO market? Uh now a lot has happened in the months uh since JP Morgan, including, you know, a war, uh a measles outbreak, a number of other things that we don't have time to get into. Um I am curious though, what you make, and this is a little off topic, Alan, and if you haven't looked into it, that's fine. But do you what do you make of um SEC chair Paul Atkins, you know, um make uh IPOs great again campaign? I I looked into this just a little, and it looks like maybe some a little bit of you know minor kind of loosening of requirements uh to go public as a company. Um, do you see that as having any sort of material effect on whether or not you know more biotech companies will will go public later this year uh or or not? What's your thought on that?
Allan ShawUh, you know, I before before I just touched that, the other thing I would just say about the markets that are really driving that is the MA. I think MA, yeah. MA MA has been really, really uh strong. It's it made it really, I think, made the first quarter look a lot better than it would have otherwise if those deals closed on April 1st. But but not notwithstanding that, it's it's it's gotten a lot of interest. There seems to be more of them. Uh the bankers seem to be very busy on that. And I think the the point, the real takeaway point on that is I think that's going to attract the attention of generalist investors. And I think the generalist investors really have to re-engage in the market. So you have a more liquid market, and I think that'll be fundamental for the IPOs to actually work. Um and and and going back to your question, you know, you the IPOs have to work, you know, while you're while you might make it a little easier for people to get out, right? And that's really what uh the SEC chair's point is he's trying to reduce. It's like really an I guess tweaking the Small Companies Act that enabled a lot of companies to get out. And and and that was helpful. There's no question about it. But I think in terms of at least looking at it in the biotech space, you know, I don't see that making the difference. I think you what you want to be able to do is for this the price these deals reflect of that so people can make money. And and right now the deals are not working. I mean, I I would just, you know, there were a couple of really great companies that did deals, uh, did IPOs in January. And, you know, they had they they crushed it in in every metric, and they were even in very, very highly hot and regarded modalities, and they've broken issue. You know, if those deals aren't working, I don't think anything that uh Paul Atkins does is gonna necessarily make make that work better. But you know, I I think I think at the end of the day, if you can make it easier for companies to go public or have the ability to go public, you know, without increasing investor risk, I'm generally predisposed to that. But with that, with the with but specifically, when I look at the landscape, and I think we talked about this on the last episode, you know, I reckon that there was already without help, uh, there was at least 125 aspirational companies looking to go public. And, you know, what we're seeing right now is, you know, I think there were expectations earlier this year that maybe there'll be 15 to 50 IPOs. You know, maybe we'll get to 20. Uh but it, you know, again, there's there's more questions and answers right now.
Ben ComerIf you're a single candidate rare disease company trying to go public, you might have second thoughts at this point, right?
Allan ShawYou I think, you know, I think that, you know, that clarity, you know, it could I I look at it as maybe this is a little bit of a storm cloud right now. And, you know, depending on the uh the success of the facade and and and the tone from the top, you know, I I think we can get this thing back to where it needs to be. And I might argue that the pendulum never stops in the middle, and that you know that now kind of rare diseases may be the place to go. Um because it's so debunked and people are so aware of what needs to be done. Um, so that that's gonna be if you ask me for a position, I think rare rare diseases will will be it'll become easier at the FDA as opposed to harder. I think I think they got the memo. They literally got the memo. Yeah, yeah, they got the letter, right? Exactly. Exactly.
Yeah, well, uh that leads me into uh a somewhat philosophical question I wanted to ask you, Alan, which is how can the politics uh the politicization genie get put back into the bottle, you know, regarding FDA decision making? We've already talked about the fact that the commissioner uh as well as the heads of of Cedar and Seber, they're they're political appointees at the end of the day. We're you know, we're gonna find out uh who's gonna um follow as the lead of of Seber. Uh the the midterms are coming uh in November. We know that, and that could, you know, have an impact. But um how do you kind of lower the temperature, do you think, uh um, in terms of the the the perception or the reality of of politicization um at the FDA?
Allan ShawUm you know, I I gotta go to my Magic Eight ball for this, but I I I I I would tell you that you need to kind of it starts at the top. So, you know, I I think the tone has really been set at HSS for what we're seeing on a on a lot of levels, and and we're seeing it at the CDC, we're seeing it, you know, there's a cascade, you know, at the top of this, uh top of this. Uh uh, so I I think really changing seats is gonna be just as I I voice some optimism for the success of the facade, uh, I'm voicing optimism that there'll be a success for RFK. And uh it'll be interesting to see how Macari operates uh in that environment. But I I think Macari give him credit for being very external, and he's done a he's done a good job and and way of communicating.
Ben ComerHe's all over the place for sure. I see him uh you know at different events and stuff on LinkedIn like almost almost daily. So he he's definitely out there talking to people.
Allan ShawHe he is, and I guess I remember earlier in my career that when you're always in meetings, I always wondered how things got done.
Ben ComerYeah, right.
Allan ShawYeah. And and I guess that's my observation here.
Ben ComerOkay.
Allan ShawUh well, I would say to debunk the politicalization, I would certainly also disband those uh those discretionary vouchers. Those things reek of politicalization.
Ben ComerYeah, I mean, we won't speculate about what kind of like backroom deals go into the the selection of those vouchers. We will not speculate about that, but it just it just uh from the outside, I mean, man, it just looks so ripe uh uh for some, you know, for some give and take to to make that make that voucher list. Uh I'm not suggesting. There is, of course, but um man, it's uh when a single person, uh the program is named after him, uh, can make a determination like that. Could they could really make or break uh a company uh and and a and a drug, um, that's um that's something.
Allan ShawNo, no, that so you know I think you got to do a few things, right? But I, you know, I think start at the top, but the stuff that's really explicitly political, you know, let's let's get let's try to tap that down. Yeah. I mean, I think those would be good starts. I'd be thrilled with that.
We're uh we're coming up on the end of our time here, Alan, but I I can't let you go before asking uh what advice you might give to biotech leaders who are looking at all of this, hearing these things we're talking about, and uh want to be successful at navigating these risks, keeping their companies funded uh in this current environment. What would you say to them?
Allan ShawPutting aside a really good therapist and a stiff drink, uh I I would I think this is again easier said than done. But you know, we we we talked about the FDA, but you know, the industry has a lot of uh industrial jeopardies. And you know, I I think the FDA is just a good example, is that to the extent of your ability, you want to try to manage those variables as opposed to having those variables manage you. And I think if you can proactively, you know, you can't do it all. And some of these things you may be helpless. But let's look at the FDA even. You know, it's about I think you got to really have a very strong dialogue with them. And if they don't have the resources, that's a problem. But I I I think you do need to manage your situation as opposed to your situation managing you.
Ben ComerYeah, right. Well, uh, Alan, thank you so much for coming back on the show. It's always a pleasure speaking with you.
Allan ShawNo, that thanks a lot, Ben. It's uh I've I've I've been enjoying this uh since you guys kicked off the podcast, and I uh I look forward to doing it again.
Ben ComerMe too. Me too. We'll have you back soon. Uh, we've been talking to Alan Shaw,
an experienced public company CFO and board member, and currently an independent director at Agvexia Therapeutics and Calcy Medica. I'm Ben Comer, and you've just listened to the Business of Biotech. Find us and subscribe anywhere you listen to podcasts, and be sure to check out our weekly video cast of these conversations every Monday under the Business of Biotech tab at lifescience leader.com. We'll see you next week, and thanks as always for listening.