Stifel’s Opler upbeat on FDA, says agency will overcome recent ‘potholes’

On The BioCentury Show, Tim Opler explains why FDA still ‘friendly’ to biotech, but sees challenges in biotech market

Notwithstanding the bad start the Trump administration got off to on FDA, Tim Opler is optimistic that the agency will serve drug developers well, and sees encouraging signals that the direction the agency is headed will not usher in the difficult regulatory era that many in the industry fear.

Opler, a managing director at Stifel whose biopharma market updates are widely read, spoke to The BioCentury Show about why he’s optimistic about FDA, what he sees ahead for capital markets, competition in China, and areas of innovation he’s focused on. 

Opler said the administration got off on “not a good foot” with the DOGE intrusion, headcount cuts and the departure of Peter Marks as director of the Center for Biologics Evaluation and Research (CBER).

Still, the early actions of newly appointed FDA Commissioner Marty Makary have been encouraging, he said.

Makary, said Opler, has advocated in his writings for listening more closely to critics of FDA and its decisions. “I don’t think that’s an unhealthy view,” said Opler. He added that since becoming commissioner, Makary has sat down with key players to ask what could be done better. “I think people at the agency, according to my friends there, have really calmed down.”

According to Opler, Makary also reached out to biotech CEOs asking for their views, and has been sending clear messages that FDA wants to expedite approvals of drugs that meet major unmet needs, especially in rare diseases. In addition to several approvals in the past five to six weeks, Opler said that from various company press releases, “you can see that FDA is being reasonably flexible on letting companies through.” 

He believes the safety standards being required look reasonable. “I view the FDA as fundamentally friendly to biotech. And yes, of course, there have been some hot potholes pounded away by those DOGE guys, but I think we will get through that.”

Opler also addressed some of the views expressed by new CBER Director Vinay Prasad, indicating he may skew toward less risk tolerance on cell and gene therapies. “[Prasad] has argued quite vehemently that we need to be careful about using PFS for approvals in oncology. I’m very sympathetic with this point of view. So if you look at the correlation ex post of PFS to overall survival, it’s not very good at all.”

He said that while there are positive signals on rare diseases, it remains to be seen what the approach to cell and gene therapies will be in common conditions. He did cite two reasons for optimism: One is that Prasad has retained Nicole Verdun in CBER leadership, “who is very, very good,” and the other is that Prasad’s private website stipulates that his past views do not necessarily represent FDA policy in any way. 

Opler also gave his outlook for the capital markets, which he said most closely resemble the bear market of 2000-01. After that recovery, which took until about 2006, the market was “fundamentally different,” he said.

One problem, he noted, is the mismatch between supply and demand, as it’s easy to start a biotech company but relatively difficult to start a fund, and this mismatch in capital supply at least partly underlies the number of companies trading at negative enterprise value.

The second problem is the “absence of generalists coming into the sector,” which reflects, in part, the increasing complexity of the biopharma products. “The sophistication required to process a gene editing story involving some cassette of a certain size is a bit challenging for the generalists. The market has really recovered at the high end — so companies like Vertex are doing well because a generalist can understand and buy that story, but it’s much more difficult to look at a Phase I specialist-target biotech.”

That may be a longer term challenge for biotech. “The nature of the stories has shifted a bit and is working against the interests of the companies in the sector,” said Opler.

He noted that the uncertainty created by the Trump administration will also make it harder for generalists to jump in. “People have no idea what’s actually going to happen in the sector. The effect of that is that limited partners in these specialist funds, which tend to be organized as hedge funds — not mutual funds — want to stay away.” 

He added, “These hedge funds, capital’s flowing out right now. They want to get money in, this is the time to be buying, but the LPs are looking at what’s going on in the macro sense saying, I don’t know if I want to allocate to this.”

Specialist funds that are organized as mutual funds, such as Fidelity and Janus Henderson, have done better because they have more stable bases of capital, said Opler. 

Opler also talked about the impact of China innovation on the sector, and three areas of innovation where he sees big potential: aging, women’s health and the brain.