By David Wainer
Finding out you're sick is hard enough. Finding out you have a disease shared by less than 1% of the population with no established treatment is something else entirely.
Rare disease breaks the traditional math of drug development. Companies can't run a 10,000-patient trial when only a few thousand patients exist worldwide. One way to get those treatments to patients sooner are accelerated approvals: a Food and Drug Administration review process that clears drugs based on early biological signals, instead of waiting years for definitive proof that they improve real-world outcomes.
That framework seemed poised to expand under President Trump. FDA Commissioner Marty Makary has been beating the drum for greater regulatory flexibility. He made the case again just a week ago in The Wall Street Journal, citing the example of the first-ever personalized gene-editing therapy that helped save Baby KJ, an infant born with a rare metabolic disease.
Yet whatever the top brass says, recent FDA actions tell a more complicated story. The accelerated approval pathway isn't closed, but it has become narrower and far harder to predict.
The FDA has recently issued a string of high-profile rejections, including Regenxbio's gene therapy for Hunter Syndrome and Disc Medicine's treatment for a blood disorder that makes patients sensitive to sunlight. In some cases, the agency appeared to reverse its own guidelines provided to these companies. The collective pattern is unmistakable to investors: In 2025, the FDA greenlighted only nine accelerated approvals, down from 20 in 2024 during the final year of the Biden administration, according to RBC Capital Markets.
The biotech industry has broadly been on the upswing, with the SPDR S&P Biotech ETF up 43% in the past 12 months, but many rare disease names are facing a measurably higher bar from investors. There's uniQure, for instance. The gene-therapy developer recently had its Huntington's therapy -- a one-time injection delivered directly into the brain -- denied accelerated approval in what the company called a dramatic reversal of guidance from the FDA. On Monday, uniQure said the FDA told it that early studies weren't sufficient and that approval would require a large late-stage trial in which some patients undergo a sham procedure so outcomes can be directly compared. Its stock plunged 33% on Monday.
Much of the tension centers on Vinay Prasad, the head of the FDA's Center for Biologics Evaluation and Research (CBER). A longtime academic critic of the agency, Prasad built his reputation through books and articles that challenged the pharmaceutical industry -- some of which have specifically argued the accelerated approval process has grown too lenient. With Prasad now installed in a key leadership role, the agency has undergone a visible retreat from the "regulatory flexibility" that prior leadership once promised.
For investors, the signal is becoming increasingly clear: Steer clear of the gray areas. "If you're investing in small data sets and relying on surrogate endpoints, the risk has simply become too high," says Simos Simeonidis, managing partner and co-founder of Kos Biotechnology Partners, an investment fund.
Some criticisms of the accelerated approval pathway aren't unfounded. Forged during the HIV crisis, it was built for speed, but some companies exploit it by failing to complete required follow-up studies. Drugs that don't work often stay on the market, and some should never have been approved at all.
"The answer isn't to shut the door," says Anna Kaltenboeck, president of Verdant Research, who helped draft drug-pricing laws under the Biden administration. "It's to hold companies accountable." Retroactively changing the rules midtrial or later, she argues, creates instability not just for pharma, but for the patients waiting on these treatments.
Uncertainty can give rise to opportunity for brave investors. For instance, a recent FDA refusal to review Moderna's application to sell a new seasonal flu vaccine initially sent the stock down. But after a White House intervention last month led the FDA to reverse course, Moderna's stock went on a tear. It is now up more than 70% this year. The lesson wasn't just about vaccines -- it was about how policy risk, once priced in, can unwind abruptly.
Rare disease attracts far less political attention, but the same dynamic applies. As Jared Holz of Mizuho notes, the current environment can produce some discounts driven by regulatory uncertainty rather than deteriorating science. He cites the case of Replimune, whose stock plunged on regulatory pushback but later recovered after the company addressed the FDA's concerns. Or take the case of Capricor Therapeutics, which is developing a cell therapy for Duchenne muscular dystrophy. The stock plunged after the FDA initially rejected it in mid-2025. But later in the year the stock soared after the company released positive data from a more advanced clinical trial.
Some investors are also watching whether Prasad remains in his current role. He already left and returned last year, and the Journal has reported on internal complaints involving him.
Biotech has been on a tear over the past year. But the fracas over rare diseases shows that political risk is still very real for the sector.
Write to David Wainer at david.wainer@wsj.com
(END) Dow Jones Newswires
March 03, 2026 05:30 ET (10:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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