Despite the FDA commissioner’s promises of partnership and collaboration, personnel changes and continued federal cuts create uncertainty for an industry already struggling with nearly half a decade of investment scarcity.
The backdrop of BIO 2025 was interlaced with funding, regulatory and political challenges. From multiple directions, the life sciences industry is facing crossroads to navigate. Each of these crossroads creates an increasingly problematic investing and partnering environment. Conversations, not unlike previous years, focused on the industry’s economy, but with a different twist in an industry dealing with nearly half a decade of funding scarcity. With so much to unpack, this first article addresses only a few of the complexities adding to the current investing environment.
BIO 2025 Sets the Stage for Connection and Collaboration
In a bipartisan effort, BIO 2025 hosted former federal officials, such as former President George W. Bush, White House officials and c-suite HHS officials, along with current federal and state officials such as Massachusetts Gov. Maura Healey, FDA Commissioner Marty Makary and senior executives from HHS.
In a statement to BioSpace, a BIO spokesperson said, “We recognize the administration’s goals to enable a more nimble and efficient U.S. government. Our ability to protect Americans’ health and drive medical and scientific advances relies on an ecosystem of innovator companies and government agencies. From the NIH to CDC to FDA to the private sector — it takes all of us.”
Global life sciences industry members met with not only federal and regulatory officials from the United States but also from countries around the world.
Federal Leadership’s Words and Actions Conflict
In a discussion with John Crowley, president and CEO of BIO, Makary echoed the same positive emphasis on public and private partnerships as other HHS officials in their public sessions. Makary emphasized a willingness to listen and learn.
“I want to see American drug developers thrive,” he said. “I want to see companies that do business in the United States thrive, and our job at the FDA is to be able to provide an expeditious review of data submitted to make determinations about what’s safe and effective when it comes to medical products.”
Makary discussed the cell and gene therapy (CGT) roundtable hosted by the FDA and HHS, which occurred prior to BIO 2025, highlighting his interest in the field. He made positive comments about the filmed session, which included CGT industry experts as well as, HHS Secretary Robert F. Kennedy Jr., CMS Administrator Mehmet Oz, FDA Commissioner Marty Makary, and FDA CSO, CMO and Director CBER Vinay Prasad.
Makary stated, “That was an amazing roundtable. I did not expect it to go as well as it did...so I thought, let’s convene experts in the field, academic and some folks from industry, and let’s just listen.” Makary opened the roundtable with this sentiment of listening and learning.
However, a day later, it was announced that both Nicole Verdun, director of the Office of Therapeutic Products, and Rachael Anatol, deputy director of OTP, had been placed on administrative leave. Verdun and Anatol are well-respected within the life sciences community and received accolades for modernizing the FDA’s regulatory approach to CGTs from the Alliance of Regenerative Medicine.
The announcement resulted in responses from the community that were similar to the alarmed reactions to the announcement of Peter Marks’ departure earlier this year. The continuing loss of experience and expertise through federal employee layoffs and departures appears to be in direct conflict with the words of the current administration. Such inconsistencies and the increased cuts to federal funding of science programs and academic institutions have raised significant questions.
Additionally, Makary’s session included criticism of previous administrations. He said that “in the past administrations, there’s been tremendous infighting,” suggesting that previous commissioners were less effective at coordinating efforts and had morale issues.
The Industry Sounds the Alarm
As the One Big Beautiful Bill Act approached final voting, in conjunction with the already deep cuts to HHS agencies, a flurry of open letters were sent to Congress to review the lasting harm these cuts will make to healthcare. The week after BIO, life sciences companies joined other industries by sounding the alarm with their own open letter to Congress.
Within their letter, life sciences industry leaders warned that America’s biotechnology ecosystem—described as a “vital national strategic asset”—is under unprecedented threat from both domestic policy decisions and aggressive international competition as National Institutes of Health funding faces evaluation and potential cuts. Other industry organizations and members furthered this sentiment to include America’s entire healthcare system.
However, funding cuts remain in place, and the One Big Beautiful Bill passed. And now the industry is left having to do a fundamental reassessment of how biotechnology companies operate and prepare for investment.
‘Unfundable’ Gaps
“The funding situation is far more complex and dire than what is often discussed,” observed Ali Pashazadeh, founder of Treehill Partners, in a conversation with BioSpace. “It’s now been about four-and-a-half, nearly five years, the funding hasn’t been there.” This extended drought has created a paradox where companies are being asked to take on increasingly complex challenges in an environment where there are diminished resources. The resource constraints have forced critical cuts. He continued, “When you’re on a starvation diet for five years, you start cutting down in terms of management, in terms of the IP coverage.”
Pashazadeh highlighted capability gaps as an increasingly growing problem. “If you look at probably 70% of companies...they don’t have a management team that could run a phase three, for example,” he observed. He explained that these capability gaps are causing companies not to be able to secure funding. With many companies face stagnation, with leaders are not able to generate any more data. Coming back to find a partner after 12 months without any significant progress is a problem many leaders are facing.
Collaborating to Survive as Federal Funding Dips
Healey highlighted her and Massachusetts’ “pro-science” stance during her address in one of BIO’s super sessions. When speaking directly to BioSpace, Healey highlighted the need for all stakeholders to come together to keep the industry thriving. With each part of the industry being affected, She emphasized communication and collaboration.
“For me, what I think we need to do is collaborate, communicate,” Healey explained in an interview with BioSpace. “States, venture capital, private industry and academic and research institutions need to collaborate or work in partnership.”
As governor, Healey thinks that state governments need to assist the industry in maintaining its competitiveness without federal funding.
“What I think the answer is, is to continue to find ways to fund science research and innovation in our states,” she explained, citing “the reauthorization of the Life Sciences Act” and similar acts in other states as key initiatives.
Paul Hastings, former BIO chairman and current CEO of Nkarta Inc., emphasized the stark reality facing the sector in a statement to BioSpace.
“Specialty biotech investors cannot shoulder the burden of replacing billions in lost NIH grants,” he said. “States and universities have also lost these grants and millions in federal funding, so they cannot make up these shortfalls either.”
The situation is further complicated by additional policy pressures on industry.
“Industry is under attack with Most Favored Nation Drug Pricing that could represent the most significant revenue cuts ever imposed on medical innovators by our government, so they will be unable to fund the gap,” Hastings explained.
However, the scale of the challenge requires more than private sector solutions. As the situation unfolds, it is clear that industry must engage in sustained policy advocacy. “We need to speak with a united voice and educate our elected officials about the consequences for patients and innovation absent a policy course correction,” Hastings stressed.
