Shares of U.S. drugmakers fell on Monday after reports that the Food and Drug Administration's top vaccine official, Peter Marks, had been forced to resign, the most high-profile exit at the regulator as the Trump administration undertakes an overhaul of federal health agencies.
The pharma and biotech sector has been under pressure since Donald Trump returned to the White House earlier this year.
Shares have dropped on worries Trump's extensive plans for tariffs will include drugs, which have traditionally been excluded from such levies, and Secretary of Health and Human Services Robert F. Kennedy Jr's plans to revamp the federal agencies.
Kennedy, an environmental lawyer, has a history of sowing doubts about the safety and efficacy of vaccines.
Marks, who played a key role in Trump's first term in developing COVID-19 vaccines, will leave effective April 5, according to his resignation letter, which was first reported by the Wall Street Journal on Friday. Marks criticized Kennedy's views on vaccines in the letter.
The S&P 500 biotech ETF slid 4.9%, which would add to the roughly 6% drop this year, as the resignation amplified uncertainty among biotech investors.
"It's no secret that biotech has been under immense pressure recently given broader macro issues, this unfortunate update does nothing to reassure investors or provide relief," said BMO Capital Markets analyst Evan Seigerman.
Vaccine-focused companies such as Novavax (NVAX.O) and BioNTech fell about 7%, while gene therapy developers including Taysha Gene Therapies (TSHA.O), Solid Biosciences (SLDB.O) and Sarepta Therapeutics (SRPT.O) slumped between 15% and 23%.
Kennedy has announced plans to reshape the federal public health agencies that could involve firing thousands of workers.
The reports on Friday said Marks was given the choice by a Health and Human Services (HHS) official to resign or be fired. As director of the FDA's Center for Biologics Evaluation and Research, Marks has publicly supported programs that expedited the development of rare disease treatments and gene therapies during his tenure.
"Given Dr. Marks' influence on the development of biologics and uncertainty as to who will replace him and how his legacy might continue, his departure will create a significant near-term overhang," said William Blair analyst Matt Phipps.
Marks' departure follows the exit of head of the FDA's drug evaluation unit, Patrizia Cavazzoni, roughly two months ago.
While a replacement is still unclear, "there is clearly a risk that the candidate's views will be in line with Secretary Kennedy's on vaccines," Phipps said.
Marks did not respond to a request for comment over email on Monday.
