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The crashing shares of Nektar Therapeutics late last week were the culmination of a terrible stretch that should shake the confidence of biotechnology investors.

It began Tuesday with the Food and Drug Administration calling out Novartis, the Swiss drug giant, for not disclosing that employees had manipulated data in the application for Zolgensma, its gene therapy for spinal muscular atrophy, until after the treatment was approved. It ended not only with Nektar shares cratering 29% as the company disclosed that it had manufacturing problems with a cancer drug being used in clinical trials, but also with shares in Amarin, maker of the fish oil-derived heart drug Vascepa, dropping 17% on news that the FDA would hold a public hearing on whether to widen the use of the medicine. It’s a hearing that Amarin had been counseling investors was increasingly unlikely.


This is a crisis in credibility fueled by boom-era hubris. Executives seem to be forgetting that it is far better to underpromise and overdeliver than the other way around. Investors seem to be forgetting as well. It would behoove them to remember that drug development is a field in which 9 of 10 new medicines that start trials don’t make it to market. Here, there be tygers.

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