FOIAengine: Assessments Include Operational, Clinical and Commercial Threats
Freedom of Information Act requests to the Food and Drug Administration during March illustrated three of the primary uncertainties facing U.S. drug manufacturers and their investors: the operational risk of manufacturing failures, the clinical risk of injury and death, and the commercial risk of meeting high expectations.
Eleven March requests targeting three different companies demonstrated each category of risk. Each represented a different layer of uncertainty, but all three shared a common feature: public disclosures alone weren’t sufficient to reassure sophisticated investors that they had the whole story. And that’s where FOIA came in. We’ll break down all three risk categories below, to illustrate how financial players like hedge funds use FOIA requests to mitigate potential risk.
Operational risk: Manufacturing problems long have been an important focus of FOIA requests to the FDA filed by financial firms. March repeated this pattern, with contract drug manufacturer and developer Catelent Inc. the subject of six separate requests from Evercore ISI, BMO Capital Markets, and Triple Gate Capital.
Five of the requests targeted Catalent’s Bloomington, Indiana, biologics site, which has a history of manufacturing problems.
A focus by multiple filers on a single manufacturer is a consistent signal of potential problems. Evercore’s request was notable for its specificity, naming Regeneron and Scholar Rock by name as potentially affected companies and explicitly asking for information including “lot holds and supply disruption documentation.” In a separate request, BMO Capital Markets sought inspection reports for two other Catalent facilities in Winchester, Kentucky, and Baltimore, Maryland.
This isn’t the first time Catalent has been the subject of multiple requests. The company is one of the most frequent targets of investor FOIA filings and has been mentioned in 324 FDA requests since 2021, according to FOIAengine, which tracks FOIA requests in as close to real time as their availability allows. Most of these requests have focused on the same types of manufacturing issues cited during March. (See our January 14 article describing how hedge funds use FOIA to stay ahead of the market.)
Clinical Risk: The potential for patient injury or death is another frequent topic of investor FOIA filings, as evidenced by two requests targeting Sarepta Therapeutics. Sarepta’s Elevidys is a one-time Adeno-associated virus gene therapy for Duchenne muscular dystrophy. It became one of the more controversial FDA approvals in recent years due to safety issues. Multiple patient deaths, including acute liver failure, occurred after treatment, primarily in non-ambulatory patients. FDA responses included a mandatory safety warning, the restriction to ambulatory patients only, and a post-marketing safety study.
On March 13, Point72 filed a request for “FAERS data on Sarepta’s Elevidys” and on March 23, Soleus Capital asked for seven different Sarepta FAERS case reports. FAERS stands for FDA Adverse Event Reporting System, the primary FDA program for tracking adverse health issues caused by drugs and therapeutic biologic products.
Commercial Risk: The possibility that a promising drug will not succeed once it goes on the market represents a third significant uncertainty facing drug companies and their investors. This was demonstrated in March by requests from three financial firms within a two-week window targeting Soleno Therapeutics and its drug Vykat XR, the first approved treatment for hyperphagia in Prader-Willi syndrome.
All three requests sought information about FDA FAERS Case Number 26462947 describing an adverse health event that occurred on December 12. Hudson Bay submitted on March 18 a detailed request for “all records and information held by the FDA relating to this case,” including the complete Individual Case Safety Report (ICSR), the full narrative description of the adverse event, follow-up reports, patient demographic information and medical history, and FDA safety reviewer assessments. Additional requests for case information were filed by Point72 on March 20 and Buckley Capital Partners on March 31.
The Soleno requests were less about crisis, and more about market validation. Vykat XR represented a rare instance of a long-awaited breakthrough for a rare but severe disease. The filing of requests by three investment firms over a two-week period signals that investors were investigating a specific safety question, possibly testing whether early real-world data matched clinical expectations. Unlike Sarepta, there was no immediate sign of regulatory problems. Instead, the concern was whether the early narrative of a successful therapy would hold up under broader use.
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Randy E. Miller, co-creator of FOIAengine, is a Washington lawyer, publisher, and former government official. He has developed several online information products and was a partner at Hogan Lovells, where he founded the firm’s Brussels office and represented clients on international regulatory matters. Miller also has served as a White House trade lawyer, Senior Legal Adviser to the U.S. Mission to the World Trade Organization, policy director to Senator Bob Dole, and adjunct professor at Georgetown University. He is a graduate of Yale and Georgetown Law. FOIAengine is a product of PoliScio Analytics (PoliScio.com), a venture specializing in U.S. political and governmental research, co-founded by Miller and Washington journalist John A. Jenkins.
Write to Randy E. Miller at randy@poliscio.com.
