Investing.com -- Shares of Inotiv (NASDAQ:NOTV) and Charles River Laboratories (NYSE:CRL) plummeted 49.5% and 28.1% respectively in today's trading session. The steep decline comes on the heels of a landmark announcement from the U.S. Food and Drug Administration (FDA), which is set to significantly reduce the reliance on animal testing for drug development.
The FDA's groundbreaking initiative is designed to replace animal testing with more effective, human-relevant methods in the development of monoclonal antibody therapies and other drugs. This move is expected to not only improve drug safety and expedite the evaluation process but also to cut down on research and development costs and potentially lower drug prices.
According to the FDA, the agency will begin to encourage the inclusion of New Approach Methodologies (NAMs) data in investigational new drug applications. The use of AI-based computational models and organoid toxicity testing in a laboratory setting is among the alternatives proposed to reduce, refine, or replace animal testing. Additionally, the FDA plans to utilize real-world safety data from other countries with comparable regulatory standards to make determinations of efficacy.
FDA Commissioner Martin A. Makary, M.D., M.P.H., expressed the significance of this shift, stating, "For too long, drug manufacturers have performed additional animal testing of drugs that have data in broad human use internationally. This initiative marks a paradigm shift in drug evaluation and holds promise to accelerate cures and meaningful treatments for Americans while reducing animal use."
The FDA's approach includes promoting advanced computer simulations and human-based lab models, such as organoids and organ-on-a-chip systems, to test drug safety. These methods are expected to reveal toxic effects that might go undetected in animals, offering a more direct insight into human responses. The agency also aims to provide regulatory incentives for companies that submit strong safety data from non-animal tests, which may lead to streamlined reviews.
This policy change is anticipated to speed up the drug development process, allowing therapies to reach patients quicker without compromising safety. It also aligns with the FDA's commitment to modernize regulatory science as technology advances.
The FDA's announcement represents a shift in the regulatory landscape that could have profound implications for companies like Inotiv and Charles River Laboratories, which have traditionally provided animal testing services to the pharmaceutical industry. The market's reaction reflects the potential impact on these companies' business models, as investors reassess the long-term demand for animal testing in light of the FDA's new direction.
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