A few months of mo­men­tum have ce­ment­ed hope that the worst of biotech’s bear mar­ket is in the rearview mir­ror, gal­va­niz­ing in­dus­try in­sid­ers who have clung to cau­tious op­ti­mism for mul­ti­ple years.

Since bot­tom­ing out in ear­ly April when Pres­i­dent Don­ald Trump threat­ened sweep­ing rec­i­p­ro­cal tar­iffs, the XBI has risen more than 50%, and is up 13% in the last month. The NYSE in­dex $DRG, an in­dex that in­cludes nu­mer­ous large phar­ma­ceu­ti­cal stocks, is up 5% in the last month. That’s far bet­ter than the broad­er S&P 500, which biotech stocks have out­per­formed over the last half-year.

The FDA in 2025 is set to ap­prove its low­est num­ber of new drug and bi­o­log­ic ap­pli­ca­tions since 2022, even as more than a dozen com­pa­nies await the reg­u­la­tor's de­ci­sions on their new mol­e­c­u­lar en­ti­ties be­fore the end of the year.

The num­ber of drug ap­provals is­n't al­ways in­dica­tive of the qual­i­ty of in­no­va­tion or whether ma­jor strides are be­ing made in hard-to-treat dis­eases. But it does pro­vide an in­di­ca­tion of R&D per­for­mance year-over-year. It's al­so un­clear whether los­ing thou­sands of FDA staff played a role in slow­ing down the ap­proval process this year.

The FDA has ap­proved 42 new drugs and bi­o­log­ics so far this year, with about 16 de­ci­sions to go be­fore 2026, ac­cord­ing to an End­points News tal­ly. In com­par­i­son, the reg­u­la­tor ap­proved 69 new drugs and bi­o­log­ics in 2024, and 80 in 2023. But it was 2022 that had the fewest num­ber of new ap­provals since 2020, with 51 new drugs and bi­o­log­ics ap­proved. In 2020, the FDA ap­proved 61 new drugs and bi­o­log­ics, and 63 in 2021.

The FDA is­sued an “of­fi­cial ac­tion in­di­cat­ed” clas­si­fi­ca­tion to No­vo Nordisk’s fa­cil­i­ty in Bloom­ing­ton, IN af­ter two biotechs re­ceived site-re­lat­ed com­plete re­sponse let­ters.

Schol­ar Rock, one of the com­pa­nies to face reg­u­la­to­ry de­lays due to the fa­cil­i­ty's man­u­fac­tur­ing woes, said on Fri­day that the FDA had giv­en Novo's fac­to­ry the OAI in­spec­tion clas­si­fi­ca­tion. An OAI clas­si­fi­ca­tion means that a fa­cil­i­ty is in an “un­ac­cept­able state of com­pli­ance” and "ac­tions are rec­om­mend­ed," ac­cord­ing to the FDA web­site.

It's the most se­vere clas­si­fi­ca­tion out of the three pos­si­ble out­comes fol­low­ing a fac­to­ry in­spec­tion. Schol­ar Rock’s stock SRRK was down near­ly 12% on Mon­day.

This clas­si­fi­ca­tion could cre­ate a "more dif­fi­cult path for­ward" for com­pa­nies us­ing the In­di­ana fa­cil­i­ty for con­tract man­u­fac­tur­ing, es­pe­cial­ly Schol­ar Rock and Re­gen­eron, who have al­ready re­ceived CRLs for their as­sets, BMO Cap­i­tal Mar­kets an­a­lysts warned in a Mon­day note.

Cal­i­for­nia Gov. Gavin New­som signed in­to law what his of­fice called a “sweep­ing re­form” of PBM prac­tices last week.

The leg­is­la­tion, SB 41, pro­hibits spread pric­ing, calls for greater trans­paren­cy and re­quires that drug­mak­ers pass sav­ings from re­bates on to health plans, among oth­er pro­vi­sions. Sen. Scott Wiener (D-San Fran­cis­co), who co-au­thored the state law, said in a news re­lease that it builds on a frame­work es­tab­lished ear­li­er this year that will re­quire PBMs to be li­censed by the state.

“With SB 41, Cal­i­for­nia is stand­ing up for con­sumers against gi­ant mega cor­po­ra­tions try­ing to rip them off on es­sen­tial med­ica­tions,” Wiener said.