Health Care Technology Stocks Surge After FDA Announces Plans To Phase Out Animal Testing Requirements

Several stocks in the health care technology space are moving higher after the market close on Thursday after the U.S. Food and Drug Administration (FDA) announced plans to phase out animal testing requirements.

What Happened: The FDA on Thursday announced plans to replace animal testing in the development of monoclonal antibody therapies and other drugs with human-relevant methods.

The FDA said it will phase out animal testing requirements in favor of AI-based computational models of toxicity and cell lines and organoid toxicity testing. Implementation is expected to begin immediately.

Health care tech and AI-powered biotech stocks making the biggest moves after the bell include Certara Inc (NASDAQ:CERT), Schrodinger Inc (NASDAQ:SDGR), Simulations Plus Inc (NASDAQ:SLP), Recursion Pharmaceuticals Inc (NASDAQ:RXRX) and Absci Corp (NASDAQ:ABSI). All of the aforementioned names were up between 15% and 25% in Thursday’s after-hours session at the time of writing, per Benzinga Pro.

“This initiative marks a paradigm shift in drug evaluation and holds promise to accelerate cures and meaningful treatments for Americans while reducing animal use,” said Martin Makary, commissioner of the FDA.

“By leveraging AI-based computational modeling, human organ model-based lab testing and real-world human data, we can get safer treatments to patients faster and more reliably, while also reducing R&D costs and drug prices.”

The policy changes will help improve the overall process by introducing advanced computer simulations, human-based lab models and regulatory incentives. The change is also expected to result in faster drug development.

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