What's Going On With Charles River, Certara, Simulations Plus Stocks On Friday?

The U.S. Food and Drug Administration announced a major shift in how monoclonal antibody therapies and other drugs are evaluated, emphasizing a transition from traditional animal testing.

The agency aims to adopt human-relevant and technologically advanced testing methods to improve safety evaluations, reduce research costs and accelerate drug development timelines.

The FDA’s new approach, outlined in a roadmap released on Thursday, encourages drug developers to integrate New Approach Methodologies (NAMs), including AI-driven simulations and laboratory-based human models.

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These alternatives are expected to provide more accurate predictions of human responses and toxicities, which can be difficult to detect through animal testing alone.

One key strategy promoted in the roadmap is the use of advanced computer modeling.

AI-based simulations can mimic how monoclonal antibodies travel through the human body and predict potential side effects based on the drug’s structure. The FDA believes this could significantly reduce the reliance on animals in preclinical studies.

In addition, the agency is supporting the use of lab-grown human organoids and organ-on-a-chip technologies.

These systems replicate the function of human organs like the liver and heart, offering a more precise picture of how a drug might behave in the human body.

Such human-based models have the potential to detect adverse effects that may not surface in animal studies.

To incentivize the adoption of these methods, the FDA plans to update regulatory guidelines and offer streamlined reviews for applications supported by NAMs data.

This could shorten development timelines and lower the cost of bringing monoclonal antibody therapies to market.

The agency will also begin using real-world safety data from countries with comparable regulatory standards, particularly for drugs already tested in humans abroad.

This marks another step toward reducing redundant animal testing while maintaining rigorous safety standards.

The FDA is working to validate and expand these alternative methods in collaboration with federal agencies such as the National Institutes of Health and the Department of Veterans Affairs.

A public workshop is scheduled later this year to gather feedback from stakeholders on the roadmap’s rollout.

Over the next year, the FDA will pilot a program allowing select developers to rely primarily on non-animal testing methods for monoclonal antibody development.

William Blair writes that even though these changes will be rolled out gradually over time, drug developers will still want to do at least some animal testing. This may be a major overhang for Charles River Laboratories International, Inc (NYSE:CRL), which generates roughly 20% of its revenue from testing drugs in non-human primates. The stock plunged over 20% on Thursday.

Analyst Max Smock adds that the move can be potentially favorable to Certara Inc. (NASDAQ:CERT) and Simulations Plus, Inc. (NASDAQ:SLP), both of which have preclinical models that can be used in place of or in conjunction with animal-based testing.

CRL, CERT, SLP Price Actions: Charles River stock is down 1.84% at $96.68, Certara stock is up 13.5% at $11.96 and Simulations Plus stock is up 22.80% at $31.61 at publication Friday.

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