FDA Plans to Reduce Drug Approval Trials, Shares of Icon and Others Drop

Shares of companies that conduct drug trials on behalf of pharmaceutical companies, such as Icon, Iqvia, and Medpace, are trading lower following a media report stating the Food and Drug Administration is planning to reduce the number of trials required for many drug approvals.ONLY ONE CLINICAL STUDY:The FDA plans to generally require only one clinical study, rather than the traditional two, for medical product approvals, according to Commissioner Marty Makary, STAT's Lizzy Lawrence. While two trials will still be required in certain cases, the default approach will shift to a single pivotal study, reflecting current industry practices, according to the report.While historically the FDA has required two trials for added assurance of a drug's safety and efficacy, it has become increasingly flexible and many drugmakers already submit just one pivotal clinical trial for approval, the author notes. Makary said that while the agency will still require two in some cases, the default will be one trial."You can achieve the same statistical power with one trial as you would with two trials when it's designed and controlled appropriately," Makary told STAT.Publicly traded drugmakers include AstraZeneca, Bristol Myers, Eli Lilly, GSK, Johnson & Johnson, Merck, Novartis, Pfizer, Rocheand Sanofi, while companies conducting drug trials on behalf of pharmaceutical companies include Icon, Iqvia, and Medpace.COVERAGE INITIATION:Last month, BMO Capital analyst Sean Dodge initiated coverage of Icon with a Market Perform rating and $175 price target. The firm's analysis suggests the company's cancellations are likely to remain elevated for the next few quarters. However, it also indicates the worst is probably now behind Icon, the analyst tells investors in a research note.BMO Capital also started coverage of Medpace with a Market Perform rating and $600 price target. The firm views the stock's valuation as full in a "tepid" biotech funding backdrop. The shares at current levels leave "little cushion for additional potential macro volatility," the analyst tells investors in a research note.More bullish on the name, BMO Capital initiated Iqvia with an Outperform rating and $260 price target. The firm believes the company is past the worst of its cancelations. This paves the way for an earnings reacceleration and valuation re-rate into 2026, the analyst tells investors in a research note.STRATEGIC COLLABORATION:On Tuesday, Iqvia announced a strategic collaboration with Amazon Web Services, naming AWS as Iqvia's preferred agentic cloud provider. Under the agreement, Iqvia will deploy its AI platform on AWS. In addition, Iqvia and AWS will explore new opportunities in life science analytics.PRICE ACTION:In morning trading, shares of Icon have dropped about 6% to $176.59, while Iqvia has slipped a little over 5% to $215.15 and Medpace has plunged almost 8% to $532.