Why Sarepta Therapeutics Shares Tumbled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Sarepta Therapeutics (NASDAQ: SRPT  ) , a biopharmaceutical company focused on RNA-based therapies, fell as much as 16% after updating its status in an attempt to gain an accelerated approval for its Duchenne muscular dystrophy drug, eteplirsen.

So what: In a press release after the bell yesterday, Sarepta noted that the Food and Drug Administration requested additional information about its mid-stage clinical results. Specifically, the FDA requested feedback as to why dystrophin – a protein whose production is encouraged by eteplirsen -- would be an acceptable surrogate endpoint and predictor of clinical benefit in patients with DMD. The FDA also requested additional safety data relating to a potential accelerated approval filing. Research firm Leerink Swann took the opportunity to downgrade Sarepta to "market perform" from "outperform" on the news and lower its price target to $41 from $45 on the request for additional data.

Now what: There's really two ways you can look at this. From a negative perspective the FDA is questioning whether there's enough reason to believe that eteplirsen's increased dystrophin production leads to clinical benefits for DMD patients. If Sarepta can't prove this to the satisfaction of the FDA, it'll need to run a phase 3 trial, which is both costly and time consuming. On the other hand, the glass-half-full crowd will see this as a willingness by the FDA to move eteplirsen into an accelerated approval status once Sarepta satisfies its requests. It's a bit early to lean either way, but, if forced to choose, I'm still betting on eteplirsen eventually securing an accelerated approval.

Craving more input? Start by adding Sarepta Therapeutics to your free and personalized watchlist so you can keep up on the latest news with the company.

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  • Report this Comment On April 16, 2013, at 5:03 PM, seejur wrote:

    Let me get this right: Sarepta asked for expedited approval and the Food and Drug Administration requested additional information about its mid-stage clinical results. FDA requested feedback as to why dystrophin – a protein whose production is encouraged by eteplirsen -- would be an acceptable surrogate endpoint and predictor of clinical benefit in patients with DMD. The FDA also requested additional safety data relating to a potential accelerated approval filing.

    Why would SRPT ask for expedited approval if they could not satisfy the FDA? Either the operational officers of SRPT are believably stupid, or many thousands of people sold off this stock because the FDA simply was doing its job . . . I have worked in the biopharma industry and would never have requested anything similar to what Sarepeta requested unless we anticipated the exact same questions from the FDA and were not capable of satisfying the request. Unbelievable that there are analysts covering this company and this industry without any idea what the process is all about. Btw, thank you.

  • Report this Comment On April 16, 2013, at 5:50 PM, RegExpert wrote:

    100% agree with Seejur's comments!!!

    If the FDA were to have accepted a small 12 patient trial data to allow an NDA filing, which was originally designed as an exploratory safety and efficacy trial, then the whole world would've turned upside down!!!

    I can'[t believe that so many investors fell for this story!!! I am not saying that eteplirsen will not ultimately get approval but first it has to demonstrate efficacy and safety with a prospectively designed clinical trial with validated surrogate endpoint for an accelerated approval or clinical endpoint for full approval!

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