FDA Says, "Call Me Maybe"

A lot has been written this week -- at The Fool and elsewhere -- about Sarepta Therapeutics' (NASDAQ: SRPT  ) update on its meeting with the Food and Drug Administration. The company is hoping to get an accelerated approval for its Duchenne muscular dystrophy drug, eteplirsen.

Here's my view: It doesn't change a thing.

The biotech has limited phase 2 data, clearly not enough for full approval. The only hope for getting the drug on the market in short order is an accelerated approval. I've pointed out that's both a historical long shot and potentially possible given the FDA's new laxer stance.

Which one will win this battle? We still don't know. Welcome to the ever-changing world of biotech investing.

Under the normal course of events, a company would meet with the FDA after its phase 2 program was complete to decide if the data was worthy of an accelerated approval. If it was an obvious no, the FDA would tell the company to run a phase 3 trial or two. If it was a maybe, the agency would suggest the company submit the full data package so the FDA reviewers could have a closer look.

Occasionally, companies and the FDA seem to have a failure to communicate, such as when Roche  (NASDAQOTH: RHHBY  )  received a refuse to file letter after seeking accelerated approval for its breast cancer drug Kadcyla. The agency didn't even want to review the data because it believed that the patients tested in the phase 2 trial didn't have an unmet need, one of the requirements for accelerated approval. Roche and partner ImmunoGen (NASDAQ: IMGN  ) recently got the drug approved with more data.

For the most part, though, "no" means "no" and "go ahead and file" means "maybe." There's a certain amount of weeding out those that obviously don't have enough data, but applying is by no means a lock on an approval. Pfizer (NYSE: PFE  ) asked for accelerated approval for tafamidis meglumine that treats a rare genetic disease, but the FDA rejected the drug, asking for a second clinical trial. Ditto for Cell Therapeutics' (NASDAQ: CTIC  ) pixantrone. The biotech appealed the decision, but still hasn't been able to gain approval. Both drugs are approved in Europe, which shows how the FDA has historically not made accelerated approval an easy route.

Sarepta seems like a special case, though. Or perhaps it's the new normal; we'll have to wait and see. Instead of saying "you don't have enough data to file," the agency asked the company for more data to figure out whether it does. That's unusual but not surprising given the new regulatory environment.

And we're essentially back where we started before Sarepta started talking to the agency. Whether eteplirsen is given an approval based on the limited phase 2 data will be determined by how far the FDA wants to relax its regulations.

Without any precedence, it's hard to handicap the decision; invest accordingly.

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