Sarepta Therapeutics (NASDAQ:SRPT) and its Duchenne muscular dystrophy, or DMD, treatment candidate eteplirsen suffered a major setback with a recent Food and Drug Administration decision declaring accelerated approval for eteplirsen a "premature" move.

At heart of concerns was the recent failure of Prosensa (NASDAQ:RNA) and GlaxoSmithKline's (NYSE:GSK) DMD treatment candidate drisapersen and a generally hazy picture about the appropriateness of the 6-minute walk test, or 6MWT, used to measure eteplirsen's effectiveness. 

Sarepta shares tumbled 70% within hours of the announcement as investors scrambled to make sense of Sarepta's future. 

While things appear bleak for now, the FDA's decision raises questions that may ultimately prove positive for investors looking to enter at a more attractive price point given eteplirsen's continued, potential long-term value.

The FDA letter concerning eteplirsen focused upon recent developments in DMD research. Most pointedly, the FDA noted that drisapersen, the recently failed Prosensa candidate, and PTC124, another dystrophin-producing DMD candidate, failed to produce improvements to patient 6MWT results.

The obvious concern here being that eteplirsen, a chemical cousin of drisapersen which also treats DMD by increasing dystrophin, simply doesn't work or perhaps dystrophin is not a valid measurement of DMD treatment.

The 10 patients in the eteplirsen study all had starting 6MWT results either at or well above 350 meters. Two additional patients with starting 6MWT results lower than 350 meters were dropped early in the study when their muscular health was considered too poor to continue. 

In light of these findings, the FDA has recommended Sarepta undertake a larger-scale phase 3 eteplirsen study prior to seeking approval. This effectively dashes Sarepta's hopes for an accelerated approval.

What didn't go wrong?
It's worth noting that FDA did not challenge the actual validity of the 6MWT used by Sarepta and actually supported its use in future eteplirsen trials.

In fact, the study cited by regulators for concerns about the 350 meter result cutoff concluded that 6MWT results hold "clinical meaningfulness" for patients with DMD. This alleviates concerns that the FDA would not accept surrogate endpoints for DMD patients in light of developments in other clinical arenas. 

Additionally, the FDA did not find any direct issues with the two "sicker" patients that were dropped at the beginning of the eteplirsen study.

The practice of refining data to focus on less-advanced patients is fairly commonplace in clinical trials, a point indirectly supported by the FDA's letter, which noted that these types of patients would be poor candidates for future trials. Sarepta critics have consistently pointed to these two patients as examples of mismanagement of trial data on the part of Sarepta researchers -- a point that has fallen a little flat in light of the FDA's response.

Unanswered questions
The recent regulatory decision is definitely a major setback for Sarepta and DMD patients who are in dire need of better treatments. Optimistic timelines, as estimated by Sarepta executives, places the earliest date for a phase 3 trial start somewhere in the middle of 2014. Assuming everything goes smoothly, it looks like eteplirsen may not be on the market until 2016 or later.

That being said, the FDA did not make any comments about whether eteplirsen may ultimately translate into success where other drugs have failed.

Early eteplirsen results may still prove to be groundbreaking later on. However, based on the FDA's call for a larger trial, answers about eteplirsen's real value will need to wait for a while longer.

Fool contributor Eric Ho has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.