Should Sarepta's Shares Be Tumbling?

Sarepta has updated data from eteplirsen's trial in Duchenne's muscular dystrophy, potentially positioning it to compete against Prosensa's drisapersen and PTC Therapeutics Translarna.

Jul 10, 2014 at 4:15PM

Sarepta (NASDAQ:SRPT) has been one of biotech's biggest hit-and-miss stocks over the past year. Shares have surged higher and fallen dramatically lower over and over as investor enthusiasm has brightened and faded for Sarepta's Duchenne muscular dystrophy drug, eteplirsen.

Unfortunately for investors, Sarepta's latest move is down following an update to its trial evaluating walking distance in patients receiving eteplirsen. However, those results appear solid and while they may fall short of investors hopes, they appear to pose little risk to Sarepta's planned FDA filing.

SRPT Chart

SRPT data by YCharts

First, a bit of background
Duchenne's, or DMD, is a rare form of muscular dystrophy that affects children. Sadly, most DMD patients fail to live beyond 25. There are few treatment options and drugmakers have struggled to find therapies that can delay its progress.

G

Source: Sarepta

One recent failure came from GlaxoSmithKline and Prosensa's (NASDAQ:RNA) R&D departments. Following success in phase 2 trials, patients held high hope for the companies' drisapersen, but an inability to outperform placebo during phase 3 derailed Glaxo and Prosensa's program.

That failure resulted in Sarepta's shares dropping from nearly $55 to less than $15 as investors worried that the FDA would be less willing to consider approving eteplirsen, which works similarly to drisapersen, without data confirming its efficacy in phase 3 -- something Glaxo and Prosensa weren't able to deliver.

But Sarepta's fortunes turned positive again this spring once management reported that discussions with the FDA had indicated the door hadn't been shut on considering eteplirsen with just phase 2 data in hand.

G

Source: Sarepta

Heading toward the finish line
During phase 2b trials, eteplirsen patients saw a 40-meter improvement on a six minute walking test. That was far better than the 10-meters notched by patients in Glaxo and Prosensa's failed phase 3 trial. Additionally, while patients in Glaxo and Prosensa's phase 3 trial showed excessive protein in their kidneys, there were no similar reports in eteplirsen's phase 2 trial.

Today, Sarepta updated data from its trial to reflect six minute walking test results at 144 weeks of treatment. The findings show that patients receiving eteplirsen could walk further than those on placebo, but that the distance had still declined from the initial baseline.

Investors seem to be interpreting that to mean that the drug isn't as good as they once hoped it might be, but the fact that there was a 75 meter walking distance treatment benefit in the current data suggests that investors may be over-reacting.

Getting crowded again
The FDA has not only indicated to Sarepta that it would still consider eteplirsen, but it's also said the same thing to Prosensa (GlaxoSmithKline shifted its rights to the drug back to Prosensa earlier this year).

That gives Prosensa an opportunity resurrect drisapersen, but since drisapersen and eteplirsen work similarly and target the same type of gene mutation found in just 15% of DMD patients, the two would have to face-off with each other in a very small market if both drugs are eventually approved.

PTC Therapeutics is also making its way to market with a DMD drug after winning the backing of a key European Union advisory committee earlier this year that could clear the way for an EU approval soon.

Fool-worthy final thoughts
There's no question that there is a dramatic need for DMD therapies; however, Sarepta's phase 2 trial is unquestionably small at a dozen patients. For comparison, Prosensa's drug was studied in 186 boys.

So while this data would seem to still support Sarepta's planned FDA application later this year, there's no telling what may happen in a larger confirmatory trial. Given that and the whipsaw nature of these stocks, I'm content to watch from the sidelines.

Leaked: This coming blockbuster has far fewer question marks than Sarepta
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not just how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers