Image source: PTC Therapeutics.

What happened

After competitor Sarepta Therapeutics (SRPT -0.80%) won early approval of Exondys 51, a drug for Duchenne muscular dystrophy (DMD), investors sent PTC Therapeutics (PTCT 2.55%) shares soaring 20.6% today.

So what

PTC Therapeutics' Translarna is a DMD drug that's available in the European Union but that isn't yet available in the United States.

Investors are hoping that may change following the FDA's approval of Sarepta Therapeutics Exondys 51. Like Translarna, Exondys 51 helps restore functional dystrophin production in amenable DMD patients by overcoming mutations that interrupt normal dystrophin production.

Previously, the FDA has refused to review Translarna's application for approval twice, including once in 2011 and again this past February.

Now what

Muscle loss in DMD patients leads to increasingly less mobility and to heart damage and as a result, DMD patients live shorter lives than non-DMD patients. Unfortunately, DMD patients have limited treatment options.

Exondys 51's approval is potentially game-changing, however, investors might not want to extrapolate its approval to an approval of Translarna. In the wake of Exondys approval, regulators have indicated that they're sensitive to the fact that approving Exondys 51 with limited efficacy data could "lower-the-bar." For that reason, they're quick to say that they're sticking to their strict guidelines. Given PTC Therapeutics has already received two refuse-to-file letters, it appears that management may still have its work cut out for it.

Instead, investors might want to focus more on two other important catalysts that could move the needle at PTC Therapeutics.

First, Translarna's conditional approval must be renewed annually, and investors are still awaiting a renewal decision that was expected earlier this summer. Secondly, Translarna is being evaluating in cystic fibrosis patients and if those trials are successful, they could double Translarna's addressable patient population. 

Overall, a FDA review of Translarna would undeniably be a big win, but given that Translarna is expected to generate at least $65 million in revenue this year, a renewal of the conditional approval in the EU is even more critical.