Shares of Sarepta Therapeutics (NASDAQ:SRPT) were crashing 50.7% as of 11:11 a.m. EST on Friday. The huge decline came after the biotech announced top-line results late on Thursday from the first part of a clinical study evaluating experimental gene therapy SRP-9001 in treating Duchenne muscular dystrophy (DMD).
Sarepta reported that SRP-9001 met its primary biological endpoint of micro-dystrophin protein express. DMD is caused by a genetic mutation that results in lower or no production of dystrophin, which is important for muscles to function properly.
But the big story from Sarepta's clinical update was that SRP-9001 didn't achieve a statistically significant improvement in the primary functional endpoint of an increased North Star Ambulatory Assessment (NSAA) total score. NSAA measures the functional motor abilities of children with DMD using a 17-item scale.
Sarepta's plunge pretty much tells how bad the news was for the company. Investors viewed the failure of SRP-9001 to achieve significant functional improvement as a showstopper for the gene therapy candidate.
Wall Street analysts were quick to weigh in. J.P. Morgan analyst Anupam Rama issued a "double downgrade," giving the biotech stock an underweight (sell) rating after previously giving it an overweight (buy) rating. Rama also slashed the price target for the stock from $185 to $96.
Analysts at Morgan Stanley and Raymond James Financial also downgraded Sarepta following the announcement of the results for SRP-9001.
Is all of this negativity warranted? At this point, yes. But Sarepta tried to spin the bad news as positively as it could.
CEO Doug Ingram said that the clinical study "reinforces our confidence in the potentially transformative benefits of SRP-9001." He acknowledged the failure of the experimental gene therapy to meet the primary functional endpoint, stating that the company was "very disappointed."
But Ingram blamed the randomization process in the study, claiming that it "resulted in a significant imbalance in baseline NSAA scores between the active and placebo cohorts of the participants ages 6-7, making the 6-7 age groups non-comparable and likely substantially contributing to the inability to achieve statistical significance."
Sarepta isn't conceding defeat. The company plans to analyze the results for all patients once they've hit the 48-week mark in the second part of the study evaluating SRP-9001. Ingram said that Sarepta "intend[s] to continue to move forward with diligence and urgency to generate the evidence necessary to bring SRP-9001 to waiting Duchenne patients around the world."