What happened

Shares of Sarepta Therapeutics (SRPT -4.89%), which focuses on genetic treatments for rare diseases, were down 11.5% Wednesday afternoon after the Food and Drug Administration (FDA) pushed back its Prescription Drug User Fee Act (PDUFA) date on a Duchenne muscular dystrophy therapy candidate. The biotech stock is up less than 1% so far this year.

So What

The FDA gave Sarepta good news and bad news on Wednesday regarding the company's gene transfer therapy, SRP-9001 (delandistrogene moxeparvovec), designed to treat ambulatory patients with Duchenne muscular dystrophy (DMD) who have a mutation of the DMD gene. The good news is the FDA said it may grant accelerated approval for SRP-9001, beginning with DMD patients 4 and 5 years old. The therapy is in a phase 3 confirmatory study and the FDA said if the therapy meets its study objectives, it could expand the age at which the therapy could be used. The top-line results of the trial are expected in the fourth quarter.

However, the FDA sent the stock plummeting when it also said it needs more time to complete the review, pushing its decision from May 29 to June 22. Earlier this month, a panel of advisors recommended, by a split decision, accelerated approval for SRP-9001. The decision has been seen as controversial, so that may be the reason the FDA is taking more time. 

Now what

Sarepta has grown revenue for seven years, but is not yet profitable. There's a lot riding on the decision, not just for Sarepta, but for DMD patients. Children, usually boys, who have DMD often lose the ability to walk before their teens and they generally don't live into their 40s. According to the Muscular Dystrophy Association, DMD affects 1 in 5,000 male births and there are approximately 20,000 people worldwide with DMD.

Current treatments, such as steroids and heart medication, don't halt the disease, they merely treat it. SRP-9001 has the potential to significantly slow the progression of the disease because it fixes the genetic mutation that causes DMD.