The markets tend to struggle at this time of year, and Washington is giving you plenty of reason to pause. Shares of several recent high-flying biotech companies have taken a hit, calling into question whether hype trumped reason last month.

One of the most hard hit has been Sarepta Therapeutics (SRPT -1.14%), a biotech company hoping to file a new drug application for eteplirsen next year. Eteplirsen is a treatment for Duchenne muscular dystrophy, or DMD, patients, a rare genetic muscle-wasting disease caused by the absence of dystrophin, a protein that is necessary for muscle function. The disease affects one in 3,500 boys worldwide and is one of the most common fatal genetic disorders. Currently, there is no approved treatment for DMD.

Eteplirsen works by skipping exon 51, helping resolve a genetic mutation and allowing for the creation of dystrophin. This, in turn, corrects the body's inability to build muscle. Eteplirsen showed promising results in phase 2b studies, which, following a meeting with the FDA in July, led the company to report that the FDA was willing to consider those results as part of an early approval process. As a result, the company indicated its plans to file an application with the FDA in early 2014.

A good deal has changed since the July conversation with the FDA
Several things have changed since that announcement. Most important, an announcement came that GlaxoSmithKline's (GSK -0.83%) and Prosensa's (NASDAQ: RNA) competing exon-skipping drug drisapersen came up short in phase 3 trials. In that trial, drisapersen failed to significantly improve muscle function despite showing considerable promise in earlier trials.

That late-stage failure kicked off a flurry of interest in eteplirsen. Investor hopes for early approval may have jumped the gun, however. Given that Glaxo's drug and eteplirsen similarly produce dystrophin by exon skipping, some are wondering if the FDA will back away from its earlier willingness to solely consider phase 2b data.

You should also recognize that the current Washington shutdown is affecting the ability to file new drugs, which potentially creates another stumbling block if FDA appropriations remain halted into next year (though let's hope not).

If the FDA does back away, Sarepta is prepared. In July, the company announced an at-the-market equity offering worth $125 million to raise money to fund both final trials and manufacturing capacity. In the company's most recent press release, it also indicated plans to initiate phase 3 confirmatory trials in the first quarter of 2014.

Sarepta's drug appears to have an advantage
Glaxo's failure adds pressure to the FDA to advance eteplirsen quickly. Eteplirsen's clinical results match up favorably to Glaxo and Prosensa's. In phase 2b, patients on eteplirsen saw a 40-meter improvement on a six-minute walk test. That's exceedingly better than the 10 meters for patients on drisapersen in phase 3. While there were reports of excessive protein in the kidneys of Glaxo patients, which resulted in hospitalizations, there were no such cases in eteplirsen patients.

Those are compelling advantages. You shouldn't ignore the potential for Glaxo and Prosensa to find a subset of the DMD population drisapersen can benefit when they combine and analyze trial data, however. If they're able to, that could salvage some hope for commercialization. Prosensa has a host of other DMD treatments in clinical trials for other genes beyond exon-51 as well.

Assuming that the FDA is open for business next year and eteplirsen can make its way quickly through FDA hurdles, the  drug will offer new hope to DMD patients. You should keep in mind that eteplirsen targets just 13% of those with DMD, however, suggesting that the majority of DMD patients will need to wait for other drugs from both Sarepta and Prosensa to make their way through trials.