Editor's Note: A previous version of this article incorrectly stated that the FDA rejected Sarepta's NDA for eteplirsen. This section of the article has been corrected and the Fool regrets the error.
Fall is the season -- and the name of the game for quite a few health-care stocks. These three experienced horrendous falls over the past week. Here's what happened.
Dazed and confused
A response from the U.S. Food and Drug Administration about Duchenne muscular dystrophy, or DMD, drug eteplirsen left Sarepta Therapeutics (SRPT -1.14%) shareholders dazed and confused on Tuesday. The stock plunged more than 60% for the week.
The FDA advised Sarepta not to apply for a New Drug Application, or NDA, for its drug eteplirsen. Saying that "considerable doubt" existed about the use of dystrophin expression to predict clinical benefit, the agency called the NDA "premature." To add insult to injury, the FDA expressed skepticism about the results from Sarepta's 12-patient study, noting that expected variability in walking ability could have accounted for the observed improvement.
Sarepta's next step will be to work with the FDA on design of a confirmatory phase 3 study for eteplirsen. That probably won't be easy to do. The company would then initiate the study. It will be another long wait for Sarepta shareholders -- and for DMD patients.
You can't always get what you want
Investors hoped for spectacular results from Epizyme's (EPZM) phase 1 study of leukemia drug EPZ-5676. Unfortunately, the Rolling Stones were right: You can't always get what you want. Shares of the biopharmaceutical company tanked nearly 44% on disappointing early results.
It's not that those results were horrible. Treatment effects were seen in four of eight leukemia patients with altered MLL genes but not in another eight patients without the gene alterations. No real safety flags were raised. Epizyme said the results were positive enough to expand the study for those patients with MLL-rearrangement, or MLL-r.
The current study is still going on, with further dosing escalations planned. Epizyme also intends to initiate a couple of other clinical trials for the drug -- a Phase 1b trial in pediatric acute leukemia patients with MLL-r, and an expansion cohort in adult leukemia patients with another MLL genetic alteration.
Against the wind
Amedisys (AMED -0.20%) just seemed to be running against the wind this week. The home health care provider reported a big third-quarter loss, declining revenue, and a lower earnings outlook. Shares fell more than 16% for the week.
That quarterly loss of $90.4 million came primarily as a result of a $145 million settlement with the U.S. Department of Justice. However, the DOJ didn't cause Amedisys' drop in net service revenue from $364.3 million in the third quarter of 2012 to $301.6 million last quarter.
The home health market continues to be a challenge. Amedisys CEO William Borne said the company's results were affected by "soft volume" as well as higher costs. With the worse-than-expected third quarter, Amedisys now projects earnings for full-year 2013 to be between $0.20 and $0.25 per share.
Comeback candidates
Which of this week's three big losers could mount a comeback? Technically, any of them could. However, their challenges in doing so vary.
Amedisys is hostage in large part to government reimbursement for home care. While the company can continue to try to move toward less dependence on Medicare revenue, such efforts aren't easy. Sarepta can certainly come back with good results from a phase 3 study of eteplirsen. However, that could take quite a while.
Epizyme could have the easiest path to rebounding. This week's drop stemmed from early stage results. Further testing could change the outlook on EPZ-5676.
There's also always the chance that the small company could be acquired. Celgene (CELG) already owns the rights to market EPZ-5676 outside the United States. The big biotech hasn't been shy about making deals in the past and is sitting on a nice cash stockpile.
