Sarepta Therapeutics (NASDAQ:SRPT) fell 13% today after announcing 144-week data for the trial testing its Duchenne muscular dystrophy drug eteplirsen. Investors seem to be freaking out about the possibility that the drug is no longer working.

Patients taking the drug during the entire time were able to walk 33 meters less in six minutes than they could at the start of the treatment. At the last measurement -- at 120 weeks -- the decline was just 14 meters from baseline.

It could be noise 
While the patients walked the shortest distance that they ever have, the decline in walking distance was as high as 21 meters at the 84-week time point, and then "improved" to a decline of 14 meters at the previous measurement after 120 weeks. I put "improved" in quotes, because we're likely just looking at variation in the test. At one point in the trial, the six-minute walk test went from a 16-meter decline to a seven-meter improvement to a 17-meter decline over the course of three readings at 36 weeks, 48 weeks, and 62 weeks respectively.

Investors are likely also worried about the magnitude of the decline, from 14 meters below baseline to 33 meters below baseline during the last 24 weeks, which is a delta of 19 meters. But, as noted above, the walk test previously declined from a seven-meter improvement to a 17-meter decline over baseline -- a delta of 20 meters -- and that was over just 14 weeks.

We need at least one more data point to know if this is truly a trend downward, suggesting the drug is no longer helping the boys as much.

It doesn't have to be a cure
There's no way the Food and Drug Administration is going to use the efficacy data after 144 weeks to determine whether eteplirsen is approved. The drug doesn't have to be a cure to get approved.

There are no approved treatments for the type of Duchenne muscular dystrophy that eteplirsen treats, but PTC Therapeutics (NASDAQ:PTCT) received a positive opinion from Europe's Committee for Medicinal Products for Human Use for Translarna, which treats Duchenne muscular dystrophy caused by a different mutation. The conditional marketing authorization, assuming the European Medicines Agency follows through, is based on 48-week data, and PTC Therapeutics has started a confirmatory phase 3 trial that will look at walking ability at 48 weeks.

Sarepta Therapeutics hasn't started its phase 3 confirmatory trial yet, but it will likely readout at 48 weeks, which should be sufficient to convince the FDA that the drug works. In the current phase 2b trial, the control group who got placebo for the first 24 weeks walked 69 meters less at the 36 week time point -- the last time point when you wouldn't expect the delayed treatment to have started working -- compared to a 16-meter decline for those who received eteplirsen from the beginning.

144 weeks is nearly three years
In addition to the standard pathway to approval using a phase 3 trial, Sarepta Therapeutics has a chance for an accelerated approval based on the current trial. The small size -- just six patients in the treatment group, and only four in the control group after two patients were excluded because they stopped being able to walk shortly after the trial began -- makes it hard to have confidence in the comparison, because patients start to decline at different ages. At this point, the boys are, on average, 12-years old, well into where they would be expected to lose their walking ability.

Source: Sarepta Therapeutics.

The trial is also open label -- at this point, all the boys know they're on eteplirsen -- which is dangerous for something like a six-minute walk test where the result is ultimately determined by the effort patients put in. It's possible there could be a placebo effect, where patients push themselves more because they believe the drug is working. But that theory only goes so far. If the drug wasn't working, eventually the biology of disease progression would catch up.

The longer the boys are on the drug without a steep decline, the more regulators can feel confident that the effect is real. The FDA also has data from Prosensa's (UNKNOWN:RNA.DL) phase 3 trial testing its Duchenne muscular dystrophy drug, drisapersen. While Prosensa's trial failed, the placebo group could act as a historical control for Sarepta's trial.

Bad news buy?
I think so. I did a pretty good job calling the bottom when Sarepta had bad news last November.

The longer the drug works, the longer patients will take it, and the higher sales will be, so a decline in walking ability -- if it's real -- is somewhat of a negative. But a decline unfortunately is also inevitable, and doesn't take away from the drug's approvability.

It's asking a little much to expect eteplirsen to be a cure. And investors seem to be overreacting at this point.