Duchenne muscular dystrophy, or DMD, drugmakers have been on a win streak lately, with Prosensa (UNKNOWN:RNA.DL), Sarepta Therapeutics (NASDAQ:SRPT) and PTC Therapeutics (NASDAQ:PTCT) all hearing good news on the regulatory front. In each case, the regulatory problems arose, for the most part, from issues with the clinical trial data for their respective drugs. And today that trend is continuing with a disappointing clinical trial update from Sarepta.
Specifically, Sarepta reported that patients in the mid-stage open-label extension study for eteplirsen experienced a dramatic decline in walking ability at the 144 week mark, assessed on the 6 minute walk test. According to the release, patients at week 144 receiving the 30 mg/kg and 50 mg/kg doses exhibited a decline of 33.2 meters, or about 8.5%, from baseline in walking ability.
What's key to understand is that this is a drastic decline compared to previous updates, although Sarepta notes that these patients are still out-performing natural history data.
Is this sell-off warranted?
My take is that a sell off is warrant but perhaps not to this degree. Duchenne muscular dystrophy is a devastating disease and eteplirsen was never meant to be curative. The fact that patients are performing comparatively well is a good sign, but this latest update should keep investors' collective hopes in check. The idea that Sarepta's exon-skipping platform was going to be a miracle cure for this disease was perhaps far-fetched in the first place.
And I think today's massive drop is indicative of the Street's over-enthusiasm for these drugs, in my opinion. Put simply, eteplirsen still looks like it provides important clinical benefits to patients with literally no treatment options, but investors might have placed too much hope in the drug's upside.
So will eteplirsen be approved?
Sarepta has long wanted the Food and Drug Administration to accept dystrophin production as a proxy endpoint, rather than performance on the 6 minute walk test. And today's news clearly shows why. Eteplirsen undoubtedly increases dystrophin production and even appears to outperform Prosensa's DMD candidate in this regard. By the same token, both drugs appear to have minimal affects on walking performance over the long-term. In short, the hypothesis that fixing dystrophin production would automatically lead to better physiological performance appears to be going out the proverbial window.
That being said, I think the FDA is ultimately going to approve eteplirsen, with the caveat that Sarepta undertakes a large late-stage study with the 6 minute walk test as the primary endpoint. All told, patient advocate groups have placed tremendous pressure on regulatory agencies to allow some form of pharmacotherapy for DMD onto the market, which bodes well for all three of these companies.
Is Sarepta a bad news buy today?
I'm interested in the stock, and I think this was an overdone haircut. Sarepta's investors have been through a number of these volatile days and perhaps there were far too many investors anticipating yet another devastating clinical or regulatory update. Today's news isn't game changing and not entirely unexpected.
The bottom line is that the limited trial data so far suggests that eteplirsen slows disease progression and increases dystrophin production significantly. That should be enough to convince regulators to allow eteplirsen on the market via a conditional approval, in my opinion.
Biotechs are infamous for their volatile ways. And most of these extreme movements are overdone. I think today's action in Sarepta is symptomatic of this trend across the industry and this drop represents an attractive entry point for this clinical-stage biopharma. In fact, I think we'll see regulatory approvals for all three of these DMD drugmakers in the near future. Even so, investors should obviously keep a close eye on any required follow-up studies post-approval. And we're