Unlike Warren Buffett, Bill Ackman, and other classic value investors, the controversial billionaire George Soros doesn't rely solely on fundamentals to guide his investing decisions. Instead, he looks for the formation -- or cessation of bubbles.

Although most investors fear bubbles to no end, Soros believes they are an integral part of the market and can be exploited to generate market-beating returns. In a nutshell, Soros' complex investing philosophy centers around being able to identify the beginning of a trend, as well as its subsequent reversal.  

So it's not entirely surprising to see his fund's name listed as an owner for some of the spicier names in biotechnology -- companies more traditional investors probably wouldn't dare to own. 

Sarepta Therapeutics (NASDAQ:SRPT), for example, has given its shareholders one heck of ride over the past few years, shown by the chart below. Despite the stock's volatile history, the Soros Fund Management still decided to dramatically increase its position in the company by 2,620% in the second quarter. 

SRPT Chart

Sarepta's future hinges on its experimental DMD drug
The wild swings in Sarepta's share price are the direct result of the regulatory and clinical drama that has been unfolding for its experimental Duchenne muscular dystrophy drug eteplirsen. In short, the company has been pushing the Food and Drug Administration to consider an accelerated approval pathway based on promising mid-stage results for the drug. 

When the FDA decided the drug wasn't a good fit for such a pathway in November of 2013, however, Sarepta's shares crashed by over 60% in a single day. When the FDA reversed this decision last April -- allowing the company to proceed with their plans to file for regulatory approval, shares returned to their volatile ways by skyrocketing over 50%.

And in July, we saw yet another downturn in share price following slightly disappointing clinical results for the open-labeled portion of the mid-stage trial, where some boys receiving eteplirsen began to experience a decline in their walking ability at week 144. 

So, why is Soros bullish on Sarepta?
Ever since the FDA declined to review eteplirsen's NDA, DMD advocates have been out in force in the hope of changing the regulatory landscape for these drugs. And their efforts appear to be paying off.

Last May, EU regulators decided to do an about face for PTC Therapeutics' (NASDAQ:PTCT) DMD drug Translarna, recommending the drug for conditional approval, pending the outcome of an ongoing late-stage study. Shortly thereafter, Prosensa Holding (UNKNOWN:RNA.DL) also received word from the FDA that they will be allowed to proceed with a regulatory application for drisapersen. 

Overall, I think Soros' bet on Sarepta is based mostly on this drastic change in the regulatory outlook for DMD drugs. Put simply, we could see multiple regulatory approvals next year, despite the fact that these drugs have a spotty clinical trial history, to put it mildly. Of course, if the drugs are approved, there is then the big question about commercial success given the small patient population.

Should you follow Soros' speculative play?
Playing follow the smart money can be a good idea when it comes to long-term investing. Investors looking to replicate Soros' monstrous returns, however, should think twice before chasing the rabbit on speculative biotechnology stocks like Sarepta.

Going back to Soros' investing style, investors should keep in mind that his aim is to catch trends early and essentially exit before the bubble pops.

Viewed this way, Sarepta looks like an ideal vehicle to employ such a strategy given that the stock will probably surge higher as eteplirsen nears a formal regulatory review with the FDA. Even so, his fund may have sold off the position before the drug is even reviewed.  

The problem retail investors face in such circumstances is knowing when to sell to take advantage of a run-up. Soros' fund has two advantages that are simply not available to the average investor.

Firstly, the amount of money a fund like Soros' can put to work means that different rules apply altogether; i.e., they can sell out well before any risks have reared their ugly head and still generate impressive profits.

Secondly, Sarepta's sub-billion dollar market cap means that his fund could quite literally move the stock higher bit itself. Although this may seem unfair to most investors, it's a reality that we all have to live with and keep in mind when investing. Superinvestors like Soros have undeniable impacts on small companies and we are not privy to their buy/sell decisions on a real-time basis.

In sum, just because Soros invested in Sarepta doesn't necessarily mean you should. Timing the market is generally a losing proposition, particularly with small biotechs facing significant uncertainty. History has shown us to expect the unexpected with DMD drugmakers and investors should factor in the considerable risks before attempting to use a Soros-like investing strategy.