BioMarin (NASDAQ:BMRN) is a recognized leader in the area of rare diseases. The key to the drugmaker's success has been its ability to identify promising clinical candidates and subsequently use its tremendous experience to bring those drugs to market. 

Source: Flickr via user Partij van de Arbeid.

That's why many onlookers were absolutely baffled by BioMarin's $840 million buyout of Prosensa last year for its experimental Duchenne muscular dystrophy, or DMD, drug, drisapersen.

Drisapersen failed to meet its primary endpoint of stabilizing performance on the so-called six-minute walking test in a pivotal late-stage study, causing GlaxoSmithKline (NYSE:GSK) to return the drug's rights to Prosensa.

Prosensa, alone and underfunded, struggled to find a glimmer of hope following Glaxo's decision to end their DMD partnership.

After combing through the data, however, the struggling biotech announced that the drug appears to be effective in younger patients, especially if it's administered over a long period of time. This nugget was apparently enough for BioMarin to risk nearly $1 billion on drisapersen. 

The Food and Drug Administration, or FDA, recently agreed to formally review drisapersen, meaning that BioMarin's risky bet may pay off.

Then again, it may not...
Last week, the FDA also gave the green light to Sarepta Therapeutics (NASDAQ:SRPT) to file a rolling New Drug Application for its competing DMD drug, eteplirsen. Although the details of the filing haven't been made public yet, there is a good chance that the same advisory committee will review both drugs sometime in the fourth quarter of this year. 

The FDA's decision to review eteplirsen, on an accelerated basis, is somewhat out of character because it required Prosensa to complete a late-stage study for drisapersen. And the agency previously denied Sarepta's request for an accelerated review because eteplirsen's midstage study enrolled only 12 patients. 

So BioMarin and Sarepta investors alike might be wondering what's going on at the FDA. 

Both drugs have their problems
The FDA is under tremendous pressure from DMD advocates to approve at least one of these two exon-skipping therapies, given that there are no treatments on the market for this fatal disease.

Drisapersen's regulatory review, though, hinges on the mere suggestion that it might be effective in younger boys. Put simply, drisapersen's clinical benefit is still very much in question, and it won't be clarified until BioMarin completes another ongoing late-stage study.

Eteplirsen, unfortunately, is in the same boat in many ways. Because of the small sample size of eteplirsen's midstage study, the drug's observed clinical benefits in terms of the six-minute walk test and pulmonary function may ultimately not hold up in a larger confirmatory trial. Indeed, drisapersen's midstage results looked promising as well, but this therapeutic signal was lost in a larger trial.  

So the FDA is basically reviewing two drugs that have yet to prove their ability to improve clinical outcomes. That's an unusual situation to say the least.

Eteplirsen may nevertheless be the FDA's drug of choice
A head-to-head comparison of the two drugs reveals that eteplirsen has a major advantage over drisapersen.

Specifically, drisapersen reportedly induced a handful of serious adverse events -- namely kidney toxicity -- that required some patients to be hospitalized. Eteplirsen's safety profile, on the other hand, is basically unblemished.

This safety issue may loom large if an advisory committee is convened -- which is almost certainly going to be the case.

In short, drisapersen's efficacy is questionable at best, but its safety profile is somewhat concerning. The FDA therefore might favor eteplirsen simply because it has a cleaner safety record. 

What's next?
The need for some form of pharmaceutical intervention for DMD is unquestionable. The FDA is thus being put in the unenviable position of considering two half-baked experimental drugs, so to speak.

In the long run, drisapersen and eteplirsen may prove to be effective DMD treatments for particular types of patients. But the clinical trial process is definitely being short-circuited, to some degree, by the overwhelming need for a pharmaceutical option in the fight against this deadly disease.   

Viewed this way, the FDA may err on the side of caution by granting a conditional approval for eteplirsen because of its superior safety profile. That would give BioMarin the time it needs to formally test the hypothesis that drisapersen works in certain patients.

The problem for BioMarin, however, is that an eteplirsen approval could make drisapersen obsolete. Drisapersen's only real competitive advantage is its first-mover status. Eteplirsen, by all accounts, should turn out to be more effective and safer than drisapersen. 

When BioMarin bought Prosensa, the overarching thesis seemed to be that eteplirsen would need to complete a lengthy late-stage study before approval. BioMarin's vast resources and experience would thus give it a real shot at getting drisapersen approved well before eteplirsen.

In the wake of the FDA's decision to review eteplirsen, that scenario now looks dubious. And investors shouldn't be shocked if eteplirsen is the drug the FDA ends up approving later this year. In other words, BioMarin may have bet on the wrong experimental DMD therapy.