Source: BioMarin

What: After updating investors on the efficacy of its therapy for Duchenne muscular dystrophy (DMD), shares in Sarepta Therapeutics (NASDAQ:SRPT) jumped by more than 22% earlier today.

So what: It's been a busy couple of days for Sarepta that began with the U.S. Patent Trial and Appeal Board ruling in favor of one patent licensed to its competitor BioMarin's (NASDAQ:BMRN) for the exon-skipping approach used by both companies to treat DMD and ended with Sarepta providing more insight into the efficacy of its DMD drug, eteplirsen.

BioMarin and Sarepta's drugs both employ an exon-skipping approach that attempts to restore dystrophin production in DMD patients to slow disease progression.

According to Sarepta, the ruling by the patent office in favor of BioMarin relates to one patent on eteplirsen and the decision has no impact on eteplirsen's primary patent, which protects the drug until 2025.

In its press release today, Sarepta reports that patients treated with eteplirsen showed a 151 meter advantage relative to a control in a six minute walk test. Sarepta also reports that nearly all of the patients receiving eterplirsen are producing dystrophin and that over the study period, the rate of loss in meters walked was less in the eteplirsen arm than in the control arm.

Now what: Both BioMarin and Sarepta are awaiting an FDA decision on approval to begin marketing their DMD therapies and those decisions are expected within the next few months. The FDA is scheduled to issue a decision to BioMarin on December 27 and to Sarepta on February 26.

If approved, these drugs will offer new hope to DMD patients with an amenable genetic makeup. Specifically, 13% of DMD patients have genetic mutations that could respond to BioMarin and Sarepta's exon-skipping therapies.

Overall, that's a relatively small addressable patient population. DMD occurs in roughly one out of every 3,500 boys born worldwide and that means that only a few thousand patients would qualify for treatment.

Regardless, because there is a significant need for new therapies for this life-shortening disease, there's a good chance that the FDA will approve these drugs and if so, then depending on the price that is charged by these drugmakers, these therapies could still generate hundreds of millions of dollars in sales. Additionally, if both drugs are approved, these companies will be awarded a transferable priority review voucher that could be worth hundreds of millions of dollars given prices that have been recently paid for them on the open market.

Overall, because there's still a chance that eteplirsen will fail to win FDA approval and it's uncertain what the impact could be on Sarepta if the ongoing patent litigation ends up favoring BioMarin, Sarepta remains a high risk stock suitable only for the most risk tolerant of investor.