Image source: NIH Image Gallery via Flickr.

What: Shares of Sarepta Therapeutics (SRPT -2.12%), a clinical-stage drug developer targeting therapies to treat Duchenne muscular dystrophy (DMD) and a host of other infectious diseases, surged by as much as 22% during Monday's trading session after its lead drug, eteplirsen, designed to treat exon 51-based DMD, received an overwhelming shot in the arm of confidence.

So what: This "shot in the arm of confidence" comes in the form of a letter posted to the University of California, Los Angeles' website that urges the Food and Drug Administration to consider approving eteplirsen for the treatment of DMD. The letter was co-authored by the two co-directors of the Center for Duchenne Muscular Dystrophy at UCLA, and was signed by an additional 34 physicians, clinicians, and researchers who specialize in DMD research around the globe. According to reports, the letter was actually delivered to the FDA last month.

This letter represent the strongest pooling of public support for eteplirsen to date, but the drug still faces an uncertain future with an FDA PDUFA date of May 26, 2016. DMD is a disease diagnosed during childhood and characterized by a breakdown of the myelin sheath that protects muscle fibers, with most patients dying in their 20s.

Now what: As a quick refresher for those who may not have followed Sarepta all too closely, we've got two very divergent things going on here.

Image source: Centers for Disease Control and Prevention.

On one hand, Sarepta's eteplirsen has unequivocally shown in a phase 2b extension trial of patients with DMD that it provides a statistically significant benefit based on the six-minute walk test. What's more intriguing is that the patients in Sarepta's extension study had been diagnosed years prior, meaning an earlier diagnosis, along with beginning treatment sooner, could have even better results.

On the flipside, Sarepta's extension study contained just a very small group of patients, and the FDA has seemed unwilling to accept increased dystrophin production as a concrete endpoint to determine effectiveness. In fact, Sarepta is being required by the FDA to run a larger phase 3 trial to confirm its efficacy, although an accelerated approval of the drug by late May (as noted above) is possible.

Investors here need to understand the risks involved. There are so many "X factors" that I'd be foolish (with a small "f") to try to name them all, but it probably shakes out something like this. If eteplirsen is approved, it'll likely carry a hefty specialty price tag and would go a long way to validating Sarepta's exon-skipping drug development platform, which could treat nearly half of all exon-based DMD cases with eight developed medications. If eteplirsen fails, it could crush Sarepta shareholders' ticket to easy money and leave the company reliant on its infectious disease portfolio.