Please ensure Javascript is enabled for purposes of website accessibility

What Caused Sarepta Therapeutics To Crash 29% in April

By Todd Campbell - May 3, 2016 at 12:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An unfavorable vote by a key advisory committee caused investors to exit shares last month.


What: A meeting of the FDA's Peripheral and Central Nervous System Advisory Committee last month to discuss approving the company's drug for a form of muscular dystrophy sent shares of Sarepta Therapeutics (SRPT -2.74%) tumbling 29% in April, according to data from S&P Global Market Intelligence.

So what: Ahead of its meeting on April 25, the advisory committee was presented with briefing materials from the FDA. Those materials suggested that the FDA was very skeptical of the data supplied by the company on eteplirsen, an exon-51 skipping therapy for Duchenne muscular dystrophy (DMD).

DMD is a rare muscle wasting disease caused by a lack of effectively formed dystrophin, a protein that is found in muscle. Eteplirsen skips a section of DNA in the dystrophin gene, thereby allowing the creation of a shortened but functional dystrophin in some DMD patients. Roughly 13% of DMD patients are thought to be amenable to this approach.

Although Sarepta Therapeutics provided the FDA with results from a trial studying eterplirsen, the briefing document revealed that the regulator wasn't overly convinced of eteplirsen's efficacy. Because Sarepta Therapeutics' trial only involved 12 patients, and the company used a historical control rather than a placebo control group, the FDA questioned whether results were convincing enough to establish a link between eteplirsen and improved outcomes for DMD patients.

During the advisory committee meeting itself, the FDA and the advisory committee discussed the potential pitfalls associated with small trials and historical controls. The committee also heard testimony in support of approving eteplirsen from trial participants. In the end, the committee voted against eteplirsen's approval 7 to 6.

Now what: The FDA usually follows the advice of its committees, but it's not required to. That has Sarepta Therapeutics bulls remaining hopeful, especially given what is being viewed by industry watchers as positive comments by FDA leaders, including Janet Woodcock, the director of the FDA's center for drug evaluation and research.

Woodcock reminded committee members that additional confirmatory studies would be required with early approval. She also outlined the risk associated with delaying approval of a drug that could potentially help patients in this indication. Currently, there are no drugs approved to combat DMD and sadly, most patients succumb to their disease by their 30s. Clearly, there's an immense need for new treatment options.

Nevertheless, the fact that the advisory committee was unimpressed by Sarepta Therpeutics' data makes a final FDA decision too-close-to-call. For that reason, investing in this stock right now ahead of such a binary event is incredibly risky. The FDA is expected to issue its determination on May 26 and until then, other investment ideas may be a better bet.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sarepta Therapeutics, Inc. Stock Quote
Sarepta Therapeutics, Inc.
$74.96 (-2.74%) $-2.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.