Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Sarepta Therapeutics Inc (SRPT) Moves Ahead With Seeking Eteplirsen Approval: Hip, Hip, Uh-Oh?

Investors wondered for months if Sarepta Therapeutics Inc (NASDAQ:SRPT) would pursue accelerated approval for Duchenne muscular dystrophy, or DMD, drug eteplirsen. Sarepta gave its answer to those questions before the market opened on Wednesday: “Accelerated approval? Forget about it!”

Sarepta Therapeutics IncSarepta Therapeutics Inc (NASDAQ:SRPT) now plans to file a New Drug Application, or NDA, for eteplirsen in the first half of 2014 based on the Food and Drug Administration’s response that it is “open to considering an NDA” based on data that the biotech submitted recently. However, the FDA wouldn’t commit to an accelerated approval pathway for the drug.

Hip, hip, uh-oh?

The press release announcing the decision to move forward with the eteplirsen NDA hit the wires at 7 a.m. ET. Sarepta Therapeutics Inc (NASDAQ:SRPT) shares immediately jumped 21% in pre-market trading. The exuberance didn’t last long, though.

Sarepta Therapeutics Inc (NASDAQ:SRPT) started its conference call to discuss the announcement at 8 a.m. ET. By that point, its stock had given up most of the pre-market gains. The more Sarepta CEO Chris Garabedian spoke, though, the more shares went down. The stock opened 2.5% down and continued to fall like a rock. Within an hour of the market open, Sarepta was trading 17% lower than its Tuesday closing price before regaining a couple of percentage points.

This sell-off, the largest in more than a year, came about as investors parsed through what Garabedian said in the conference call. His words boiled down to plenty of uncertainty. Uncertainty about whether the FDA will actually accept the NDA. Uncertainty about whether dystrophin levels would be acceptable as a surrogate endpoint for the treatment of DMD. Uncertainty about the chances of ultimate approval based on current data.

Sarepta Therapeutics Inc (NASDAQ:SRPT)’s news didn’t inspire confidence in several analysts. Burrill, Deutsche Bank, and Piper Jaffray all downgraded the stock following the press release and conference call.

Getting to “hooray”

Sarepta appears to be rolling the dice that the FDA will look favorably on the results obtained in the phase 2 clinical study. Those results were impressive — excellent improvement in walking ability for young boys who took eteplirsen. The FDA could give considerable weight to the improvement seen in those six-minute walk tests. However, the small number of patients involved in the study (only 12 boys participated) is a definite hurdle.

GlaxoSmithKline plc (ADR) (NYSE:GSK) and Prosensa Holding NV (NASDAQ:RNA) claim larger studies for rival DMD drug drisapersen. The phase 2 study for the drug included 53 patients, while an ongoing phase 3 clinical study involves 186 boys with DMD. GlaxoSmithKline plc (ADR) (NYSE:GSK) and Prosensa Holding NV (NASDAQ:RNA) received breakthrough therapy designation for drisapersen in June. The FDA has not awarded this designation to eteplirsen thus far.

Despite Sarepta’s smaller study, I think that the FDA could still give a positive decision on approval of the eteplirsen NDA. There has been considerable pressure on the FDA from families of boys with DMD to approve a treatment for the rare disease. The strong results Sarepta brings to the table combined with a real need for alternatives for patients just might sway the FDA to allow eteplirsen to be marketed.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.