Sarepta Stock Rises to Highest Since 2013 as Drug Approved

  • Drug will have net cost $300,000 a year, company says on call
  • FDA requires more study to prove benefit of the treatment

Sarepta Therapeutics Inc. won U.S. approval for its drug to treat Duchenne muscular dystrophy, a victory for young patients with a form of the deadly muscle disease and their parents after a long and disputed regulatory review.

The stock rose 74 percent to $48.94, the highest closing price since October 2013. The gain gives Cambridge, Massachusetts-based Sarepta a market value of $2.34 billion, and the positive news from the Food and Drug Administration could make it a much more appetizing -- and expensive -- takeover target.

The drug, which will be sold as Exondys 51, is the first therapy approved for Duchenne muscular dystrophy, or DMD, a genetic disease that mainly affects young boys. It will have a net price of $300,000 a year, Sarepta said on a conference call Monday. adding that it wasn’t sure exactly how many patients would qualify for use of the therapy.

Sarepta Interim CEO Edward Kaye said the price of the drug was “in the middle of the range” for rare disease treatments, which are developed for a small handful of patients. Kaye said the company also factored in its research costs as well as the expense of future drug trials.

“Given the sensitivity to pricing we have tried to be what we think is very reasonable given all of the costs for this,” he said on the call.

Approval Process

Following months of uncertainty -- including a rejection by a panel of outside advisers in April and an internal dispute over clearing the treatment for sale -- the FDA decided to approve it under its “accelerated approval” program, which can make drugs available for sale if they show signs they might help patients while more study is conducted.

“Accelerated approval makes this drug available to patients based on initial data, but we eagerly await learning more about the efficacy of this drug through a confirmatory clinical trial that the company must conduct after approval,” Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research, said in a statement. Future trials will run for two years, Sarepta said on the conference call.

Sarepta’s stock has oscillated widely over the past year over the fate of experimental treatment, also called eteplirsen. The FDA decision sent shares of other rare-disease drug developers higher, including PTC Therapeutics Inc., up 21 percent, and Amicus Therapeutics Inc., up 5 percent.

Sarepta said in June that the FDA had asked for data from patient biopsies obtained in an ongoing study of the drug that was intended to confirm its benefit after it reached the market, raising hopes that the therapy had a chance of approval. The request was a rare step by the agency, which has given more weight to patient perspectives even when clinical trials don’t conclusively show benefit.

‘Shaking and Quivering’

For parents of children with DMD who worked hard to get a treatment approved, the FDA’s decision is a major achievement.

“I’m standing here shaking and quivering,” said Terri Ellsworth, the mother of a 15-year-old boy who is among 12 children enrolled in a Sarepta drug trial. “It means so much for the muscular dystrophy world.”

“All of our hard work has paid off, writing the FDA and writing to everyone,” Ellsworth said. “I can’t say enough how much your voice matters, and I will do it again and again so more research can go forward."

Patients with DMD lack a protein, called dystrophin, that keeps muscles intact. They quickly lose strength, robbing them of the ability to walk, stand and breathe. Sufferers often die by age 25, usually from lung disorders, according to the National Institutes of Health.

FDA Split

The Exondys 51 review caused a split within the FDA that went all the way to Commissioner Robert Califf, who sided with Woodcock to approve the drug. Ellis Unger, a top FDA reviewer, wanted to reject the treatment.

“Patient-focused drug development is about listening to patient perspectives about what matters to them; it is not about basing drug approvals on anecdotal testimony that is not corroborated by data,” Unger wrote in a July 15 memo posted on FDA’s website.

“If we were to approve eteplirsen without substantial evidence of effectiveness, or on the basis of a surrogate endpoint with a trivial treatment effect, we would quickly find ourselves in the position of having to approve a myriad of ineffective treatments for groups of desperate patients, in essence, allowing marketing based on desperation, patient lobbying, and the desire and need of hope,” Unger continued.

Califf countered that Woodcock has a “well-documented history of not bowing to such influences.” He said overturning Woodcock’s decision to approve Exondys 51 would be an “exceedingly rare” move and he deferred to Woodcock’s judgment given he doesn’t have technical expertise beyond hers or that of Unger, her subordinate.

‘Amazed’

The ruling and the way it was made could have implications well beyond Sarepta, potentially easing the requirements for medicines that treat patients with rare conditions who have no other options, said Sam Fazeli, an analyst with Bloomberg Intelligence in London.  

“I am amazed after all that has happened,” Fazeli said. “This does mean that the FDA may be more lenient on very rare diseases such as DMD with no drug options at all.”  

Experimental Duchenne drugs have had a tough history at the FDA. This year, the agency rejected two other experimental therapies, one from BioMarin Pharmaceutical Inc. and the other from PTC. Sarepta is also studying at least nine other drugs to treat various forms of DMD.

Closely held Marathon Pharmaceuticals LLC submitted an application to the FDA on June 14 seeking approval of its DMD drug, called deflazacort.

“Change usually happens from a champion or an individual who is willing to think outside the box,” Debra Miller, head of advocacy group CureDuchenne. said. “We had a champion in Janet Woodcock who was able to see beyond the numbers on the paper and actually see the patients who were involved, and understand the benefits.”

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