Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Even by the chaotic standards of biotech, Sarepta's drug for Duchenne Muscular Dystrophy (DMD) has been through an emotional and regulatory wringer. 

The end result of all that pain -- an FDA panel rejection of the drug on Monday -- left nobody happy. But it was probably the right call.  

Sarepta was the lone remaining contestant in what began as a three-company race, including PTC and BioMarin, to get a drug approved for DMD, a deadly disease that affects boys and currently has no treatment. Sarepta's drug once looked to have a decent chance of approval, until an FDA review in January revealed serious concerns about it, sending Sarepta shares down 54 percent. An East Coast blizzard and the submission of new data delayed a final decision, raising hopes of a regulatory change of heart ahead of Monday's rescheduled FDA review panel. 

But those hopes have been dashed: A report from the agency's staff released on Thursday rejected Sarepta's arguments in favor of the drug, and the panel of experts convened on Monday did, too. 

There may still be a chance for the drug. The FDA usually follows panel recommendations, but not always. A high-ranking FDA official spoke at the panel of the risk of rejecting a drug that might work. Top brass could buck the scientists that examined the company's data and argue that a lack of treatment alternatives means the drug should be approved, despite unconvincing study results. 

But that's a long shot. Sarepta shares tumbled as much as 46 percent in early trading on Tuesday and have fallen 77 percent from their peak last October. 

Roller Coaster
The prospects for Sarepta's experimental therapy for a deadly muscle wasting disease have sent the stock rocketing up and down repeatedly.
Source: Bloomberg

A rejection would be another blow to companies seeking approval of drugs using small, fast studies that don't use a placebo or control group. And it's a sign the FDA's willingness to lower the approval bar for rare-disease, or "orphan," drugs is limited. It suggests that political and patient pressure -- of which there has been plenty in the case of Sarepta's drug -- won't overcome the FDA's view of the science.

Sarepta delivered strong arguments at the dramatic panel hearing. And more than 50 patients, parents, and doctors spoke emotionally and convincingly of the drug's benefits to them. The crowd cheered the patients and sometimes hassled FDA presenters. 

But even after FDA top brass told panel members to be flexible and take what they heard from patients into account, the panel voted against the drug's full approval. They were concerned over small sample size -- there were only 12 patients -- and the lack of a placebo control arm. 

Race to the Bottom
It's been a tough 10 months for biotech stock performance, but those chasing treatments for Duchenne Muscular Dystrophy have had it worse.
Source: Bloomberg

Sarepta faces a difficult path forward. Though it is working on another study for this drug, that may take years. It has about $200 million in cash -- not a huge amount, but pretty good compared to peers -- but its other assets are early-stage, and investors won't relish the idea of waiting years for an approval. Raising more money will be tough with a depressed stock price.

The company is partly culpable for this outcome. It says it didn't have enough of its drug available to run the sort of big, placebo-controlled trial the FDA prefers. And it says that such a trial is now more difficult, as parents will be reluctant to enroll their boys and risk getting a placebo instead of a drug that has proven to be somewhat effective. But the trial Sarepta submitted was so small, and its data so difficult to interpret, that it may have cost it an approval. 

The FDA could also be criticized for sending mixed signals about its standards. The agency publicly told patients and advocates it was looking for ways to speed up approval of this drug, and created a public perception it would lower the bar.

And there has been an unusual amount of public pressure on the FDA over this drug. Nearly a quarter of the U.S. Senate signed a letter urging it to be flexible. Thirty-six doctors and experts in treating the disease also signed a letter arguing the drug is at least worth approving on a temporary basis. 

Pressure has clearly gotten to the to the agency's upper echelons. Janet Woodcock and Bob Temple, two high-ranking FDA officials, spoke at the panel about the standards for accelerated approval and issues with the sort of trials Sarepta ran. It's relatively rare for one of them to speak at a panel, let alone both. 

But approval based on political or patient pressure could set a possibly dangerous precedent. It could send a message about small clinical trials and scientific rigor that the agency does not want to send.

Rejecting Sarepta's drug is clearly a tough call. But if the FDA truly believes Sarepta failed to prove the drug works, then it's the right one.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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