Sarepta Surges After FDA Delays Ruling on DMD Drug

  • Stock jumps as investors hope delay increases approval chances
  • Analysts caution that competitor drug was rejected after delay

Sarepta Therapeutics Inc. surged Wednesday after the biotechnology company said U.S. regulators delayed ruling on its drug for a deadly muscle disease, raising hopes that the therapy could be approved.

The Food and Drug Administration notified Sarepta that it won’t complete its review of the drug, known as eteplirsen, by the scheduled May 26 deadline, Sarepta said Wednesday in a statement. The shares gained 18 percent to $21.82 at 10:17 a.m. in New York.

Boys with Duchenne muscular dystrophy are anxiously awaiting the regulator’s decision, a verdict that may decide the fate of the drugmaker. The FDA didn’t give a new date, only saying that it hopes to complete the review as soon as possible, according to Sarepta.

Sandy Walsh, an agency spokeswoman, said the FDA is prohibited by law from commenting on pending applications and declined to comment further. Sarepta’s statement did not mention any new data request from the FDA, and Ian Estepan, a company spokesman, declined to elaborate beyond the company’s statement.

If the FDA rejects Sarepta’s experimental therapy, it will be the third drug that patients have seen turned down by regulators this year. For Sarepta, whose sinking stock and dwindling cash have left it with few options, this may be the company’s last chance to get a product on the market after 36 years.

Extending the Agony

Simos Simeonidis, an analyst with RBC Capital Markets, cautioned that the delay may not significantly raise the odds of an approval. A decision on competitor BioMarin Pharmaceutical Inc.’s DMD drug was also delayed by the FDA before its eventual rejection.

The delay is “extending the agony (and the hope) in DMD,” Simeonidis said a note to clients Wednesday. “We continue to see only a small chance of an approval.”

Last month, patients and their advocates erupted when an agency advisory panel said that a key test of eteplirsen was flawed, since it didn’t include a matched comparison group receiving a placebo, the gold standard for clinical testing. While the company would have a hard time financing additional studies to support approval, it could be done, although at a steep price, according to Ritu Baral, an analyst with Cowen & Co.

“It sounds tough, yes, it sounds very tough,” Baral said by phone. “When there are investors who believe in the activity and investors that believe there’s a market, there’s always a price.”

A trial examining the drug’s impact on production of a key muscle protein could be completed by the second half of 2017, she said.

“It’s a vanishingly small probability that they will walk away from this drug,” Baral said.

The FDA’s decision will be a critical one for the company: At the end of March Sarepta had $141 million in cash and equivalents, down $63 million from three months earlier. The company’s 2015 operating loss was $220 million. 

Patients and drug companies have been strained by the effort to develop a drug for DMD. PTC Therapeutics Inc., developer of a third drug for DMD, also saw its candidate rejected by regulators this year. 

Rocky Start

Eteplirsen is designed to treat about 13 percent of patients with the disease, which is caused by a genetic defect affecting mostly young boys. DMD kills most patients by age 25 as their muscles fail, destroying their ability to walk and, eventually, to breathe. 

Cambridge, Massachusetts-based Sarepta’s quest for approval was rocky from the beginning. When the company announced its intention to file with the FDA three years ago, the shares dropped as investors felt the drug wasn’t ready, and the agency later pronounced the application premature. In April 2014 Sarepta said it would submit its application that year, only to be told in October that more data was needed. The filing was eventually completed in 2015.

Agency Flexibility

Frustrations with the approval process erupted as dozens of patients and parents flooded into a meeting last month to tell FDA advisers about the benefit they believed they got from the drug. In a rare move, FDA drug review chief Janet Woodcock gave comments at the end of the meeting, saying that the agency has “flexibility” to take patients’ views into account in its decisions.

The FDA’s decision will signal whether the agency is listening to patients’ arguments that doing traditional clinical studies won’t work in diseases as rare as DMD, according to Carrie Miceli, co-head of the Center for Duchenne Muscular Dystrophy at the University of California at Los Angeles and the mother of a boy with DMD.

“It’s not a situation where desperate parents are hoping for an approval, it’s a situation where educated people are hoping for a path” for such drug approvals, said Miceli, the lead signatory of a February letter to the FDA pushing for eteplirsen’s clearance. “If the FDA doesn’t hear that voice it will beg the question of how they hear the voice of the public.”

“Considering the thousands of lives that could be affected by a decision on eteplirsen, we understand and appreciate the care the FDA is taking in its review of this innovative drug,” Debra Miller, head of advocacy group CureDuchenne, said Wednesday in a statement after the FDA’s delay was announced.

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