Yesterday we saw erratic, bullish action in shares of Sarepta Therapeutics (NASDAQ: SRPT) after key data was released early on TheStreet from a study on GlaxoSmithKline (NYSE: GSK) and Prosena's drug known as drisapersen, which is also being developed for the treatment of Duchenne Muscular Dystrophy (NYSE:DMD). Although this is a drug that could compete with Sarepta's DMD drug eteplirsen later on, buyers pushed SRPT over 11% higher on the notion that the drisapersen trial provided more data establishing the efficacy of DMD treatments that induce skipping of exon 51 during transcription of the dystrophin gene.
The Disease And Mechanism of Action
DMD is the most common form of muscular dystrophy in children, and affects roughly one out of every 3,500 boys worldwide according to Sarepta's own estimates (which equates to roughly 600 male births per year). Because the gene that causes muscular dystrophy is located on the X chromosome it's virtually impossible for a female to be affected due to the existence of a functional copy on their second X chromosome, although they have a 50% chance to pass the disease onto their offspring.
Muscular dystrophy, which gradually kills muscle cells throughout patients' lifespans, is caused by mutations of the gene that code for the production of a vital protein known as dystrophin. The dystrophin protein itself is absolutely vital for connecting the structural components of individual muscle cells to one another through the extracelluar matrix.
Scientists will not be able to develop a true cure for muscular dystrophy in the near future, but there are many angles through which we can slow the overall progression of the disease. Some have proven more successful than others, but nothing compares to the likes of eteplirsen and drisapersen.
After research performed in previous decades, scientists have mapped out and located the exact mutations of the dystrophin gene that cause the various types of muscular dystrophy. Duchenne Muscular Dystrophy has been linked to exon 51.
Successful Manipulation of RNA And Dystrophin
Using cutting-edge technology, Sarepta and Prosena designed compounds that induce skipping of exon 51 during the transcription process (when DNA is written into RNA). This allows muscular dystrophy patients to produce functional dystrophin proteins that don't contain the exact amino acids coded for in exon 51 without replacing their actual DNA (a very difficult task).
This mechanism of action is proving to be quite viable, as more and more data suggests that these altered dystrophin proteins seem to be highly functional.
Drisapersen's Phase III efficacy data was based on something known as the 6MWD (6 minute walk distance), which is a crude but simple-to-understand method of measuring slowdown in muscular dystrophy progression. Statistically significant improvements in the "continuous" drisapersen arm versus placebo were seen after 24 and 48 weeks, although the "intermittent" arm was only able to outperform placebo at the 48 week mark. This suggests that exon 51 skipping drugs need to be taken quite consistently to produce optimal therapeutic results.
In agreement with Feuerstein, who provided the results yesterday, I'm interested to see whether these top-line results were stellar because of the outperformance of patients that took drisapersen or because of more rapid deterioration in the placebo arms. We'd also be able to say that exon 51 skipping works with much more conviction had they included dystrophin protein levels as a secondary endpoint, although Sarepta investors should realize that this data takes care of an issue that many had with the phase II results that they first announced in early October 2012 - the tiny patient population.
Sarepta's phase II trial enrolled only 12 children, while GSK's trial enrolled 53. Although this is still small for a phase III trial, duchenne muscular dystrophy is an extremely rare genetic disorder that has a very limited patient population. Given the situation, the FDA would be hard-pressed to reject these drugs based on the small number of patients that they were tested on.
Sarepta recently held a meeting with the FDA to discuss the potential approval of eteplirsen based on existing clinical trial data, although the results of this meeting are not yet public and will be released "some time before the end of April." The top-line drisapersen phase III results were not available at the time, although it would make the most sense if the FDA linked the success of the drisapersen trial to the early approval of eteplirsen.
Depending on the actual results of that meeting, we should see significant movement in SRPT in either direction before the end of April. A fresh "buy" rating on SRPT from Ritu Baral of Canaccord Genuity put out in reaction the drisapersen data suggests that the efficacy link between drisapersen and eteplirsen is also established by Wall Street analysts.
Another positive brought about by the drisapersen phase III trial is its potential impact on RNA-based therapeutics as a whole. As mentioned in my note from early March 2013, I have a lot of confidence in the RNA sector due to the flexibility and power of RNA manipulation in the treatment of various diseases. Muscular dystrophy seems to be one of the first indications that RNA will thrive in, but more indications will come as technology improves.
Sarepta is now one of the major players in the field, which is one of the reasons it has received so much attention this year. Although valuable by itself, eteplirsen is also a financial stepping stone that Sarepta will use to leverage its RNA technology in other indications.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.