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The requests Sarepta Therapeutics (SRPT) has gotten from the FDA represent a sign of FDA seriousness towards bringing the firm’s drug eteplirsen for Duchenne muscular dystrophy as soon as possible to the children suffering from the debilitating, fast deteriorating disease. The FDA did not wait for the firm to file for early approval, it rather asked Sarepta to bring in more data that would legitimize granting early approval of the first drug ever to claim treating the disabling disease at its root-origin. Investors who should have been optimistic about the FDA initiative sold their shares instead, causing them to lose around 10% of their value.

Looking at the stock price dropping like a rock, some investors called us asking if they are missing something, probably an FDA decision not to grant the drug early approval. Our answer was that the FDA could not have decided on rejecting approval of an NDA that has not been filed. The agency did not request data that are missing from because the firm did not file them. The selloff, we believe, was not a matter of pessimism towards the drug’s outcome, but rather of the fear that makes investors abandon ship before the FDA makes a decision about a drug approval, especially those who have made enormous profit out of their investment in and feel more secure upholding their gain, not risk it.

In spite of the news that citing that Sarepta has received feedback on both the acceptability of dystrophin as a surrogate endpoint that would reasonably predict clinical benefit in DMD patients and the acceptability of the eteplirsen safety database for a Subpart H Accelerated Approval filing, still analysts demonstrate skepticism towards early approval.

Coming Tuesday, before the market hours SRPT was seen on the tape dropping like a rock. The reason for the persistent skepticism seems to be that Janney Capital Markets analyst Kimberly Lee announced in the Tuesday morning research that she could not rule out the possibility that Sarepta's study of 12 patients treated with eteplirsen is too small for accelerated approval. Seeking comments from the company itself, the Associated Press seemed to have not received yet a return call from the company.

Duchenne muscular dystrophy is one of a group of inherited conditions that may occur in childhood or adulthood. In this group, the patients’ conditions deteriorate faster than other types of muscular dystrophies. Duchenne muscular dystrophy is known to be caused by a defective gene for the protein dystrophin, but the condition has proven to occur also in people without a known family history of the condition. Symptoms usually appear before age 6 and may appear as early as infancy. They may include tremendous fatigue, learning difficulties, muscle weakness with difficulty running and jumping, falling frequently and inability to climb stairs. These symptoms worsen very quickly. At age 12 children mostly use wheelchairs. Difficulty breathing and heart myopathies usually start by age 20.

From the brief description, one can understand the reason for the rush to approve Sarepta’s eteplirsen - the only drug that has proven to increase the level of dystrophin the protein whose deficiency is currently considered the main cause for the disease. When it comes to children, decision makers are usually careful not to let them wait for a hope that might be at reach. It all depends on safety. In case eteplirsen safety s acceptable, then the too small study that has confirmed the drug’s action and demonstrated efficacy might be good enough for the FDA to get it to the children to overcome at least part of their disability, and, in the meantime put a break on the fast disease progression.

We are confident that the FDA is considering all the facts.

With regard to Sarepta, the most valuable in this firm is the success of its technology that makes possible the firm’s development of far-reaching RNA-based drugs. The proof of concept is partially offered as eteplirsen has succeeded in producing dystrophin. Those who sold SRPT cannot complain. They made a lot of profit and those who followed cannot be blamed as the fear is king and a bird in hand is ..

However, we believe in the Sarepta’s technology and brilliant future. We will probably accumulate when the stock stops bleeding. We are long this firm.

Disclosure: None.

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Source: Sarepta: What's Going On?