For pharmaceutical companies FDA decision dates can be met with a mix of excitement and dread. FDA decisions represent the culmination of years of work and hundreds of millions of dollars in investments. For smaller pharmaceutical companies a positive decision can send the stock soaring, while a negative decision could ruin the company. One of the more controversial areas of the pharmaceutical industry is in orphan drug pricing. Orphan drugs are drugs that are developed for afflictions that affect a small number of people. Due to the small amount of people affected by the disease, it is possible to demand a substantial price premium. Orphan drugs can provide substantial returns for investors and we have two FDA actions on orphan drugs that I am watching very closely.
Sarepta Therapeutics (NASDAQ:SRPT) appears poised to finally appear before an FDA panel for its drug eteplirsen, which is being developed for patients with Duchenne Muscular Dystrophy. I have previously written an article which goes into much further depth on Sarepta, which can be found here. Sarepta will be going in front of an FDA panel and is seeking the panel's approval for Eteplirsen. While the FDA is not bound by the decisions of its panels, it is uncommon for the FDA to deviate from the decision.
This panel in particular could be make or break for Sarepta. While I remain bullish on the potential for eteplirsen to be approved, the FDA rejected a similar drug from Biomarin Pharmaceuticals (NASDAQ:BMRN). Even more importantly, the FDA and Sarepta seem to disagree on whether or not eteplirsen is efficacious for its intended treatment population. Therefore, I would expect that the panel will play an unusually important role, as if the experts brought in by the FDA believe that the drug is efficacious, it will be very hard for the FDA to turn around and still argue that the drug is not efficacious. There also seem to be very few safety concerns surrounding eteplirsen, so I would expect for the main arguments to the panel to revolve around efficacy. For investors the panel decision will be a make or break moment. I would expect for Sarepta's stock to move up substantially on a positive panel decision, and conversely I would expect for the stock to move down on a negative decision (whcih will likely give the FDA cover to reject the drug).
The second FDA action to watch comes from Chiasma Inc (NASDAQ:CHMA). Chiasma is pursuing the approval of its drug Mycapssa, which has a PDUFA date of April 15. Chiasma is attempting to get Mycapssa approved for the treatment of acromegaly, which is a disorder in which the pituitary glands produce too much growth hormone. The condition is relatively rare, which caused for Chiasma to be able to obtain Orphan Drug designation for the treatment of acromegaly.
Orphan drug designation will grant marketing exclusivity for a number of years to Chiasma. It should also mean that Chiasma will not need a particularly large sales force in order to generate substantial revenue from Mycapssa. Should the decision come back positive, this would be the first time that Chiasma has been able to obtain FDA approval for a product. Obtaining FDA approval should help for investors to become more confident in management being able to execute on its objectives, while at the same time also making the market confident in European approval. While European regulatory agencies are not bound by the decision of the FDA, it is common for a drug to obtain FDA approval and then obtain EMA approval relatively easily. Investors should be watching the FDA's decision closely as a positive decision from the FDA could send the stock significantly higher.
It is an exciting time for pharmaceutical investors. While I am watching two actions with interest, there are many FDA decisions coming out in April that will represent significant catalysts. For both Sarepta and Chiasma, there appears to be the potential for a substantial swing in value depending on the ultimate outcome of their respective actions.
Disclosure: I/we 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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.