Wall Street betting intensifies over Sarepta’s muscular dystrophy drug

In three weeks, the US Food and Drug Administration will decide one of the most contentious issues the agency has tackled in some time — whether to approve a drug for Duchenne muscular dystrophy, a rare and fatal muscle-wasting disease that afflicts about 13,000 children, mostly boys.

And speculation is intensifying over the FDA’s decision. After Sarepta Therapeutics, which makes the drug, released earnings today but did not provide any new updates, Wall Street reacted with apprehension. Sarepta stock, which has been volatile, dropped slightly. And two analysts issued reports containing gloomy bets about whether the agency will approve the drug, called eteplirsen, on May 26.

“We continue to see only a very slim chance of the drug’s approval,” wrote RBC Capital Markets analyst Simos Simeonidis in an investor note. He expects the agency to issue what is known as a Complete Response Letter, which signals a willingness to approve a drug, but only if further clinical studies are conducted. Such a requirement would place further financial pressure on Sarepta.

As we have noted previously, the Sarepta drug is seen as a litmus test for a struggle between the FDA and patient groups, which want the agency to take a more expansive view toward approving medicines for unmet medical needs. Some hope the FDA will use accelerated approval to endorse the drug, an approach that relies on a substitute outcome in a clinical trial to suggest a drug may have a benefit.

There is much reading of tea leaves, however.

A central issue raised by FDA staffers has been Sarepta’s reliance on a trial of just 12 boys. The agency also chastised the drug maker for not pursuing a conventional, placebo-controlled study, despite repeated suggestions to do so. And FDA reviewers also questioned the extent to which the drug increased production of a protein called dystrophin and enhanced performance in a walk test.

Confronted with this information, an FDA panel of outside experts early last week voted against recommending it for approval. And they did so, despite a parade of parents and children last week who implored them to endorse eteplirsen. Although their pleas made an obvious impact, most panel members seemed to harbor similar concerns about trial data that were expressed by FDA staff.

Yet there may be a wild card. The official who oversees the FDA division that approves drugs, Janet Woodcock, appeared to leave the door open. At the outset of the day-long session, she made remarks that suggested the agency might still consider approval this month.

“Much of the effort in evaluating a drug development program goes into avoiding a specific mistake — that is, erroneously approving a drug that is not effective. There often is little consideration of another error, which is failing to approve a drug that actually works,” she said. “In devastating diseases, the consequences of this mistake can be extreme. But most of these consequences are borne by patients, who traditionally have little say in how the standards are implemented.”

In fact, just before the panel voted, Woodcock responded to questions from panelists and appeared to steer them toward voting in favor of approval.

Despite her remarks, though, another Wall Street analyst expressed skepticism.

“It’s difficult to anticipate a positive decision,” wrote Leerink analyst Joseph Schwartz. “While the FDA is at liberty to make its own decision, we believe the agency’s interpretation of empirical data for eteplirsen mirror the recent negative panel, which was critical despite powerful human testimonies.”