Sarepta Therapeutics Receives FDA Rejection, Shares Dip

Sarepta Therapeutics (NASDAQ:SRPT) received a blow on Monday (August 19) when it announced in after-hours trading that the US Food and Drug Administration (FDA) has rejected its second treatment for Duchenne muscular dystrophy (DMD).

In a press release, the company said that in a complete response letter the FDA raised two main issues regarding the company’s injection treatment, called Vyondys 53 (golodirsen).

According to the FDA, Vyondys 53 presents infection risks in its application and the results of animal studies show kidney toxicity. However, Sarepta Therapeutics claims there were no signs of kidney toxicity in its Study 4053-101, which was done on humans at a lower dose than the animal study.

Shares of Sarepta Therapeutics closed Monday’s trading session at US$120.31, but dropped by 18.24 percent to open at US$98.36 on Tuesday (August 20). Since the announcement, the company’s share price has dropped by 15.16 percent overall to close at US$102.07 on Tuesday.

Doug Ingram, president and CEO of Sarepta Therapeutics, expressed shock in the company’s statement regarding the FDA’s decision. He said that throughout the review process, the FDA brought up no concerns to indicate that Vyondys 53 was unsatisfactory.

“We will work with the division to address the issues raised in the letter and, to the fullest extent possible, find an expeditious pathway forward for the approval of (Vyondys 53),” Ingram said. “We know that the patient community is waiting.”

DMD is a genetic disorder that leads to muscle loss and weakness. Symptoms begin presenting between the ages of three to five in children, targeting regions such as the legs, thighs, arms and shoulders.

Sarepta Therapeutics received the first FDA approval to treat DMD in 2016 for another drug, called Exondys 51. While pursuing FDA approval for Vyondys 53, the company used the same method as it did when working on Exondys 51.

The FDA ultimately received backlash over its approval of Exondys 51 because the drug has not been proven effective in treating DMD.

Even so, since the approval, sales of Exondys 51 have brought in revenue of between US$300 million and US$400 million for the company. In its Q2 2019 financial report, Sarepta Therapeutics indicates that Exondys 51 sales were up 29 percent from the previous quarter at US$94.7 million.

With the FDA’s rejection of Vyondys 53, treatment options for DMD remain limited. That said, a clinical study called Essence for another DMD treatment by Sarepta remains underway in addition to a follow-on project. The study’s targeted completion date is estimated for sometime in May 2023.

Vyondys 53 and Exondys 53 differ in that Vyondys 53 targets patients whose disease results from an error in the DNA sequence called exon 53, while Exondys 51 treats those with an error in the DNA sequence called exon 51.

Monday’s late news comes just after the company announced that an erroneous report was sent to the FDA over its gene therapy study SRP-9001-102. The report claims that one of the children in the study was hospitalized after rhabdomyolysis was found in the patient.

Rhabdomyolysis is caused by muscle injury and leads to decaying muscle fibers entering the bloodstream. The company has said that rhabdomyolysis is an understood risk related to DMD.

Since August 7 — the day before the company announced that the inaccurate report had been sent to the FDA — shares of Sarepta Therapeutics have dipped by 15.33 percent.

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.