Shares of Sarepta Therapeutics, Inc. SRPT shot up 73.9% on Monday after the company announced that it has received accelerated approval for its Duchenne muscular dystrophy (DMD) drug, Exondys 51 (eteplirsen), in the U.S.
Sarepta’s shares hit a new 52-week high of $56.18 on Monday, after nearly doubling from the Sep 16 closing price and closed a little lower at $48.94. Shares were also up almost 6% during the pre-market trading session on Tuesday.
Exondys 51 (30 mg/kg) has been approved as a once-weekly intravenous infusion, specifically indicated for patients who have a confirmed mutation of the DMD gene amenable to exon 51 skipping.
The approval was based on an increase in dystrophin in skeletal muscles, which was observed in some Exondys 51-treated patients in pivotal studies. However, a clinical benefit of the drug, including improved motor function, could not be established.
The FDA stated that Sarepta needs to conduct a study to evaluate whether the drug improves motor function in DMD patients with a confirmed mutation of the dystrophin gene amenable to exon 51 skipping, to confirm the drug’s clinical benefit. Any failure to do this may lead to the withdrawal of the FDA approval.
Expectations of an FDA approval of the drug were already high last week when one of the chief critics of the drug, Dr. Ron Farkas, left his job at the FDA. We remind investors that in Apr 2016, an FDA advisory committee voted against approving eteplirsen for the treatment of DMD. Dr. Ronald Farkas had led the panel and has reportedly been critical of the drug. Shares had then gained around 27%.
DMD, a devastating and debilitating disease, is estimated to affect nearly 1 in every 3,500 boys born across the world. In addition, up to 13% of DMD patients have mutations addressable by Exondys 51. There is thus significant unmet need for treatments in this indication. Exondys 51’s approval makes it the first therapy for this indication, which should enable it to capture a major share of this orphan disease market.
Note that DMD drugs have not witnessed much success on the regulatory front. For instance, earlier this year, BioMarin Pharmaceutical Inc. BMRN received a Complete Response Letter for its DMD drug, Kyndrisa, in the U.S.
Sarepta currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector are Anika Therapeutics, Inc. ANIK and ANI Pharmaceuticals, Inc. ANIP. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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