What Explains Sarepta Therapeutics Inc (NASDAQ:SRPT)’s Dramatic Reversal?


Sarepta Therapeutics Inc (NASDAQ:SRPT) stock soared when news entered the market that a critic of the company’s drug candidate had decided to leave the FDA advisory committee. Ronald Farkas was part of the advisory panel that reviewed Sarepta’s candidate called eteplirsen and later recommended that the FDA should reject the drug. Sarepta’s eteplirsen is designed for Duchenne muscular dystrophy (DMD) indication.

So when it emerged that Mr. Farkas was leaving the FDA, it appeared that perhaps eteplirsen would stand a better chance of approval. The FDA requested Sarepta Therapeutics Inc (NASDAQ:SRPT) for additional information regarding eteplirsen after the advisory committee issued an adverse verdict on the candidate.

Sarepta is banking on the additional data on eteplirsen to convince the FDA to clear the candidate. Because one of the distractors of eteplirsen is leaving the FDA, the market thought the drug had edged closer to getting commercialization green light.

No so fast

However, not everyone sees things from that perspective. When news broke about the departure of Mr. Farkas, Jefferies analyst Gena Wang took it upon herself to find out what that development might mean for Sarepta’s candidate eteplirsen. After having a conversation with an expert in FDA matters, Wang didn’t see any improved chances for approval of eteplirsen, leading her to maintain UNDERPERFORM rating on Sarepta stock.

Jefferies has a price target of $7 on Sarepta Therapeutics Inc (NASDAQ:SRPT), compared with the stock’s prevailing price of $30.

Sarepta stock crashed on the report that indicated that the departure of Mr. Farkas was unlikely to sway FDA’s decision on whether or not to approve eteplirsen.

Unmet medical need

Doubt is cast on whether the additional data that Sarepta Therapeutics Inc (NASDAQ:SRPT) submitted on eteplirsen would help the candidate through approval. However, with the FDA having already rejected a number of drugs seeking to treat the life-threatening DMD and the unmet medical need in that space, there is pressure on the regulator to do something for the suffering DMD community.

But as to whether the FDA would bow to pressure to just approve anything to satisfy unmet medical need is doubtful. The best chance for Sarepta Therapeutics Inc (NASDAQ:SRPT) is that the FDA finds meaningful value in the additional data it submitted to clear eteplirsen.


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