Sarepta Therapeutics Inc said data from ongoing studies of its lead drug could be enough for the company to apply for a U.S. approval, but that the regulator was unsure if it was enough to fast-track the review process, sparking a sell-off in the company's shares.
The drug, eteplirsen, has been closely watched by the biotechnology community after trial data released in October showed it dramatically improved walking ability in patients suffering from Duchenne muscular dystrophy (DMD) - a rare, degenerative disorder that mostly affects boys and hampers muscle movement.
The drug works by increasing the production of a protein called dystrophin, the lack of which is the chief cause of DMD.
Sarepta on Wednesday said the U.S. Food and Drug Administration did not commit to accepting that production of dystrophin could be considered proof enough of eteplirsen's effectiveness. Some analysts pointed to this ambiguity as the main reason for the share fall.
"We believe the burning question that the Street has been looking for an answer to has not yet been answered," Cowen analysts said in a note.
The agency also asked for more information on the drug's clinical studies and Sarepta said it believes it will be able to respond to the requests and apply for approval in the first half of 2014.
Eteplirsen's efficacy as seen in clinical studies and the absence of other treatments for DMD led to expectations that the FDA could speed up the drug's approval process, by possibly allowing the company to skip conducting a larger, late-stage trial.
Chief Executive Chris Garabedian, on a conference call with analysts, said it is too early to speculate how the FDA may consider the company's marketing application and what type of approval they might consider.
Sarepta shares, which have tripled in value since the October data, fell as much as 17 percent on Wednesday. They had risen 18 percent in premarket trading ahead of the call.
They were trading down 14 percent at $39.62 by midday.
MISREAD BY MARKET?
Eteplirsen's effect has so far only been seen in 12 DMD-affected patients, causing some analysts to question the market's optimism on the drug. Deutsche Bank analysts, for instance, have been critical of eteplirsen for this reason.
The brokerage downgraded Sarepta shares to "hold" from "buy", citing skepticism that eteplirsen would see faster approval, as it believes a competing drug from Dutch company Prosensa Holdings could reach the market earlier.
Prosensa is developing its drug, drisapersen, in partnership with British drugmaker GlaxoSmithKline Plc.
In contrast, Baird analyst Brian Skorney said the likelihood of an FDA approval for eteplirsen in 2014 was stronger following Wednesday's news.
"I think it's a bad misread on the market's part on what Sarepta was saying and what the FDA (is indicating)," Skorney said.
He said the FDA maintained a cautious tone regarding eteplirsen due to the size of the study, but that the agency appeared to have implicitly acknowledged that eteplirsen showed a benefit in treating DMD.
"This is a very preliminary 'hey, is there enough information here to help us make a decision on this next year?'"
(Reporting by Esha Dey and Zeba Siddiqui in Bangalore; Editing by Sreejiraj Eluvangal and Sriraj Kalluvila)