April 21, 2016 / 12:55 PM / a year ago

Sarepta shares sink as FDA staff stay sour on muscle drug

(Reuters) - U.S. Food and Drug Administration staff reviewers stuck by their negative assessment of Sarepta Therapeutics Inc's rare muscle disorder drug, further diminishing its chances of approval and wiping out nearly half of the company's value.

The reviewers highlighted similar concerns on Jan. 15 ahead of a scheduled meeting of an independent panel of experts advising the FDA on the drug. However, the meeting was postponed due to a snow storm.

FDA reviewers reiterated on Thursday their discomfort with trial design, statistical analysis and overall effectiveness of the drug, eteplirsen. (1.usa.gov/1Wfkrqd)

Sarepta is seeking accelerated approval for eteplirsen, which is designed to treat a subset of patients with Duchenne muscular dystrophy (DMD). There are no FDA-approved drugs for the disease and most patients die by the age of 30.

After publication of the original review, Sarepta submitted additional information and claimed "key inaccuracies" in the FDA staff analysis.

On Thursday, the reviewers not only disagreed with Sarepta's rebuttal but said fresh information had cast further doubt on the reliability of trial data.

Sarepta is conducting a "confirmatory" late-stage study, but it is designed in a way that patients will either get eteplirsen or go untreated. The reviewers said any potential beneficial effects of the drug are unlikely to be large enough to detect unless the drug is tested against a placebo in a large trial.

The reviewers didn't formulate a voting question for panelists to ascertain whether they think Sarepta has provided enough evidence of the drug's effectiveness to warrant approval.

"If there's no clear cut voting question then this is just a farce," said Janney Montgomery Scott analyst Debjit Chattopadhyay, who sees a less-than 5 percent chance of approval.

Sarepta's shares fell as much as 47 percent to $10.50, wiping out about $420 million of market value.

UNUSUAL APPEARANCE

Pressure has been mounting on the FDA to approve treatments for the progressive, muscle wasting disease.

The independent panel will discuss the drug on Monday. The FDA is not obliged to follow its advice but usually does.

The head of the FDA's pharmaceuticals division, Dr. Janet Woodcock, is expected to attend the meeting, indicating an unusually high degree of scrutiny.

The agency has also set aside an exceptionally long period for public commentary in the meeting, which will include testimony from patients, family members and advocates.

"The panel will be tough ... although, no doubt parent/patient testimony for 2.5 hours will pull on heartstrings," Wedbush Securities analyst Heather Behanna said in an email.

Although most analysts see the staff assessment as the end of the road for eteplirsen, the FDA has in the past brushed aside a negative staff review in the face of strong advocacy.

Last year, the agency approved Addyi, the first drug to treat low sexual desire in women, despite a scathing review from its staff.

Patient advocacy and clinician support could be an interesting counterbalance at the eteplirsen meeting, as well as the expected FDA decision date of May 26, William Blair's Tim Lugo said in a note.

The FDA staff's stern review of Sarepta's drug in January came a day after the regulator rejected a rival drug developed by BioMarin Pharmaceutical Inc.

"BioMarin's drug is dead. Eteplirsen is now dead. There is nothing in DMD for the foreseeable future," Chattopadhyay said.

Reporting by Natalie Grover in Bengaluru; Editing by Maju Samuel and Ted Kerr

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