Sarepta Stock Sinks 43% on Uncertain Future for Its Gene Therapy

The stunning results sent shares of Sarepta down 43% on Tuesday. When the Food and Drug Administration approved Elevidys on an accelerated basis in June, the agency warned that it could pull the approval if the results of the trial weren’t positive.

Sarepta, for its part, had been hoping to be able to expand the approval of Elevidys to include older patients. The FDA approved Elevidys for children aged 4 and 5 who are still able to walk. Sarepta had asked for approval for all patients with Duchenne muscular dystrophy still able to walk, which could include some individuals as old as 13.

Sarepta said in a statement late Monday that the results of the trial, known as EMBARK, do support label expansion to include older patients. The company said it had spoken with FDA leaders and that the FDA officials had said that “based on the totality of the evidence, they are open to such label expansion if supported by review of the data.”

Duchenne muscular dystrophy, or DMD, is a fatal condition that manifests in early childhood, and causes muscle weakness that worsens over time. In the EMBARK study, patients who received Elevidys improved 2.6 points on a measure of functional motor abilities called the North Star Ambulatory Assessment, while patients who received a placebo improved 1.9 points. The difference was not statistically significant.

Other measures in the trial did show statistically significant differences between the Elevidys group and the placebo group, including a 10-meter walk test and a time to rise test.

The question now is whether the FDA will expand the label on Elevidys, or pull the drug’s approval. In comments on an investor call late Tuesday, Sarepta CEO Douglas Ingram suggested very strongly that the FDA would keep the gene therapy on the market. He said that the company had discussed the results with Dr. Peter Marks, who leads the FDA’s Center for Biologics Evaluation and Research, which is ultimately responsible for gene therapy approvals.

“We were not discussing whether we meet the standard for the 4s and 5s staying on,” he said, referring to the current population in which the drug is approved. “I think that is an obvious win on that issue.”

Instead, he said that the company and the FDA officials were discussing label expansion.

“I would say everything about that meeting was encouraging,” Ingram said.

Wall Street analysts, meanwhile, were split.

In a note late Monday, Leerink Partners analyst Joseph Schwartz wrote that the FDA has historically been flexible in its approach to DMD drugs. “We would be surprised if the FDA does not at least work with SRPT on a path forward,” he wrote.

Raymond James analyst Danielle Brill seemed skeptical that the agency would expand the drug’s label. She wrote that a “best case scenario” would see Elevidys stay on the market with its current label, and that it was possible that FDA might pull the approval.