The Food and Drug Administration pushed back its review of a highly anticipated gene therapy from Sarepta Therapeutics on Wednesday, prompting SRPT stock to tumble.
This month, a split panel of advisors to the FDA narrowly recommended an accelerated approval for Sarepta's gene therapy for Duchenne muscular dystrophy. Patients with this muscle-wasting disease don't have enough, or any, of the dystrophin protein necessary to keep muscles intact.
The FDA says it's initially considering an accelerated approval for Sarepta's drug in children age 4-5. If the results of the confirmatory study — expected in the fourth quarter — suggest the drug works in older patients, the FDA says it will consider expanding the gene therapy to all ages.
However, these changes require "modest additional time" to review. The FDA says it will make an approval decision on Sarepta's gene therapy by June 22. Previously, the agency planned to wrap the decision-making process by May 29.
On today's stock market, SRPT stock toppled 10.6% to close at 131.36.
SRPT Stock: 'A Shoe-In'
SVB Securities analyst Joseph Schwartz says Sarepta's gene therapy, SRP-9001, "looks like a shoe-in."
"We believe this update is encouraging as it highlights that the agency is working collaboratively with Sarepta to provide DMD patients access to SRP-9001 as quickly as possible and is open to the accelerated approval pathway," he said in a note to clients. "However, we believe the potential age restriction will be a modest disappointment to investors, as this is narrower than the broad population proposed by Sarepta."
In clinical testing, patients age 4-5 who received Sarepta's gene therapy showed statistically significant improvements in muscle function after one year. But patients age 6-7 didn't meet the same bar. Sarepta said the placebo recipients were healthier in that age group, confusing the results.
Still, SRPT stock fell on that news in January 2021.
Confirmatory Study Needed If Approved
If the therapy receives accelerated approval, Sarepta will have to confirm its benefit in a confirmatory study called Embark. The company hopes creating a miniature version of the protein missing in Duchenne patients leads to a functional benefit.
But earlier this month, just eight panelists on an FDA advisory committee agreed with Sarepta's theory. Six said the presence of the so-called microdystrophin protein in patients' muscles doesn't necessarily mean they will experience any improvement in function.
The FDA isn't bound by the committee's vote, but it often follows the recommendation.
SPRT stock holds an IBD Relative Strength Rating of 96 out of a possible 99. The rating measures a stock's performance against all other stocks over the last 12 months.
Shares currently are in a consolidation with a buy point at 159.94.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
