E Shares Of Sarepta Tank 50% Ahead Of FDA Panel Advisory Meeting

On Friday Shares of Sarepta Therapeutics (SRPT) tanked 50% after the FDA published a very negative clinical review of the drug, Eteplirsen. This is in advance of the FDA advisory panel, which is expected to convene on Jan 22, 2016. This negative report was released as a preliminary review for what the FDA believes about the drug. The FDA advisory panel is an independent committee, outside the FDA, and will review data to make a recommendation on Eteplirsen. 

Going into the advisory panel it doesn’t look quite good for Sarepta, but at least the company will have time to convince the advisory panel to recommend the drug for approval. There is one problem that can occur, despite a positive recommendation of the advisory panel. That is, even with the recommendation for approval by the advisory panel, the FDA can decide to ignore it. The FDA doesn’t have to follow the recommendation of any advisory panel but typically it does. 

Why then would the FDA go against such a recommendation? All is dependent upon FDA bias. The negative internal FDA review that came out on Friday, sending Sarepta shares 50% lower, had some pretty negative remarks. For instance, The FDA states that it knows there are no drugs approved in the U.S. for this indication, but it will not approve Eteplirsen just because of that alone. In other words if they don’t think the efficacy in the 12-patient data is sufficient enough then they won’t approve it. 

It does sound quite harsh when you think about it, but the FDA doesn’t work on whether or not a drug is approved for a certain indication. Certainly it helps sometimes to change their minds, but there are those times where the FDA sticks with their rules. Emotions always get in the way with these types of drugs, but the FDA is not so easily persuaded with passion. 

It will be up to Sarepta to convince the FDA advisory committee and panel that their drug is efficacious enough for approval. The company won’t be able to say that the drug produces enough dystrophin levels because those levels, according to the reports, show a 0.9% improvement,  where 3% or higher would be needed to overcome all odds against the FDA.