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Sarepta shares sink 14% after shock FDA rejection


By Manas Mishra

(Reuters) - Shares of Sarepta Therapeutics Inc plunged 14% on Tuesday after the U.S. health regulator, in an unexpected move, declined to approve the drugmaker's newest treatment for a muscle-wasting disorder that mainly affects young boys.

Wall Street analysts expressed surprise at the decision and at least six cut their price targets for the company's shares, while stressing they still expected the company's second drug for Duchenne muscular dystophy (DMD) to eventually be approved.

The U.S. Food and Drug Administration's so-called complete response letter (CRL) on Sarepta's new treatment, called Vyondys 53, cited risks of infection and kidney toxicity, the company said late Monday.

It represents a blow to the company as it looks to solidify its leadership in treating DMD, which has limited treatment options.

"The setback can only be described as odd and we cannot help but feel there is more to the CRL than the issues cited," William Blair analyst Tim Lugo said.

The details included in FDA's CRL are confidential but the company could release the letter if it chose to do so, FDA spokeswoman Sandy Walsh said in an email.

Sarepta said it did not plan to make the letter public.

"We are disappointed that Sarepta did not receive FDA approval," said Debra Miller, co-founder of nonprofit organization CureDuchenne.

"We look forward to continued discussions between Sarepta and the FDA and hope that the patients in need of this therapy will not have to wait much longer," Miller said.

Exondys 51, the company's first DMD treatment, was approved in 2016 against the advice of the FDA's outside panel of experts and its own reviewers, who had questioned the drug's effectiveness. It brought in annual sales of $301 million in 2018.

The FDA's decision on Monday cited risks of infections and kidney toxicity seen in pre-clinical studies of Vyondys 53, which is chemically known as golodirsen.

The company said the doses used in those studies had been ten-fold higher than those used in clinical studies.

"Sarepta is being slapped on the wrist for the prior questionable accelerated approval of Exondys 51," said SVB Leerink analyst Joseph Schwartz, but added he was confident that the drug will ultimately be approved.

Analysts have forecast annual sales of golodirsen to reach a peak of nearly $400 million in five years.

Tuesday's stock plunge could be tied in part to investor concerns about the commercial status of Exondys 51, Janney Montgomery Scott analyst Yun Zhong said.

Zhong, however, said the likelihood of the CRL affecting Exondys 51 was minimal as sales of the drug indicate that a lot of patients are taking the treatment.

Shares of the company were trading down nearly 14.30% at $103.1 in morning trading, shedding more than $1 billion from its market value.

(Reporting by Manas Mishra in Bengaluru; editing by Patrick Graham)

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