Sarepta Bear Speaks: Eteplirsen Accelerated Approval Will Be Denied

NEW YORK (TheStreet) -- Many investors are smitten with Sarepta Therapeutics (SRPT) and its lead compound, eteplirsen, a novel experimental drug for Duchenne Muscular Dystrophy (DMD), which aims to help patients produce a normal amount of dystrophin, a protein required for correct muscle function. Sarepta bulls are so smitten with the company that they believe FDA will allow eteplirsen to be filed for accelerated approval on the basis of a single phase IIb study. Sarepta is meeting with FDA in the first quarter to discuss this issue.

Under accelerated approval regulations, FDA allows the early approval of drugs to treat serious disease that fill unmet medical needs. The approvals are based on clinical trials that assess efficacy using surrogate endpoints. "The FDA bases its decision on whether to accept the proposed surrogate endpoint on the scientific support for that endpoint. The studies that demonstrate the effect of the drug on the surrogate endpoint must be adequate and well-controlled studies, the only basis under law for a finding that a drug is effective," the FDA's regulations state. [Emphasis mine.]

Unlike the bulls, I believe Sarepta is extremely unlikely to convince FDA the eteplirsen data warrant accelerated approval. Instead, it's much more likely Sarepta will be required to perform a new, larger pivotal study prior to submitting eteplirsen for FDA review. Here are some of the reasons why I believe a denial of accelerated approval for eteplirsen is the more likely outcome of this quarter's FDA-Sarepta meeting:

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The "pivotal" eteplirsen phase II data are systematically biased.

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Sarepta Bear Speaks: Eteplirsen Accelerated Approval Will Be Denied