UPDATED: Sarepta rewarded by Wall Street for FDA committee shocker, with accelerated nod now more likely

Sarepta Therapeutics was handsomely rewarded by investors early Monday after FDA advisers surprisingly voted in favor of the accelerated approval path for the company’s Duchenne muscular dystrophy gene therapy Friday evening. 

Members of the Cellular, Tissue, and Gene Therapies Advisory Committee voted 8-6 Friday in favor of the risk-benefit profile of SRP-9001, going against FDA reviewers that had a bevy of issues. Analysts were wary of Sarepta’s chances heading into the meeting after FDA briefing documents suggested the agency was exceedingly skeptical of the therapy’s benefits and had questioned the company’s proposed surrogate endpoint for years. 

But now equipped with an endorsement from a (narrow) majority of FDA advisers, investors are optimistic. Sarepta’s shares were up more than 24% shortly after the market opened Monday, from $120.20 apiece to roughly $150. 

“I think this gives senior leadership at FDA and [Center for Biologics Evaluation and Research] the opening they were looking for, to potentially enable this to get approved based on the existing data,” RBC analyst Brian Abrahams, M.D., told Fierce Biotech on Monday. 

“I think what was also a positive here is that there weren't any kind of new major issues brought up that I think would significantly delay a potential accelerated approval,” he added. But in their post-vote research note, RBC analysts including Abrahams noted they wouldn’t be surprised if the FDA’s May 29 decision deadline was slightly extended given questions surrounding Sarepta’s manufacturing process. 

Mizuho analysts similarly think it will be difficult for the FDA to go against the advisory committee’s recommendation after the agency’s concerns were so publicly debated and ultimately passed over. The firm had previously thrown cold water on the possibility of a positive advisory committee vote in light of the FDA’s mountain of warnings. 

The agency had raised a number of concerns, namely that they were unconvinced that expression of Sarepta’s micro-dystrophin was a quality biomarker for clinical benefit in patients with Duchenne. The company’s only placebo-controlled, randomized data company came from part 1 of phase 2 trial 102, which did not show a statistically significant improvement in treated patients as measured by a motor function scale. 

Abrahams believes future complex gene therapy decisions will be examined on a case-by-case basis, but the advisory committee result speaks “to a level of permissiveness and flexibility on the part of … the FDA—which could be applicable to other drugs in the class or in the space,” he said. CBRE chief Peter Marks, M.D., Ph.D., has explicitly advocated for exploring expanded use of the accelerated approval pathway for rare disease treatments.  

With momentum shifting toward a likely accelerated approval, Wall Street’s attention is on Sarepta’s confirmatory phase 3 EMBARK trial set for an interim readout in December. The company boosted its case Friday by laying out concrete timelines for trial completion and presenting a compelling rationale for why patients are unlikely to drop out in favor of the commercial product. But analysts feel that the pressure is on Sarepta to post compelling results from the study, given how many questions remain about SRP-9001’s efficacy. 

“Accordingly, while the positive nod from the committee gives us confidence in accelerated approval of SRP-9001, risk remains around maintaining approval depending on the strength of data from EMBARK,” wrote analysts at William Blair. The firm believes that the EMBARK trial would have to show no signs of efficacy for regulators to pull the plug. 

William Blair partner and biotech analyst Tim Lugo said in an interview that the agency appears to have its bearings on more rigorous confirmatory trial policy after issuing new guidance last year. 

“It seems like the agency is probably more comfortable around these confirmatory trials and you know, ultimately, we're going to have a lot more of these gene therapies approved over the next, you know, even year, than what we've seen in the past three,” he said. 

Editor's note: This story was updated with additional editorial from interviews with research analysts from William Blair and RBC Capital Markets.