Sarepta's boardroom intrigue clouds a promising drug's future

Sarepta CEO Chris Garabedian

After Sarepta Therapeutics' ($SRPT) former head scientist blamed his swift ouster on "serious disagreements" with CEO Chris Garabedian, the company has moved to limit its chief executive's power, according to a report--especially when it comes to meetings with the FDA over the biotech's much-scrutinized lead drug.

According to The Wall Street Journal, members of Sarepta's management team have begun to worry that Garabedian's vigor in defending eteplirsen, the company's in-development treatment for Duchenne muscular dystrophy (DMD), may be off-putting to regulators, damaging the biotech's case for an early approval.

After repeated overtures to Sarepta's board--including one by now-deposed CSO Arthur Krieg--Chairman William Goolsbee told the company's executive team this month that Garabedian would no longer participate in the biotech's sit-downs with the FDA, according to WSJ. He'll also be stripped of final say in matters of trial design and patient safety, the newspaper reported, a move its sources said would bring Sarepta's structure more in line with those of other companies of its size.

For its part, Sarepta is declining to comment on the matter, but a spokesman told FierceBiotech Tuesday evening that the company isn't seeking any corrections to the WSJ story.

All this comes as Sarepta attempts to strike a delicate balance, working to convince regulators and investors that, despite small sample sizes and murky endpoints, its exon-skipping therapy can effectively delay the progression of the muscle-deteriorating DMD. Earlier this month, the biotech unveiled three-year results it believes demonstrate eteplirsen's durable effect on the disease, but investors were less convinced, sending Sarepta's shares down more than 30% and feeding doubts about the company's ability to secure the early FDA nod it believes the drug deserves.

Krieg's firing after just 6 months on the job put Sarepta under a microscope last week, and the new murmurs of boardroom unrest are unlikely to help matters much. The WSJ, which has led the way on the story, pointed out that the CSO's termination came after two vice president-level departures over the past year alone, and one former Sarepta C-suiter told the paper that Garabedian's company "wasn't a very healthy culture in a lot of ways."

Carping between strong-willed executives is certainly commonplace among companies in every industry, but Sarepta's inability to keep its squabbles out of the public eye could become a costly distraction at a particularly inopportune time. And a groundswell of investor concern could move the apparently open-eared board to remove Garabedian.

But the CEO is not without his acolytes. At least one of WSJ's sources close to the situation described Garabedian's toughness as an asset in meetings with the FDA, and two of the company's stakeholders--including one who supported a reduction in his powers--made public votes of confidence in his ability to lead Sarepta.

- read the WSJ story (sub. req.)

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