FDA pulls back the curtain on Sarepta's latest DMD delay

In an uncommon move, the FDA has publicly weighed in on an in-development drug, clarifying the status of Sarepta Therapeutics' ($SRPT) closely watched Duchenne muscular dystrophy treatment eteplirsen in light of an earlier setback that tanked the biotech's shares.

On Monday, Sarepta announced that, after a meeting with regulators, it was delaying its plans to file eteplirsen for at least 6 months, nixing its goal of a year-end submission in order to prepare a wealth of new data and analysis. The agency wants to see an independent assessment of eteplirsen's effect on dystrophin--the protein whose absence leads to DMD--plus more safety results and history data, and getting all that together will put off a filing until mid-2015 or later, Sarepta said.

Now, in response to questions from DMD patients and their families, the FDA sent out a letter suggesting that its most recent advice shouldn't have been much of a surprise to Sarepta. Since April, when the company first declared it was on track for a 2014 filing, the FDA has consistently told Sarepta that it would need the above-mentioned data to complete its submission, the agency said, name-checking each requirement the company disclosed earlier in the week.

Comparing the FDA's statement with Sarepta's earlier disclosure, things look less dire for eteplirsen than they did earlier in the week when investors believed the agency had changed its thinking on the drug, Baird analyst Brian Skorney wrote in an investor note.

"Following the FDA response, we're beginning to think the whole delay isn't a result of a guidance change but a misunderstanding of the submission/review process and timeline," Skorney wrote. "It seems increasingly like the FDA meant to guide Sarepta to submit the additional requested data during a rolling submission process, prior to NDA completion as opposed to following a standard NDA submission, prior to the completion of the review as Sarepta interpreted it following the April minutes."

Sarepta CEO Chris Garabedian

And while that reading is a net positive for Sarepta, whose shares rose about 15% overnight, it also suggests that management failed to appropriately interpret the FDA's demands and then repeatedly miscommunicated agency guidance to investors. CEO Chris Garabedian, who survived an internal challenge to his authority over the summer, may find himself under renewed scrutiny as a result.

But, as the FDA repeatedly underscores in its letter, regulators are still committed to helping Sarepta get its act together and finally file eteplirsen. The agency is willing to conduct a so-called rolling review for the application, which would allow the company to hand in portions of application as they become available. Furthermore, the agency "expects the NDA for eteplirsen will qualify for a priority review," meaning Sarepta would get a final decision in 6 months instead of the requisite 10.

"FDA understands the dire urgency of the situation and the importance of our actions to the DMD community," the agency wrote. "FDA will continue to work with Sarepta in their efforts to provide the data it considers critical to FDA's ability to review the NDA and reach a decision on approvability."

- read the note

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