UPDATED: PTC plunges after FDA spurns its failed Duchenne muscular dystrophy drug

The FDA is not in a forgiving mood when it comes to biotech companies with bad applications for new drugs for Duchenne muscular dystrophy (DMD). Today it was PTC Therapeutics' ($PTCT) turn at the whipping post, which saw its shares go into a tailspin after it announced that the agency had spurned its application for an approval of Translarna (ataluren).

The South Plainfield, NJ-based biotech received a dreaded refuse-to-file letter from the FDA after regulators determined that "the application was not sufficiently complete to permit a substantive review."

Its stock was eviscerated, plunging 61% on the news, slipping and sliding ever downwards through the day, right up to the close. 

Ataluren is one of three new therapies for DMD which has been manhandled at the FDA. First up was San Rafael, CA-based BioMarin ($BMRN), which had its drug candidate drisapersen rejected by outside as well as inside experts at the FDA. Then came Cambridge, MA-based Sarepta ($SRPT), which endured a harsh internal review from regulators for eteplirsen. An FDA panel review still lies ahead after a snowstorm and new data delayed the process by several months.

PTC Therapeutics CEO Stuart Peltz

Ataluren flunked its Phase III study last fall when the drug failed to prove that it could help the average patient walk significantly further than a placebo. But PTC, which is run by Stu Peltz, believed that it could still make a case with regulators that the drug could work for subpopulations, hoping to build on a Phase IIb trial that also failed.

Claudia Hirawat, the former president of PTC, defended the company on Twitter this morning and took the FDA to task for not giving the drug a panel review.

She tweeted: "the real shame is not taking a novel mechanism into an advisory committee. Patients deserve that much!"

"I am not saying I am sure it works," she added, "but between the subgroup & novel mechanism it deserves a hearing."

Barclays' Geoff Meacham suspects the reason for the FDA rejection may well lie in the Phase III study.

"We had a chance to connect with management and while the company did not offer any incremental details beyond what was in the press release and is clearly still digesting the surprising news, it is our view that the issue could be more than a technical / procedural issue, and could relate to some aspect of the phase 3 ACT DMD trial, which is the 'new' component of the application," Meacham wrote in a note out Tuesday morning.

PTC also filed an application with the EMA using the failed Phase III. The biotech received an accelerated approval to market ataluren in Europe in the summer of 2014, but it was conditional on the success of the Phase III. That approval is subject to annual review and could be threatened by PTC's latest setback in the U.S.

Biotechs have been encouraged to push on ahead to the FDA by patients and families who have no therapy available to slow down a lethal condition that first cripples and then kills boys at an early age. But pursuing a strategy of increasing dystrophin production through exon-skipping tech has failed to provide any solid reason to believe that they can help these boys, and the FDA appears to be unwilling to fan hopes around unproven drugs. 

Refuse-to-file letters from the FDA are a rare rebuke these days, but this new quick rejection is just a week behind another embarrassing RTF for Coral Gables, FL-headquartered Catalyst Pharmaceuticals ($CPRX) for Firdapse.

- here's the release