Sarepta Therapeutics (SRPT) Stock Falls On FDA Blues

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Sarepta Therapeutics Inc (NASDAQ: SRPT)

Sarepta Therapeutics is having an incredibly rough start to the trading day today, and for good reason. Recently, an analyst hosted a call with an FDA Regulatory expert that believes that the NDA for eteplirsen will be denied. Today, we’ll talk about the details of the call, how investors are reacting to the news, and what we can expect to see from SRPT moving forward.

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SRPT Declines On Results Of Analyst Call

As mentioned above, an analyst from Jefferies, Gena Wang, hosted a call with an FDA regulatory expert by the name of Dr. Brian Harvey. The call was focused on the new drug application for eteplirsen, which Sarepta Therapeutics investors have been waiting for a response on. The call was prompted as the FDA missed the PDUFA date with regard to making its decision.

Dr. Harvey believes that the delay could be the result of the involvements of senior FDA officials. However, he doesn’t believe that eteplirsen will be approved. Essentially, he said that approval based on weak data could lead to significant consequences that the FDA simply wouldn’t be willing to take on.

Based on current law, the standard of evidence is not lower for accelerated approval-based surrogate endpoints. Unfortunately, the data surrounding eteplirsen is considered to be relatively weak. This is according to the FDA clinical review team. Because of the weak data, if the FDA were to approve the treatment, other companies will likely view it as a high-level inconsistency in the review process. On top of that, an approval of a treatment with weak data could impact future clinical trials designed around orphan diseases, shifting the focus from a statistics focus to a patient focus. Essentially, the expert believes that because there is not a lower standard for orphan diseases, eteplirsen will not be approved.

How The Market Reacted To The News

As investors, we know that the news moves the market. Any time there is positive news released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with the company. Adversely, negative news will generally lead to declines. In this particular case, the news surrounding SRPT is overwhelmingly negative. After all, if eteplirsen is not approved, there will be further expenses associated with future trials, if the company even decides to continue moving forward with the treatment. If not, the money spent on the treatment will prove to be wasted. As a result, we’re seeing heavy declines on the stock today. Currently (10:11) Sarepta Therapeutics stock is trading at $17.25 per share after a loss of $4.16 per share, or 19.43%, thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively bearish opinion of what we can expect to see from SRPT. The reality is that the company is heavily dependent on the approval of eteplirsen. If the FDA expert is correct, the treatment will not be approved, sending the value of the stock even further downward and forcing SRPT to shift focus. Unfortunately, things simply aren’t looking good for the company.

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What Do You Think?

Where do you think SRPT is headed moving forward and why? Join the discussion at CNA Finance SocialVEST!

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