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Sarepta Therapeutics hit after FDA pushes back on fast-track approval for Golodirsen

By Alexander Bueso

Date: Tuesday 20 Aug 2019

Sarepta Therapeutics hit after FDA pushes back on fast-track approval for Golodirsen

(Sharecast News) - Shares of Wall Street biotechnology darling Sarepta Therapeutics came under sharp selling pressure after America's drug safety watchdog rejected the company's petition for accelerated approval of its Golodirsen drug for Duchenne Muscular Distrophy.
As of 1422 BST, shares of the company were changing hands at $100.09 or 16.88% lower in premarket trading and were falling below their 200-day moving average (the 200-week moving average came in at $80.0), although the end-2018 lows around the $96.0 mark had yet to be tested.

Overnight, America's Food and Drug Administration issued a Complete Response Letter to Sarepta's New Drug Application rejecting fast track approval on two main grounds, according to Sarepta, the risk of infections linked to the intravenous delivery of the treatment and the renal toxicity observed in pre-clinical models.

The company said it was "very surprised" by the FDA's decision to issue a complete response letter because throughout the entire review it had not raised any potential issues regarding the approvability of Golodirsen.

Sarepta also pointed out that the renal toxicity alluded to by the regulator had been observed at doses that were 10 times higher than those applied in clinical studies with persons and that no toxicity had been evident in the current study 4053-101.

"Sarepta will immediately request a meeting with the FDA to determine next steps," the company said in a statement.

"We will work with the Division to address the issues raised in the letter and, to the fullest extent possible, find an expeditious pathway forward for the approval of golodirsen. We know that the patient community is waiting."

Commenting on the implications of the FDA's decision, analysts at RBC told clients: "FDA's apparent change in direction on assessing benefit/risk for accelerated approvals of DMD (and related) agents does impact the risk profile across their platform - leading us to lower our tgt to $204 (from $218.0).

"Nonetheless, while it is harder to point to a near-term catalyst to help turn sentiment around, we continue to see substantial LT value across a platform of potential game-changing, multi-$B therapies, not reflected in the share price."

The analysts reiterated their 'outperform' recommendation for Sarepta's shares.

For their part, analysts at Nomura reportedly said selling in Sarepta on the back of the FDA's decision was a gift for bulls, arguing that the objections raised by the regulator were not a surprise and represented no read-through risk to [Sarepta's] EXONDYS 51, Casimersen or its gene therapy.

The stock had been under sustained selling pressure since the release of the company's second-quarter results on 7 August, when the outfit reported net losses of $276.4m or $3.74 per share, after total costs and expenses roughly double from the year earlier period to reach $370.04m.

The biotech outfit also revealed a decline in cash, cash equivalents and investments to approximately $1.1bn as of 30 June, versus $1.2bn at year-end 2018, having raised an additional $375.0m via a stock offering on 5 March.

At the time, investors appeared to react poorly to the company's decision to proceed a bit more slowly on scaling-up its manufacturing base and to increase the number of patients enrolled in one of its studies - although some analysts described those decisions as "prudent".

The stock was also pummelled when the day following its second quarter results an erroneous adverse event report was filed with the FDA linked to ongoing "blind" clinical trials of its key gene therapy treatment for DMD.

As an aside, there continued to be heavy short interest in Sarepta stock, although more recently its own finance chief, Sandy Mahatme, had stopped selling shares and begun to buy some.

On the other hand, over roughly the past year, the company's chief executive officer and President Douglas S. Ingram had raised the number of shares he held.


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