Sarepta tumbles after the FDA rejects its muscular dystrophy treatment — a decision that left the CEO ‘very surprised’ (SRPT)

Boston Globe

Pharmaceutical company Sarepta Therapeutics dropped as much as 18% in early Tuesday trading after the FDA issued a surprising rejection of its second drug for Duchenne muscular dystrophy.
The FDA cited risk of infection from intravenous infusion ports and kidney toxicity for its decision. The company’s CEO said the agency hadn’t previously mentioned the two concerns.
Research firm Cantor Fitzgerald lowered its price target for Sarepta stock by 24%, saying the FDA’s decision "could be political."
The director for the FDA’s Office of Drug Evaluation is a "vocal critic" of Sarepta’s treatment, according Cantor analysts.
Watch Sarepta trade live here.

Sarepta Therapeutics tanked as much as 18% in early Tuesday trading after the Food and Drug Administration rejected the marketing application for a new drug to treat a muscle-destroying childhood disease.

The FDA blamed the risk of infections from intravenous infusion ports and kidney toxicity seen in animal testing for the rejection. The drug would’ve been Sarepta’s second for treating Duchenne muscular dystrophy, a rare inherited disease that leaves most affected unable to walk by age 12.

The agency’s decision is an unusual case when the FDA cited an early indicator in rejecting a company looking to quickly approve a rare-disease drug. Fast approvals for such treatments jumped in popularity after the FDA introduced new rules meant to expedite the development of rare-disease medicines.

Sarepta was "very surprised" to receive the rejection, as the agency "did not raise any issues suggesting the non-approvability" of the drug, CEO Doug Ingram said. He added the FDA didn’t raise any previous concerns regarding IV port infections or kidney toxicity.

The company’s first drug for Duchenne muscular dystrophy was approved in 2016 after prolonged debate among regulators who sought more data before allowing the drug to hit the market. The approval process saw patients and their families unusually active in pushing the drug forward, Bloomberg reported. Even after its approval, the decision was challenged internally in a process past-FDA Commissioner Dr. Robert Califf called "highly unusual."

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Research firm Cantor Fitzgerald promptly lowered its price target for Sarepta by 24%, to $175 per share from $231. It noted some aspects of the FDA’s action "could be political and therefore difficult to handicap," calling the director for the agency’s Office of Drug Evaluation a "vocal critic" of Sarepta’s treatment.

The company could trade lower to $90 to $100 per share Tuesday, according to the analysts, but the company should recover "if gene therapy is successful." The firm maintained its "overweight" rating.

The pharmaceutical company closed at $120.31 per share Monday, up about 10% year-to-date.

Sarepta has 22 "buy" ratings, one "hold" rating, and no "sell" ratings from analysts, with a consensus price target of $195.57 per share, according to Bloomberg data.

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