This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Sarepta Will Defy Wall St. Consensus With Eteplirsen Early FDA Filing

BOSTON ( TheStreet) -- The bearish view of Sarepta Therapeutics (SRPT) outlined Monday by Aafia Chaudhry -- she believes FDA won't allow the company to seek accelerated approval for its Duchenne muscular dystrophy drug eteplirsen -- aligns with Wall Street's consensus opinion.

I spent a good amount of time yesterday on Twitter defending Chaudhry's right to express a bearish opinion on Sarepta. More importantly, I was trying to explain to my fellow Sarepta bulls that we are in the minority when it comes to eteplirsen's chances for accelerated approval.

Twitter can be an echo chamber. Sarepta bulls carry a bigger megaphone and therefore dominate the social media conversation, but institutional investors carry bigger wallets, which is why Sarepta shares trade in the mid-to-high $20 range. If Wall Street believed more confidently in eteplirsen's chances for accelerated approval, the stock would be double the price.

This is not to say Sarepta doesn't have its supporters on Wall Street. Of course, it does. But I asked one of the company's largest institutional shareholders -- and a believer in eteplirsen's accelerated approval -- to gauge the view of his Wall Street colleagues. He believes they're at four or five on a ten-point confidence scale.

That suggests more upside than downside in Sarepta if the FDA meeting this quarter goes well and the company is given the green light to file for accelerated approval. A negative outcome is baked into Sarepta's valuation to some extent.

I also tweeted yesterday that I wasn't going to respond specifically to Chaudhry's column because the fundamentals behind Sarepta haven't changed. I changed my mind. She does a good job discussing the risks of over-interpreting data from a small study. Sarepta bears and bulls need to appreciate the challenge facing the company to convince FDA to go along with the accelerated approval filing.

With that said, I believe the eteplirsen data demonstrate a clear and consistent benefit for DMD patients. Yes, the study is unblinded and therefore subject to potential bias, but I think the small number of patients actually helps make Sarepta's case because FDA (and an inevitable advisory panel) will have the opportunity to scrutinize individual patient data in ways not possible with a larger trial. The more you look at the results over time, the more convincing eteplirsen's benefit becomes.

I've previously responded to the Sarepta bear thesis, so I won't repeat it here in detail. Please go back and re-read what I wrote last October.

I like being a contrarian, so I predict a positive outcome from Sarepta's FDA meeting and an allowance for eteplirsen's accelerated approval. Once Sarepta clears this hurdle, bulls and bears can move to debating the outcome of the inevitable FDA advisory panel.

On a related note, DMD advocates are holding a press event Wednesday in Washington, D.C. to press FDA to consider eteplirsen for accelerated approval. Later in the week and next week, parent of DMD kids, including Jenn McNary, will be meeting with top FDA officials.

The precise timing of the more important meeting between Sarepta and FDA has not been disclosed other than it will occur sometime in the first quarter. Sarepta has previously stated that it will not publicize the outcome of the meeting until after it receives FDA's minutes. Don't expect to hear a decision on eteplirsen's FDA filing strategy until March, perhaps into April.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7870 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs