This Day On The Street
Continue to site
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

More Reasons to Invest in Sarepta With Caution

NEW YORK ( TheStreet) -- My column last week about the risks associated with Sarepta Therapeutics (SRPT - Get Report) generated an unexpectedly high volume of comments from professional investors. A few smart buysiders questioned two of my concerns: 1) Sarepta's control group might not accurately reflect natural progression in Duchenne muscular dystrophy (DMD), and 2) competitor GlaxoSmithKline's (GSK - Get Report) pivotal trial implied a higher-than-expected bar for accelerated approval.

Before we dig in, let me reiterate my investment conclusion: Sarepta seems like a solid, modestly sized long position for a risk-tolerant investor.

Sarepta bulls allege that I unfairly questioned the 78-meter absolute decline in the six-minute walk test (6MWT) reported after 36 weeks for control patients in the phase IIb study of eteplirsen. My view was based on a December 2012 Muscle and Nerve study (McDonald C, et al. Muscle Nerve 2010 42:966-974), which showed a 57-meter decline in 6MWT for a small cohort of DMD patients. Citing the same paper, the bulls suggested that I should have focused on the 115-meter decline observed for boys more than seven years old, since that more closely matched the demographics in the company's trial. Had I used this subgroup as a benchmark, Sarepta's control arm data at 36 weeks would seem reasonable.

My first thought was: "$%@#! How did I miss that?"

Step 1: Double check the median age of patients in the Sarepta Phase IIb trial. As far as I can tell, management hasn't publicly disclosed those data. However, a review of the study protocol shows that enrollment was limited to boys between 7 and 13 years old.

Tip of the hat to those investors who highlighted my oversight, and apologies to my readers.

Step 2: Review the literature in more detail. Feeling like a bit of a dope, I dug deeper through the medical literature for longitudinal data on the natural progression of 6MWT scores in DMD. After an exhaustive search, I unearthed another relevant citation that Wall Street appears to have missed.

In July 2011, investigators from 11 neuromuscular centers in Italy independently published a longitudinal study of 6MWT scores in DMD in Neurology (Mazzone E, et al. Neurology 2011; 77:250-256.) The investigators followed 106 patients -- a far larger group than the 18 patients in the McDonald study -- for a year. Like McDonald, the Italians noted a significant age-based difference in the 6MWT decline, with "the point of slope change...around 7 years."
1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
GSK $42.38 -1.80%
SRPT $17.20 -4.60%
AAPL $94.38 -0.84%
FB $117.94 0.43%
GOOG $697.28 0.71%


Chart of I:DJI
DOW 17,645.65 -105.26 -0.59%
S&P 500 2,049.16 -14.21 -0.69%
NASDAQ 4,721.2480 -41.9760 -0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs