This Day On The Street
Continue to site
ADVERTISEMENT
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

A New Reason to be Bullish About Sarepta Therapeutics

NEW YORK ( TheStreet) --I've written about Sarepta Therapeutics (SRPT - Get Report) twice over the past month, with good reason. Despite a modest $327 million market capitalization, recent clinical data suggest that the company's lead drug candidate eteplirsen may be an effective treatment for Duchenne muscular dystrophy (DMD) -- a progressive disease that leaves patients wheelchair bound by their teens and dead shortly thereafter.

My first article highlighted risks that I thought my colleague Adam Feuerstein missed in his bullish coverage. My second addressed comments I received from institutional investors who own Sarepta. They thought I was overly critical of eteplirsen even though I had declared Sarepta to be "a reasonable long position for biotech investors with a healthy appetite for risk."

Last week, I learned an important tidbit that I don't think is widely known by the investment community: Sarepta's Phase IIb study of eteplirsen remained effectively blinded for far longer than 24 weeks.

That's important and potentially very good news for Sarepta. Before I explain why, let's recap the eteplirsen study to date:

Eteplirsen induces the body to "skip" a mismatched section of the exon (a sequence of nucleic acids) that codes for dystrophin, a protein critical to muscle repair that is dysfunctional in patients with DMD. By skipping exon 51, the drug enables the creation of a semi-functional dystrophin protein.

After 36 weeks, Sarepta reported that four eteplirsen recipients in the company's phase IIb study walked 69.4 meters further in six minutes (6MWT) than four patients treated with 24 weeks of placebo and 12 weeks of drug. These results reached statistical significance and far exceeded Wall Street expectations, which had dimmed following an essentially equivocal 6MWT assessment at 24 weeks.

If these data hold at 48 weeks and patient dystrophin levels correlate with clinical response, Sarepta will have meaningfully de-risked the program and the stock could easily double. Investigators will present the 48-week data on Oct. 13 at the World Muscle Society conference in Australia, although the company could issue a press release with top-line results any day.

One of my chief complaints with the phase IIb data was that the control group might not accurately reflect the natural progression of DMD. The medical literature shows a highly variable clinical course for DMD, even among patients more than seven years old (experts agree that patients progress more rapidly after age seven.) Given Sarepta's small study size, aberrant control group results could meaningfully skew the drug-placebo differential.

Importantly, patients in Sarepta's control arm were "rolled over" to receive drug after 24 weeks. Most investors assumed the study blind had been broken at that point, meaning that everyone -- from investigators and patients to the physical therapists who administered the 6MWT -- was informed of patients' treatment assignments. I worried about the possible demotivating effect that unblinding might have on subsequent 6MWT scores for those patients previously on placebo.

Late last week, I had a lengthy conference call with Christopher Garabedian, Sarepta's amiable CEO. Our detailed discussion about the phase IIb study and the unblinding process made it clear that the patients, parents, and physical therapists likely didn't know treatment assignments until at least 32 weeks -- and perhaps as long as 36 weeks.
1 of 2

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
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
GSK $39.69 0.00%
SRPT $33.81 0.00%
AAPL $109.27 0.00%
FB $88.26 0.00%
GOOG $600.70 0.00%

Markets

Chart of I:DJI
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASDAQ 4,683.9190 -49.5780 -1.05%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs