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Sarepta Is Still A Buy: Recent Concerns Much Ado About Nothing

Stocks in this article: SRPT GSK

Patients in the "delayed treatment" cohort -- this group received placebo through 24 weeks, followed by 38 weeks of eteplirsen -- show a similar pattern once on drug. Despite some variability in absolute 6MWT scores at 36 weeks (-71 meters from baseline), 48 weeks (-61 meters), and 62 weeks (-78 meters), the data again fall within a 5% margin that suggests at least disease stability.

Sarepta's press release and the accompanying data slides, both of which were posted to the company's website on Friday, show multiple analyses on the 62-week data that can be confusing at first. Rather than focus on each analysis -- based on maximum (highest baseline value; the primary endpoint), mean, minimum (lowest baseline), and "Day 1" (tests were administered on consecutive days) 6MWT scores -- investors should note the data offer solid concurrence for eteplirsen's placebo-subtracted treatment effect. (Patients had two 6MWT scores taken at baseline, but only one score at 62 weeks. That explains the differences in adjusted mean 6MWT change from baseline for the various analyses.)

The consistent placebo-subtracted benefit should reassure eteplirsen worriers, especially since FDA reviewers routinely cut data several ways to look for red flags.

The final concern about the 62-week data has to do with eteplirsen's safety data. The morpholino-based chemistry used to design eteplirsen had shown no adverse effects thus far. Sarepta on Friday noted one eteplirsen-treated patient had a transient finding of proteinuria (protein in the urine) that did not recur, didn't cause any complications nor require discontinuation of therapy. I don't think this single adverse events is a big deal, but it's worth keeping an eye on. It's worth noting toxicity concerns have long surrounded competitor GlaxoSmithKline's (GSK - Get Report) drisapersen although I don't believe safety is a big problem for that drug either.

The complexities of human biology can make biotech investing a treacherous endeavor, and Sarepta isn't home free yet. Nonetheless, eteplirsen is clearly a meaningfully active drug and the unmet medical need in DMD is plainly established. I'm not sure of eteplirsen's exact path to market, but the drug will most likely get there and Sarepta's still modest $645 million market capitalization doesn't assume much.

For the patient investor, that's an exciting combination.

Sadgeghi has no position in Sarepta.

Nathan Sadeghi-Nejad has 15 years experience as a professional health-care investor, most recently as a sector head for Highside Capital. He has worked on the sell side (with independent research boutiques Sturza's Medical Research and Avalon Research) and the buyside (at Kilkenny Capital prior to Highside). Sadeghi-Nejad is a graduate of Columbia University and lives in New York. You can follow him on Twitter @natesadeghi.
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