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Sarepta Serious Setback: FDA Says No Early Approval Filing for Eteplirsen (Updated)

The FDA has told Sarepta Therapeutics (SRPT - Get Report) that it should not seek accelerated approval for its Duchenne muscular dystrophy drug eteplirsen because regulators have "considerable doubt" about results from the small phase II study, the company said Tuesday.

Sarepta shares are down 57% to $15.62 on the significant regulatory setback, which means the company will have to conduct a phase III study of eteplirsen -- with positive results -- before seeking approval. 

"We are very disappointed with the FDA's decision to reconsider their openness to a potential NDA filing based on our current data and the resultant impact this change may have on our efforts to achieve an earlier approval of eteplirsen," Sarepta CEO Chris Garabedian, in a statement. 

Sarepta continues to work with the FDA to finalize a design for a confirmatory phase III study of eteplirsen, he added. The FDA said a placebo-controlled study "would be the most likely method for developing interpretable evidence of efficacy for eteplirsen..." Sarepta had proposed a phase III study in which DMD boys with non-exon 51 skips would serve as a control.

The risk that FDA would ask Sarepta for a larger and positive phase III study of eteplirsen as a pre-requisite for an approval filing increased after GlaxoSmithKline (GSK - Get Report) and Prosensa (RNA) announced negative results from a pivotal study of their competitive DMD drug drisapersen. What's more surprising, however, is FDA apparently no longer believes in what appeared to be promising and positive data from Sarepta's phase II eteplirsen study, albeit conducted in just 12 DMD patients. Or, perhaps regulators had doubts about the eteplirsen data all along.

In its meeting with Sarepta, FDA questioned the robustness of the six-minute walk test data and the correlation with dystrophin production resulting from the phase II study. 

Sarepta shares soared in October when drisapersen failed because investors believed eteplirsen had the DMD market to itself. The lack of competition was more of a positive than any risk of FDA asking Sarepta to run a pre-approval phase III study. Sarepta shares are tanking today because now FDA appears to have lost faith in the exon-skipping technology that underlies both drisapersen and eteplirsen. Sarepta and its investor fans believe etepiirsen is different, more potent, than drisapersen. They believe drisapersen's failure shouldn't cast doubts on eteplirsen. But FDA apparently disagrees, based on comments made public today by Sarepta. 

It's these FDA doubts coupled with uncertainty about the design and timing of the now-necessary eteplirsen phase III study, which explains why Sarepta shares are getting hit so hard Tuesday.

Must Read: Biotech Stock Mailbag: Galectin, Keryx, Navidea, Cytori

-- 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.

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