Updated with new information.
CAMBRIDGE, Mass. (TheStreet) -- Sarepta Therapeutics(SRPT) - Get Report on Tuesday announced the abrupt "resignation" of CEO Chris Garabedian. I'm using quotation marks around resignation because the Sarepta press release issued just after 8 p.m. EDT on Tuesday night reads like Garabedian was fired by the company's board of directors.
Current Sarepta Chief Medical Officer Ed Kaye is taking over the CEO role on an interim basis until a permanent chief can be found, Sarepta said.
Sarepta shares are up 8% to $14.35 in early Wednesday trading. Garabedian is not well-liked on the Street, generally speaking. It's believed the FDA isn't a fan of Garabedian because of critical (some might say antagonistic) comments he's made in the past about the way regulators are handling the approval process for eteplirsen, Sarepta's drug to treat Duchenne muscular dystrophy.
Many of the parents of DMD kids adored Garabedian because of his passion in trying to get eteplirsen approved as quickly as possible. When the news of his departure hit the wires, Jenn McNary, mother of two children with DMD and a forceful advocate for the rapid approval of eteplirsen, tweeted:
Sarepta offered no explanation for the change in leadership in its announcement. This canned quote from Sarepta Chairman John Hodgman does offer a clue, however.
"We believe this change will facilitate the company's clinical and regulatory discussions and relationships with the goal of meeting its stated timelines for bringing a potentially disease-modifying treatment to patients with DMD as soon as possible." (Emphasis added.)
Regulatory discussions and relationships.
This implies FDA relationships, which suggests Sarepta's board no longer had confidence in Garabedian's ability to navigate eteplirsen through the review and approval process. Sarepta's top scientist Art Krieg was fired abruptly last summer after inciting a coup to unseat Garabedian as CEO.
In October, Sarepta was forced to delay the eteplirsen filing to the FDA, a setback which Garabedian blamed on the agency. In a highly unusual move, the FDA defended itself publicly, which basically confirmed speculation that Garabedian's relationship with the agency was poisoned.
Sarepta's new interim CEO Kaye spoke with analysts and investors on a conference call Wednesday morning, expressing his desire to "re-engergize our discourse with regulatory agencies."
All of the discussion on the Sarepta call pointed to Garabedian's poor relationship with the FDA as the main reason for his departure. FDA officials have already been notified about the change in leadership at the company, Kaye said.
Kaye will get a chance to show he can foster better relationships with the FDA very soon. The company and FDA are scheduled to meet face to face this quarter. Sarepta will give the FDA an early look at the updated clinical data package for eteplirsen. The goal of the meeting is to walk out with the FDA's blessing to file eteplirsen by the middle of the year, per the company's guidance.
"We view the news as an incremental net positive for Sarepta, since we expect the change at the CEO position can help with improving the company's problematic interactions with FDA, and its credibility with investors. Dr. Kaye's background as a pediatric neurologist with industry experience in rare disease drug development at Genzyme definitely brings a different gravitas to the role," writes RBC Capital analyst Simos Simeonidis in a Wednesday morning research note.
On Tuesday night, Sarepta reiterated prior guidance that the eteplirsen new drug application would still be filed by the middle of the year. DMD competitorBioMarin(BMRN) - Get Report is expected to beat Sarepta to an FDA filing because of the eteplirsen delay.
A source familiar with Sarepta says the board's decision to ask for Garabedian's resignation may have been finalized over the weekend. Kaye was supposed to be on vacation this week but was called back to work, the source said.
If the board's plan to fire or force the resignation of Garabedian was a plan long in the works, he didn't appear to know his days were numbered. Garabedian was interviewed and quoted in a story published by the Boston Business Journal on Tuesday afternoon. The reporter who wrote the story, Don Seiffert, tweeted Tuesday night:
Perhaps not coincidentally, Seiffert's story focused on a new controversy involving Sarepta, the FDA and accusations of conflict of interest by an outside scientist developing a new method for measuring dystrophin, the muscle protein missing in DMD patients. If Garabadian was already on thin ice with Sarepta's board over FDA issues, Garabedian's comments in the Boston Business Journal story may have been the last straw.
One thing's for certain: Sarepta is never boring.
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.