For the ongoing phase III study, PTC narrowed enrollment to DMD kids 7 or older and those with baseline six-minute walk tests of 350 meters or less. These are the kids who seemed to benefit more from ataluren in the phase IIb study.

It's not a crazy thesis. Sarepta also enrolled older kids with more advanced disease in its eteplirsen phase II study for exactly the same reasons. While I'm generally skeptical of conclusions derived from post-hoc sub-group analyses, PTC's theory makes sense.

Where ataluren falls short -- and why the ongoing phase III study in nonsense mutation DMD carries a high risk of failure -- is the absence of dystrophin production.

Ataluren, by design, should boost the production of functional dystrophin, the protein that supports muscle function. DMD is caused by genetic mutations that prevent cells from producing functional dystrophin.

Except ataluren doesn't cause an increase in functional dystrophin. PTC blames compromised muscle biopsy samples in the phase IIb study for the inability to correlate dystrophin production to improvements in six-minute walk tests. Perhaps, but Sarepta didn't have that problem.

PTC doesn't seem to be measuring dystrophin production in the phase III DMD study either, which is weird if ataluren works the way the company say it does.

Top-line results from the ataluren phase III study in DMD are expected in the middle of 2015.

Right now, PTC is trying to convince European regulators to approve ataluren for DMD based on the post-hoc analyses of the failed phase IIb study. By the company's own admission, European regulators haven't been receptive to the idea. They want to see more data.

Last thing, let me emphasize again that PTC's ataluren is not directly competitive to Sarepta's eteplirsen. Same overall disease, but the drugs are directed at different mutations.

Following up on my dissection of Vanda Pharmaceuticals' ( VNDA) sleep disorder drug tasimelteon:

Vanda's FDA submission for tasimelteon has a lot of problems, as I documented Wednesday, but almost all are clinical review issues and therefore unlikely grounds for the agency to slap down a Refuse-To-File letter. The FDA has plenty of reasons to reject tasimelteon after a proper review.

If you liked this article you might like

No Good Stock Left Behind: Cramer's 'Mad Money' Recap (Tuesday 7/25/17)

Hertz Global Holdings, Honeywell, PetMed Express, Allergan: 'Mad Money' Lightning Round

Biotech Movers: Albany Molecular Shares Soar on Sale to PE Firms

Biotech Premarket Movers: Seres, PTC, Inovio

The 'Gnarly 9' Biotechs Will Test the FDA's Mettle