In a three-week period between mid-September and early October, Sarepta Therapeutics  (SRPT) received a batch of good news for its Duchenne muscular dystrophy (DMD) drug eteplirsen which propelled the stock from the low $30s into the mid $50s. 

Since then, a lack of news, a general malaise over the biotech market and a rehash of bearish arguments from short sellers has squashed the Sarepta rally. The stock has retrenched back to where it was trading mid September before all the good news kicked in. 

I view the pullback as an opportunity for investors to get into Sarepta at an extremely cheap price given the outsized upside from here relative to downside risk.

The company's chief competition, the partnership between GlaxoSmithKline  (GSK) and Prosensa (RNA), saw their DMD drug drisepersen fail in a phase III study. The blow up means two very big things for Sarepta. First, eteplirsen has the DMD treatment market to itself, regardless if the drug is approved in 2014 or even if delayed by a year or so while a pre-approval phase III study is completed. Second, the demise of drisapersen opens the European DMD treatment market to Sarepta, which was previously blocked due to patents. Eteplirsen's commercial market opportunity goes from $500 million to $800 million with European DMD patients added in. 

I have more confidence in eteplirsen's efficacy following the presentation of stellar 96-week data from the phase II study last month. Over 96 weeks, nearly two years, the DMD boys treated with eteplirsen have shown a reduction in six-minute walk test performance of only 6.3 meters from baseline. As anyone who knows the natural history of DMD will tell you, these results are simply remarkable. Furthermore, eteplirsen hasn't had a single safety issue.

The Eteplirsen data to date have been so good that Sarepta short sellers are now claiming the company and its CEO Chris Garabedian are pulling off some sort of scam. These allegations are possibly the dumbest thing I've ever heard. The value of Sarepta's stock has risen dramatically in the past two years yet management has not sold a single share since late August. Instead, five Sarepta insiders have bought company stock.

There are many reasons for insiders to sell stock but only a single reason to buy, Peter Lynch has said. I truly believe management is confident they have, in eteplirsen, the first effective therapy against DMD, which is why they're not selling stock but buying it. 

Sarepta bears continue to claim FDA will reject eteplirsen due to the insufficiency of the phase II data. Furthermore, the bears believe FDA only agreed to allow Sarepta to seek early approval as a way to placate the parents of DMD boys and DMD advocates demanding a drug to treat this horrible disease. 

Last month, Sarepta disclosed the FDA requested another set of muscle biopsies from the DMD boys in the phase II study. Presumably, this is to show dystrophin production was maintained throughout the two years of the study. If the FDA isn't serious about granting eteplirsen early approval, it would never ask Sarepta to subject the boys to another round of painful and unnecessary muscle biopsies. Such a request would be cruel and unethical.

What the FDA's request for additional muscle biopsies shows is the agency's desire to approve eteplirsen and its interest in having as much clinical data as possible to validate the approval decision. 

Last March, I said Sarepta shares could increase 20-fold if the company's exon-skippin technology was found to be effective for all the mutations of DMD. 

With all that's happened to Sarepta this last March, I'm more confident in the company and its future today. The stock is my largest long position in both my personal portfolio and in my newsletter portfolio.

Dan Rosenblum has been a full-time stock trader since 1999 after leaving a job at a publicly held medical-device company. Rosenblum joined that year and has been the online trading community's resident biotech expert ever since. Rosenblum writes the newsletter, which has outperformed the S&P 500 and the Nasdaq Biotechnology Index every year since its inception in 2006. Rosenblum lives with his wife and kids in Rockland County, New York.