BOSTON (TheStreet) -- Welcome back to the Biotech Stock Mailbag.

Tony B. writes, "I appreciate your prediction of the approval for the DMD drugs but I think you're too optimistic about Sarepta Therapeutics (SRPT - Get Report) . I believe FDA approves Biomarin (BMRN - Get Report) but tells Sarepta that another trial must be run. In your article, you should have provided more explanation for the risk facing Sarepta and the possibility its drug is rejected."

Before I wrote my last column predicting the approvals of Duchenne muscular dystrophy drugs drisapersen and eteplirsen, I spoke to a health care investor I've known and respected for a long time. This investor agrees with Tony B. He says the FDA is more likely to approve Biomarin's drisapersen than Sarepta's eteplirsen, although at this point, he lacks the confidence to invest in either stock.

So, why Biomarin over Sarepta? Because what Biomarin is seeking to do -- make a convincing argument for drisapersen's approval based on messy clinical data including a failed phase III study -- doesn't set a regulatory precedent. It's something that the FDA has done before with drugs for rare diseases and would probably be comfortable doing again.

Examples include Vanda Pharma's (VNDA) Hetlioz and Chelsea Therapeutics' Northera. (Chelsea was later acquired by Lundbeck (HLUYY).) Biomarin even has prior experience with its orphan-disease drug Aldurazyme, which passed FDA muster despite study results which failed to hit statistical significance.

To approve Sarepta's eteplirsen, by contrast, requires the FDA to set a regulatory precedent which the agency might regret later. The data from Sarepta's 10-patient eteplirsen study are compelling, but is that enough to justify an approval? If the FDA says yes to Sarepta, must it also say yes to any future company which seeks approval on tiny uncontrolled studies? Does giving Sarepta a pass lower regulatory standards too much?

Sarepta bears argue that the FDA won't approve eteplirsen this time around for these reasons. It's easier for the FDA to approve Biomarin's drisapersen on its own. DMD patients and their families finally get a drug for which they've long lobbied, making the FDA look good. And the door is left open for Sarepta's eteplirsen to eventually reach the market if the ongoing phase III study is positive.

@adamfeuerstein what explains the relative strength of $QURE compared to $ONCE? Qure + 1.2% in August, ONCE -27%!

— Superwoester (@sparklybluequre) September 1, 2015



The simplistic answer is investors are nervous about the soon-to-be released outcome of Spark Therapeutics' (ONCE - Get Report) phase III study.

Recent actions taken by Spark management have exacerbated investor concerns. Uniqure (QURE - Get Report) will also be announcing some study results of its own this fall, but the data are early and preliminary, so not as pivotal to the future of the company.

Both Spark and Uniqure are developing gene therapies for serious diseases. The recent clinical setbacks at Avalanche Biotechnologies and Celadon -- also gene therapy stocks -- put a chill in the market's love-a-thon with the emerging technology.

It's a mistake to lump all gene therapy stocks together, but it would also be a confidence boost for the market to see positive results from a pivotal gene therapy study. Spark is next in line.

Spark's lead gene therapy SPK-RPE65 is designed to improve vision in patients with inherited retinal dystrophies, or IRD -- a group of eye diseases affecting the retina. Patients with IRDs have decreased sensitivity to light that eventually leads to blindness. IRDs are caused by a mutation in a single gene.

Spark's SPK-RPE65 is injected into the eye to correct a mutation to the RPE65 gene, the causative factor for about 3,500 IRD patients in the U.S. and Europe. The FDA granted SPK-RPE65 with a Breakthrough Therapy Designation based on data from earlier-stage studies.

As I mentioned, Spark is running a randomized, placebo-controlled phase III study of SPK-RPE65 which is fully enrolled and expected to have top-line results before the end of the year.

You can trace the weakness in Spark shares to management comments made on Aug. 5. On a conference call discussing second-quarter earnings and a pipeline update, Spark CEO Jeff Marrazzo said this:

On SPK-RPE65 we are reiterating our guidance to expect database lock and top-line results of our Phase III trial this year and BLA submission next year. We have reached the last patient/last visit in our study and are in the process of collecting all trial data. As we look ahead and fine-tune our preparations for BLA submission, we have taken advantage of our breakthrough therapy designation to engage in dialogue with FDA on certain details before we lock the database. We have continued to explore with FDA ways to enrich our analysis of the data collected in our Phase III trial.

Given that these conversations are ongoing, we will not be discussing specific details today except to confirm our earlier guidance regarding timing of the data and BLA submission. We plan to provide an update before we release the Phase III results. [Emphasis added.]

Investors freaked out about Marrazzo's disclosure of "dialogue with FDA" coming so close to the top-line results from the phase III study. Why is there a need for Spark to "enrich our analysis" of the SPK-RPE65 data?

Absent a clear answer, investors sold off Spark. It's worth noting, too, that Spark only disclosed the new FDA chats on its Aug. 5 conference call but omitted any mention in the company's accompanying press release.

Back to Uniqure. Preliminary data from a phase I/II study of its hemophilia B gene therapy are expected later this year, perhaps at the American Society of Hematology annual meeting in December.

Joe. C emails, "Can you comment on Raptor Pharmaceuticals (RPTP) in your next mailbag? I own the stock and am wondering your thoughts. Procysbi seems to be gaining some traction after initially disappointing investors with the launch a couple years back. Do you think the upcoming pediatric NASH and Q4 Huntington's data could transform the company? I understand both could fail and Raptor then becomes a one hit wonder with Procysbi, but this seems to be possibly shaping up into a decent long term story."

I was not a fan of the Procysbi (RP103) data from the Huntington's trial released in February 2014. The study compared RP103 against a placebo in 96 Huntington's disease patients. After 18 months, RP103 failed to show a statistically significant slowing of disease progression (measured by Total Motor Score) compared to placebo.

Raptor claimed to be encouraged by a subset of patients not taking concomitant tetrabenazine in which RP103 treatment resulted in a statistically significant slowing of disease progression compared to placebo. I wrote a column at that time casting doubt on Raptor's overly optimistic analysis.

After the 18-month randomized treatment phase of the study ended, Raptor invited all patients to roll over into an 18-month extension in which everyone would be treated with RP103. Raptor will compare the rate of Huntington's disease progression in patients on RP103 for three years to the patients who were originally treated with placebo but then switched to RP103 for 18 months.

Results from this analysis are expected in the fourth quarter. The lack of a true control arm in the three-year extension will make interpreting the data a challenge.

I don't know how to predict the outcome of the RP103 pediatric NASH study. In an earlier, proof-of-concept study, treatment with RP103 resulted in reduced liver enzyme levels, suggesting some beneficial effect from the drug. To meet the primary endpoint in the current study, RP103 needs to lower the NAFLD Activity Score, or NAS, by two points or more without any worsening of liver fibrosis compared to placebo. This is the same hard-to-hit NASH primary endpoint used in the Intercept Pharma (ICPT) "FLINT" study.

And as with the Intercept study, the National Institute of Diabetes and Digestive Kidney Diseases, or NIDDK, is running the RP103 study.

Raptor's ability to announce results is dependent on NIDDK providing the company with the data, but a presentation is expected in November at the American Association for the Study of Liver Disease (AASLD) annual meeting.


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.