Sarepta Plunges on FDA Statement
Biotechnology has been a hotspot for investors over the last year. Names including Gilead and Celgene have soared above the broad market returns as the street begun to realize the growth potential within the industry. However, not all biotechnology names are not created equal. Regulatory hurdles and competition within the space often causes great headache for management and investor bases. On Tuesday morning shares of Sarepta Therapeutics Inc (NASDAQ:SRPT) a popular name in the space came under fire.
Following comments from the U.S. Food and Drug Administration shares of the company plunged on exceptionally high volume. The FDA expressed doubts that the design and goals for the trial of its lead drug were sufficient to support marketing approval. Moreover, the FDA suggested that the drug be tested against a placebo in a new trial.
Sarepta’s drug, eteplirsen, is being developed to treat Duchenne muscular dystrophy (DMD) – a rare, degenerative disorder that mostly affects males. The treatment was designed to increase the production of a protein called dystrophin, the lack of which is the chief cause of DMD. Sarepta previously has reported data from a mid-stage trial that showed that eteplirsen significantly improved walking ability in DMD patients.
Over the coming days it is expected shares of Sarepta will remain volatile. At the time of this writing, shares of the company were down by 60 percent to $14.31 per share. Prior to today’s announcement, shares of the company had done especially well. Year to date, shares of the company had been higher by nearly 40 percent. Time will tell if the company can return from its highs. Even with eteplirsen’s approval the market size for the drug remains rather small in comparison to other biotechnology drugs.
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