(Reuters) – Sarepta Therapeutics shares slumped 11% on Friday as some analysts voiced concerns that upcoming confirmatory trial data for its gene therapy to treat Duchenne muscular dystrophy (DMD) may not be enough to secure approval for expanded use.
The stock hit a seven-month low and was set to drop $1.4 billion in market value if losses hold.
The U.S. health regulator had on Thursday granted Sarepta’s Elevidys therapy accelerated approval to treat DMD patients aged between 4 and 5 years who can walk, contrary to the company’s application for all patients who can walk.
Now, the Food and Drug Administration will wait for results from a late-stage study expected by December to confirm the treatment’s effectiveness and then decide on expanding its use to other age groups.
While most analysts were positive about the accelerated approval, some raised concerns about the enormous weight now resting on the upcoming trial, especially after the lack of clarity provided by earlier trials in the 6-7 age group.
“We just think the path to expand the label is tough,” Evercore ISI analyst Gavin Clark-Gartner said in a note, adding that there will also be challenges in expanding use of the therapy to patients who cannot walk.
Sarepta’s gene therapy is the first of its kind for DMD, an inherited progressive muscle-wasting disorder that almost always affects young boys. Its patients rarely survive beyond their thirties.
Elevidys, a one-time treatment, is expected to change the way that DMD patients are treated as current therapies require regular use.
William Blair’s Tim Lugo called the treatment “transformational for Duchenne’s patients” and “a significant opportunity for Sarepta”.
Sarepta’s price to tangible book value ratio, a common benchmark for valuing stocks, stood at 16.36 on Friday – nearly four times that of peer BioMarin Pharmaceuticals, which is developing a gene therapy to treat a bleeding disorder.
(Reporting by Leroy Leo, Khushi Mandowara and Bhanvi Satija in Bengaluru; Editing by Devika Syamnath)
