Sarepta (SRPT) sinks 20% as surprise FDA AdComm for SRP-9001 adds risk

Shares of Sarepta Therapeutics (NASDAQ: SRPT) fell 20% in pre-open trading Friday after the company announced a surprise FDA AdComm for SRP-9001, its investigational gene therapy for the treatment of Duchenne muscular dystrophy. The news comes just a few weeks after management indicated that there would be no AdComm.

While the news adds a layer of risk, most analysts still expected FDA approval at the May 29th PDUFA date.

"FDA’s decision to hold a public advisory committee meeting on the SRP 9001 BLA is a change from the communicated position at the midcycle meeting," said Doug Ingram, president and chief executive officer, of Sarepta. “While we are disappointed that we must communicate a change in decision after our prior statement on the topic, we are not disappointed with the decision to hold an advisory committee." He added that they will be "well prepared."

Reacting to the news, Credit Suisse analyst Judah Frommer, thinks the decision could be related to the recent reorganization of OTAT into the OTP super office. In addition, SRP 9001 status as "one of the first gene therapy BLAs founded on a surrogate endpoint in conjunction with CBER leadership’s focus on biomarker-driven accelerated approval pathways, especially in rare diseases, may also play a role." The analyst doesn't think safety is an issue and sees a high likelihood of approval. That said, the "potential for gyrations in share price around 3 key events, i.e. briefing docs, the AdCom and the PDUFA", has the firm lowering their price target to $139 from $144 while maintaining a Neutral rating.

Oppenheimer's Hartaj Singh said while the AdComm adds a layer of risk, they "continue to point to extensive scientific work behind SRP-9001 gene cassette and rh74AAV vector, SRP-9001's compelling safety/efficacy profile to date (>100 DMD boys), and SRPT's leading manufacturing expertise." The analyst continues to expect a 75% chance of approval and stays bullish with an Outperform rating and $180 price target.

"We believe SRPT's comprehensive data disclosures, high unmet need for disease-modifying therapy in DMD, and KOL backing should support a positive outcome," Singh commented. "Having said that, we think that more than 80% of committee members voting in favor of the proposed question should lead to a positive PDUFA. In contrast, less than two-thirds backing could indicate a higher likelihood of a CRL."

By StreetInsider.com Staff

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