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REUTERS: Shares of Sarepta Therapeutics Inc. plunged 14% on Tuesday after the US health regulator refused to endorse the drug maker's most recent treatment for muscle wasting, which mainly affects young boys.
Wall Street analysts have expressed surprise at this decision and at least six of them have lowered their price targets for the company's stock, while stating that they were still waiting for them that the company's second drug for Duchenne Muscular Dystophy is finally approved.
The so-called full response letter (CRL) from the US Food and Drug Administration regarding the new treatment of Sarepta, called Vyondys 53, raised the risk of infection and kidney toxicity, the company said Monday.
This represents a blow to the company looking to strengthen its leadership in the treatment of DMD, which has limited treatment options.
"The setback can only be described as strange, and we can not help but think that the issues raised by the LCR are more important than those mentioned," said Tim Lugo, an analyst with William Blair.
The details included in the FDA's CRL are confidential, but the company could issue the letter if it decides to do so, said FDA spokeswoman Sandy Walsh in an email.
Sarepta said he did not intend to make the letter public.
"We are disappointed that Sarepta has not received FDA approval," said Debra Miller, co-founder of the non-profit CureDuchenne organization.
"We look forward to continuing discussions between Sarepta and the FDA and hope that patients requiring this treatment will not have to wait long," Miller said.
Exondys 51, the company's first DMD treatment, was approved in 2016 against the advice of the FDA's group of external experts and its own reviewers, who had questioned the effectiveness of the drug. It generated annual sales of 301 million US dollars in 2018.
The FDA's ruling on Monday cited the risks of kidney infections and toxicity seen in preclinical studies of Vyondys 53, known as golodirsen.
The company said that the doses used in these studies were ten times higher than those used in clinical studies.
"Sarepta is the victim of questionable accelerated approval of Exondys 51," said Joseph Schwartz, an analyst at SVB Leerink, but said he is confident that the drug will eventually be approved.
Analysts predict that annual golodirsen sales will reach a peak of almost 400 million US dollars in five years.
Tuesday's stock market crash may be partly related to investor concerns regarding the trading status of Exondys 51, said Janney Montgomery Scott analyst Yun Zhong.
Zhong, however, said the likelihood that the CRL affects Exondys 51 was minimal, as sales of the drug indicate that a large number of patients are following the treatment.
The company's shares traded down nearly 14.30% to 103.1 USD in the morning, losing more than 1 billion USD of its market value.
(Report by Manas Mishra in Bengaluru, edited by Patrick Graham)
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