Sarepta Therapeutics (NASDAQ:SRPT) shares halved on Thursday as FDA strong arms on opposing muscle drug and broker Wedbush downgrades the stock in light of the regulatory wrestle.
US Food and Drug Administration staff reviewers stuck by their negative assessment of Sarepta Therapeutics' rare muscle disorder drug, further diminishing its chances of approval.
The reviewers highlighted similar concerns on January 15 ahead of a scheduled meeting of an independent panel of experts advising the FDA on the drug.
However, the meeting had been postponed due to a snowstorm.
FDA reviewers on Thursday reiterated their discomfort with trial design, statistical analysis and overall effectiveness of the drug, eteplirsen.
Wedbush said it was downgrading to neutral and the price target was $14 in light of the growing regulatory discomfort.
"The amended FDA briefing documents are, in our view, more negative in tone than in January; the agency now has issues with data consistency. Although we expect the panel to be positively disposed towards eteplirsen, the documents suggest FDA is unlikely to approve the drug without more data. Fundamentally, we believe eteplirsen works; however, due to the increase in regulatory risk, we are stepping to the sidelines ahead of next week's panel," Wedbush said.
The broker said that as expected, the panel will not get to vote yes or no. The draft points to consider basically ask the panel to weigh up the data for dystrophin and clinical measures and what these data could mean, in line with the drisapersen panel. It also asks for design of future studies, a typical question to advisory panels in general.
"In our view, this lack of a definitive vote allows FDA to follow its own conclusion without having to go against a potential panel decision," Wedbush added.
The broker said it now assumes full approval in 2019, not 2016.
"We have also included dilution expected from a financing to get Sarepta through to confirmatory data sufficient for a full FDA approval of eteplirsen. Our target is based on a sum-of-the-parts analysis driven by eteplirsen US revenue discounted by 40%."
Sarepta shares were last seen down 44.8% at $10.88 - their lowest level since early February.