December 13, 2019 / 2:14 PM / a month ago

Sarepta shares surge after surprise approval of DMD drug

(Reuters) - Shares of Sarepta Therapeutics Inc soared 32% on Friday after U.S. regulators shocked Wall Street by reversing their rejection of its muscle-wasting disorder therapy less than four months ago, to allow the drug’s immediate launch.

The Food and Drug Administration in August declined to approve the Duchenne Muscular Dystrophy (DMD) treatment, Vyondys 53, citing safety concerns, including the risk of infection and kidney toxicity.

In a statement, Sarepta said it had appealed the rejection through a formal dispute resolution request and, unusually, credited the swift approval to the FDA’s Review Division under Dr. Billy Dunn, and the Office of New Drugs, directed by Dr. Peter Stein.

The FDA said late on Thursday that in making the decision it had “considered the potential risks associated with the drug, the life-threatening and debilitating nature of the disease and the lack of available therapy.”

It said data from trials showed Vyondys 53 was “reasonably likely” to predict clinical benefit in patients with DMD although such benefit, including improved motor function, had not been established.

HC Wainwright analyst Debjit Chattopadhyay said he did not understand what had changed since August.

“If the (application) package was not approvable four months ago, it cannot suddenly become approvable without significant new data, and potentially reflects some contrived decision-making within the agency,” Chattopadhyay said.

Jefferies analyst Michael Yee said the change of heart could have implications for a review of Biogen Inc’s Alzheimer’s drug, aducanumab.

Biogen scrapped development of aducanumab in March, but seven months later surprised investors by saying it would pursue approval after analyzing additional data that showed it had some benefit. Wall Street has forecast annual aducanumab sales of nearly $4 billion by 2024.

The FDA approval remained contingent on the results of a post-approval trial expected to conclude by 2024, for which Sarepta is enrolling patients.

The surprise approval is not the company’s first.

In 2016, the FDA approved its first treatment for DMD, Exondys 51, bowing to pressure from patient advocates even as an outside panel of experts and the agency’s own reviewers both questioned the drug’s effectiveness.

Citi Group analyst Joel Beatty said it was now more likely that Sarepta would be able to win approval for Duchenne treatment casimersen and gene therapies it is developing.

Company shares, which halved in value in August and September to around $72, jumped to $132.08 in trading before the bell on Friday, up from Thursday’s close of just over $100.

Reporting by Tamara Mathias in Bengaluru; editing by Patrick Graham

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