2023-04-19 09:15:05 ET
Summary
- Sarepta Therapeutics develops RNA-targeted therapeutics and gene therapies for rare diseases, with approved products for Duchenne muscular dystrophy (DMD).
- The FDA will review the marketing application for Sarepta's DMD gene therapy, SRP-9001, after an advisory committee (AdCom) meeting on May 12, 2023.
- In 2016, Sarepta faced a controversial regulatory process for the approval of their DMD drug eteplirsen, leading to the drug's accelerated approval.
- SRP-9001 has shown positive results in clinical trials for DMD, with significant improvements in functional motor abilities compared to external control groups.
- The forthcoming AdCom meeting introduces some uncertainties; however, in my view, the probability of SRP-9001's approval remains high and is estimated to range between 65% and 75%.
Introduction
Sarepta Therapeutics ( SRPT ) is a biopharmaceutical company dedicated to discovering and developing unique RNA-targeted therapeutics, gene therapy, and other genetic therapeutic modalities for the treatment of rare diseases. Through their proprietary and innovative technologies and collaborations with strategic partners, Sarepta has developed multiple approved products for the treatment of Duchenne muscular dystrophy and is currently developing potential therapeutic candidates for a wide range of diseases and disorders. Their commercial products include EXONDYS 51, VYONDYS 53, and AMONDYS 45, which are approved treatments for Duchenne muscular dystrophy in patients with specific gene mutations. Sarepta's technologies and therapeutic candidates also have the potential to treat other neuromuscular and central nervous system-related disorders, including Limb-girdle muscular dystrophies.
Recent events: Sarepta recently disclosed that an advisory committee meeting will take place on May 12, 2023, to review the marketing application of Sarepta Therapeutics' DMD gene therapy, SRP-9001, ahead of a regulatory action date on May 29, 2023. Subsequently, it was revealed in a report that some FDA staff members initially expressed opposition to SRP-9001's approval, but eventually consented to the meeting.
This article will delve into the prospects of Sarepta in the wake of the latest news.
Financials
Let's first discuss financials. In Q4 2022, Sarepta Therapeutics reported a GAAP net loss of $109.2 million or $1.24 per share, which is a decrease from the Q4 2021 net loss of $122 million or $1.42 per share. For the whole of 2022, the company reported a GAAP net loss of $703.5 million or $8.03 per share, in contrast to a net loss of $418.8 million or $5.15 per share in 2021. The company's total revenues in Q4 2022 were $258.4 million, rising from $201.5 million in Q4 2021, with total revenues for 2022 amounting to $933 million, as opposed to $701.9 million in 2021. The increased revenue primarily resulted from a heightened demand for their products in the U.S. and a full year of Amondys 45 sales in 2022. Research and development expenses, as well as selling, general, and administrative expenses, increased in Q4 2022 compared to Q4 2021. As of December 31, 2022, the company had approximately $2.0 billion in cash, cash equivalents, investments, and long-term restricted cash, a slight decrease from the $2.1 billion as of December 31, 2021.
Controversial Approval of Sarepta's Eteplirsen: Drama with FDA and AdCom in 2016
In 2016, Sarepta engaged in a contentious regulatory process with the FDA and its Advisory Committee (AdCom) regarding the approval of Exondys 51, otherwise known as eteplirsen, for the treatment of Duchenne muscular dystrophy (DMD) patients with a particular mutation in the dystrophin gene. The drug was intended to reinstate the production of a functional, albeit truncated, dystrophin protein, which is crucial for maintaining muscle function and stability.
The AdCom's review of eteplirsen's clinical trial data in April 2016 sparked considerable controversy, as critics questioned the validity of the evidence presented by Sarepta, which was based on a mere twelve patients and lacked a placebo-controlled group. This limited dataset raised questions about the drug's efficacy and the ability to draw firm conclusions from the results.
Moreover, there was a lively debate surrounding whether dystrophin production, the surrogate endpoint employed in Sarepta's clinical trials, could accurately predict clinical outcomes, such as improved muscle function or a decelerated disease progression.
Despite these concerns, DMD patient advocacy groups and families mounted intense pressure on the FDA to accelerate the drug's approval, given the lack of alternative treatments and the disease's degenerative nature.
Ultimately, in April 2016, the AdCom voted against recommending eteplirsen for approval, citing insufficient evidence of its efficacy. However, in September 2016, the FDA issued an accelerated approval for eteplirsen, provided that Sarepta undertake further clinical trials to confirm the drug's safety and effectiveness.
The FDA's decision to grant eteplirsen approval was met with mixed reactions, with some hailing it as a significant breakthrough for DMD patients and their families, while others contended that it set a perilous precedent for endorsing drugs lacking substantial evidence of their therapeutic value.
SRP-9001 Gene Therapy Shows Positive Results in Clinical Trials for Duchenne Muscular Dystrophy
SRP-9001 is a gene therapy for Duchenne muscular dystrophy. SRP-9001 utilizes a AAVrh.74 vector to express a smaller, functional version of dystrophin, which targets skeletal, diaphragm, and cardiac muscle without crossing the blood-brain barrier. To ensure robust expression in the heart, crucial for Duchenne patients who often die from pulmonary or cardiac complications, the MHCK7 promoter was chosen. The FDA cleared the IND application for SRP-9001 in 2017, leading to a Phase 1/2a clinical trial (Study 101). Results from this trial and subsequent studies (Study 102 and Study 103) have been released at various stages.
A pivotal (or potentially confirmatory) trial of SRP-9001 (Study 301) began in October 2021, with data expected in late 2023. In September 2022, a biologics license application was submitted for SRP-9001, seeking accelerated approval for the treatment of ambulant individuals with Duchenne.
Study SRP-9001-103 ( ENDEAVOR ) showed that SRP-9001-treated patients (n=20, ages 4 to 7) had significant improvements in functional motor abilities one year after treatment compared to an external control group. These improvements were measured using the North Star Ambulatory Assessment (NSAA) and timed function tests. Long-term results from Study SRP-9001-101 also showed positive outcomes in SRP-9001-treated patients.
An integrated analysis of one-year functional data from Studies 101, 102, and 103 demonstrated improvements in NSAA total scores for SRP-9001-treated patients compared to the external control group. The safety and tolerability profile of SRP-9001 remained consistent with past reports, with vomiting as the most common treatment-related adverse event and transient increases in liver enzymes. One serious adverse event of myocarditis occurred in an older patient, but the patient showed signs of recovery.
Understanding AdCom and its Relevance to SRP-9001
An FDA Advisory Committee (AdCom) is a panel of independent experts that provides the agency with objective advice and recommendations on various topics, including the safety, efficacy, and appropriate use of new drug products. The panel consists of specialists in relevant fields, such as clinicians, researchers, statisticians, and sometimes patient representatives or industry experts.
For SRP-9001, the AdCom will evaluate several aspects specific to the gene therapy, including:
- Clinical Trial Data: The committee will review the data generated from SRP-9001 clinical trials, including the Phase 1/2a Study 101, as well as Studies 102 and 103. They will assess the therapy's efficacy and safety based on the outcomes observed in these trials, such as improvements in functional motor abilities and any adverse events reported.
- Comparison to External Control Group: The AdCom will examine the performance of SRP-9001-treated patients in comparison to an external control group. This assessment is critical for determining the therapy's effectiveness in comparison to standard care or other available treatments.
- Safety and Tolerability: The committee will scrutinize the safety and tolerability profile of SRP-9001, taking into account the frequency and severity of any treatment-related adverse events, as well as any potential long-term safety concerns.
- Surrogate Endpoints: As with eteplirsen, the AdCom may discuss the use of surrogate endpoints in SRP-9001's clinical trials, such as dystrophin production, and whether these endpoints can reliably predict clinical benefits.
- Unmet Medical Need: The committee will consider the unmet medical need for effective DMD treatments and weigh the potential benefits of SRP-9001 against its risks. This evaluation is crucial in determining whether the therapy warrants accelerated approval, given the progressive and life-limiting nature of DMD and the limited availability of effective treatments.
Ultimately, the AdCom's role is to provide the FDA with an informed, unbiased recommendation on whether SRP-9001 should be approved based on the available data. The FDA is not required to follow the committee's advice, but their recommendation carries significant weight in the final decision-making process.
My Analysis & Recommendation
Sarepta Therapeutics is facing uncertainty due to the upcoming FDA AdCom meeting for their Duchenne muscular dystrophy (DMD) gene therapy, SRP-9001. This concern arises from their past experience with the FDA regarding eteplirsen (Exondys 51) in 2016, which was a controversial approval involving limited data, surrogate endpoint debates, and significant pressure from DMD patient advocacy groups. Despite the initial AdCom vote against recommending eteplirsen, the FDA granted accelerated approval, provided Sarepta conducted further clinical trials.
Given Sarepta's history, it is essential to evaluate the current data and trials for SRP-9001 independently. Recent study results, including the ENDEAVOR trial and the integrated analysis of Studies 101, 102, and 103, have demonstrated significant improvements in functional motor abilities for SRP-9001-treated patients compared to external control groups. The safety and tolerability profile of SRP-9001 appears consistent with past reports.
While it is reasonable to be cautious about the upcoming AdCom due to Sarepta's past, the recent positive trial results and the strong need for effective DMD treatments should be taken into account when estimating the odds of FDA approval for SRP-9001. It is crucial to note that SRP-9001's development has been more robust than eteplirsen, with multiple trials and an external control group.
In my view, despite uncertainties surrounding the AdCom, its impact on the likelihood of SRP-9001's approval is expected to be minimal, and I estimate the likelihood of approval to be between 65% and 75%. Investors should take into account the favorable trial results and the persisting demand for effective DMD therapies when assessing the potential for SRP-9001's approval. It is essential to keep a close eye on the AdCom meeting and any additional information that emerges to make informed investment decisions. Those who have already invested in Sarepta may consider increasing their holdings if the share price falls further due to uncertainties alone, while Sarepta is currently rated as a "Hold."
Risks to Thesis
When the facts change, I change my mind.
There are several risks associated with the thesis discussed in my article:
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Regulatory risk: There is a risk that the FDA AdCom may not recommend approval for SRP-9001 or that the FDA may not grant accelerated approval even with a positive recommendation from the AdCom. This could have a negative impact on Sarepta's stock price and future revenue prospects.
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Clinical trial risk: The clinical trial data for SRP-9001 may not hold up under further scrutiny, or additional safety concerns may emerge during the AdCom meeting. If the data is found to be insufficient or if safety concerns are significant, the FDA may not approve SRP-9001 or may require additional trials, delaying its potential approval and commercialization.
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Competition risk: Other companies are also working on developing therapies for DMD. If a competing therapy demonstrates superior efficacy, safety, or ease of use, it could reduce the market share and revenue potential for Sarepta's products, including SRP-9001.
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Manufacturing risk: Gene therapies, such as SRP-9001, can be complex and challenging to manufacture. Any issues with the manufacturing process or quality control could delay the launch of SRP-9001 or lead to product recalls, negatively affecting Sarepta's financial performance and reputation.
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Reimbursement risk: Even if SRP-9001 is approved by the FDA, there is a risk that payers, such as insurance companies and government programs, may not provide adequate reimbursement for the therapy. This could limit patient access and reduce the potential revenue for Sarepta.
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Legal and Intellectual Property [IP] risk: Sarepta may face legal challenges or disputes over the IP related to SRP-9001 or its other therapies. Such disputes can be costly, time-consuming, and could ultimately affect Sarepta's ability to market and sell its products.
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Market risk: The overall market conditions, such as economic downturns or increased volatility, could negatively impact Sarepta's stock price regardless of the company's performance or the outcome of the AdCom meeting.
For further details see:
Sarepta's Prospects For SRP-9001 Approval Remain Strong Despite AdCom Setback