Sarepta stock falls in low outcomes for gene therapy

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Until Thursday,

Sarepta Therapeutics

led the race to show that gene therapy could cure Duchenne muscular dystrophy, a genetic disorder that progressively weakens children’s muscles. Late in the afternoon, however, the company announced that a controlled trial of its gene therapy failed to improve the average muscle strength of children treated in a statistically clear way.

“It’s an understatement to say that I was initially not only surprised, but deeply disappointed,” Sarepta CEO Doug Ingram said in a conference call Thursday evening. The company blamed the poor samples for the unfortunate randomization of sick children in the treatment group, rather than the placebo group. Sarepta noted that younger children had good gene therapy.

But clearly, if gene therapy had produced a strong medical benefit, no statistical reluctance would be needed.

Wall Street was torn down. On Friday early trading, Sarepta (ticker: SRPT) shares were down 50%, to $ 85. Many of the company’s analyst aficionados maintained their buy recommendations, but stock price targets plummeted as the company’s rival over the gene therapy rival

Pfizer

(PFE) evaporated. Of nearly 20 analysts surveyed by FactSet, only four downgraded shares.

Pfizer’s stock was basically flat on Friday morning, while another company with experimental gene therapy for muscular dystrophy—

Solid biosciences

(SLDB): saw its stock fall close to 12%, to $ 7.48. He

Nasdaq Composite

Meanwhile, the index rose 0.8%.

Both Sarepta and Pfizer are initiating phase 3 trials of their gene therapies, which inject muscle cells from patients with healthy copies of the genetic instructions of a muscle cell protein, to augment the broken instructions that patients inherited. . But the mid-stage study reported by Sarepta on Thursday provided the first randomized placebo-controlled data on gene therapy for muscle dystrophy, and the company had hopes that U.S. regulators would allow treatment to market according to the results.

Now, an approval for Sarepta gene therapy will have to wait for the result of its phase 3 study, which could delay any launch of a Sarepta product by two years, until 2024, writes the Mizuho group analyst, Difei Yang, on a Friday note.

The disappointing front-line results announced Thursday are just a tentative analysis and the study continues. In Thursday’s call, CEO Ingram and Sarepta scientific manager Louise Rodino-Klapac argued that the therapy could still be proven. Children in the 4–5-year-old group showed a significant improvement in the battery of muscle strength measurements from the study, and muscle cells produced healthy proteins in treated children of all ages.

Sarepta executives blamed overall poor muscle strength scores on the largest group of children ages 6 to 7, whose performance deteriorated slightly during the study. After inspection, older children who were randomly assigned to treatment were weaker at the start of the study than those assigned to placebo. The patients treated and the placebos of the younger group with better study performance were well equated.

“I’m not going to ignore the fact that I’m extraordinarily disappointed that this imbalance has missed our statistical significance,” Ingram told listeners.

RBC Capital Markets analyst Brian Abrahams generally agrees that the lack of the study was the result of bad luck. His Friday note also notes that older muscular dystrophy patients have suffered more damage and therefore may be harder to rescue for gene therapy. Abrahams lowered its Sarepta stock price target from $ 200 to $ 143, because Sarepta’s need for Phase 3 data will now reduce the advantage of gaining market share.

But the RBC analyst maintained its Outperform score, in the belief that Sarepta’s existing drug treatment for muscular dystrophy will continue to grow in sales from a 2019 level of $ 381 million, to $ 552 million. million dollars in 2020 and $ 713 million in 2021. Abrahams hoped that gene therapy would allow Sarepta to achieve a return of $ 2.50 per share in 2022, but now projects its losses to continue, with $ 2.20 per share in sales losses of $ 1 billion in 2022.

“All is not lost,” Abrahams wrote, arguing that Friday’s sale does not take into account the possibilities that Sarepta gene therapy can still be claimed.

Sarepta said more than 50 children have now been safely treated with their SRP-9001 gene therapy, including 10 with the production version they hope to market. “We are convinced that SRP-9001 will play a transformative role in the treatment of Duchenne muscular dystrophy,” Ingram told his audience on Thursday.

But Thursday’s bad news will resurrect the debate over the value of Serepta’s treatments, including her existing medications. The company’s first Exondys 51 drug was approved in 2016 when a senior U.S. Food and Drug Administration official overturned a rejection recommendation from the agency’s scientific staff. The drug improved biological measurements of protein levels in children, but had not been shown to improve their muscle performance. Sarepta’s second drug, Vyondys 53, was also approved after an initial rejection by the agency.

Measures of healthy protein production from the latest gene therapy data were disappointing for some analysts who asked questions at Thursday’s call from Sarepta, and average levels of these biological measures did not correlate with muscle strength. .

Thus, investors will eagerly await data this year that could vindicate the prospects of Sarepta muscular dystrophy.

Write to Bill Alpert to [email protected]