Sarepta Bear Speaks: Eteplirsen Accelerated Approval Will Be Denied

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NEW YORK ( TheStreet) -- Many investors are smitten with Sarepta Therapeutics (SRPT) and its lead compound, eteplirsen, a novel experimental drug for Duchenne Muscular Dystrophy (DMD), which aims to help patients produce a normal amount of dystrophin, a protein required for correct muscle function. Sarepta bulls are so smitten with the company that they believe FDA will allow eteplirsen to be filed for accelerated approval on the basis of a single phase IIb study. Sarepta is meeting with FDA in the first quarter to discuss this issue.

Under accelerated approval regulations, FDA allows the early approval of drugs to treat serious disease that fill unmet medical needs. The approvals are based on clinical trials that assess efficacy using surrogate endpoints. "The FDA bases its decision on whether to accept the proposed surrogate endpoint on the scientific support for that endpoint. The studies that demonstrate the effect of the drug on the surrogate endpoint must be adequate and well-controlled studies , the only basis under law for a finding that a drug is effective," the FDA's regulations state. Emphasis mine.

Unlike the bulls, I believe Sarepta is extremely unlikely to convince FDA the eteplirsen data warrant accelerated approval. Instead, it's much more likely Sarepta will be required to perform a new, larger pivotal study prior to submitting eteplirsen for FDA review. Here are some of the reasons why I believe a denial of accelerated approval for eteplirsen is the more likely outcome of this quarter's FDA-Sarepta meeting:

The "pivotal" eteplirsen phase II data are systematically biased.

Sarepta conducted their phase IIb study at one hospital in Columbus, Ohio. This means FDA has no idea whether or not these results could ever be reproduced at another healthcare institution. Most pivotal studies are conducted at multiple hospitals to ensure consistency and reproducibility of results. Multi-center studies are less susceptible to biases, inadvertent or not. The single-center eteplirsen phase IIb study is problematic in my opinion.

After 24 weeks of treatment, the eteplirsen study was unblinded, at which point bias was introduced into all future results. For all measures of efficacy reported after this time point, investigators and raters knew exactly which patients had received how much eteplirsen and at what dose. Whether or not bulls agree, unblinding of the eteplirsen study placed limitations on what could be inferred from the results after 24 weeks.

In July, Sarepta reported results from 36 weeks of follow-up in the study. Two patients were excluded from the analysis of the lower-dose eteplirsen treatment arm because they experienced significant worsening in their ability to walk and could not complete assessments. Because these patients were excluded, all subsequent results were reported as modified intent to treat (mITT) for 10 patients (down from 12 patients on an ITT basis)-- adding more bias favoring the treatment effect of eteplirsen. Data from 10 patients is tiny for a pivotal study used to determine efficacy and safety of an investigational drug, accelerated approval or not.