Sarepta Therapeutics' brutal week continued Friday after European officials rejected the company's controversial gene therapy, Elevidys.
The rejection, which was delivered to European partner Roche, was due to effectiveness questions, rather than safety issues, RBC Capital Markets analyst Brian Abrahams said in a report. Roche had been working toward approval in Duchenne muscular dystrophy patients ages 3 to 7.
"Our interpretation is that the CHMP perhaps considered it futile to opine further on safety," he said.
Sarepta stock tumbled 7.4%, closing at 11.93. Shares have lost more than 30% this month.
The Downfall Of Sarepta Stock
It's important to note that the Committee for Medicinal Products for Human Use's negative opinion is not binding. But the European Medicines Agency usually follows it.
Patients didn't show a statistically significant benefit on North Star Ambulatory Assessment a year after their gene therapy infusion. The NSAA measures functional motor skills in ambulant children with Duchenne muscular dystrophy, a muscle-wasting disease.
Abrahams noted the safety data from that study lined up with what could be expected of other gene therapies. Notably, there were no patient deaths.
However, the safety of Elevidys has been called into question in the U.S. where two teens died after receiving Elevidys treatment. A third patient, a 51-year-old man, also died following treatment with an experimental Sarepta gene therapy for limb-girdle muscular dystrophy. All three of the patients were non-ambulatory, meaning they were sicker and could no longer walk.
Sarepta had already stopped selling Elevidys to non-ambulatory patients. But, giving in to a request from the Food and Drug Administration, the company also voluntarily stopped shipments to patients who could still walk. Roche followed suit two days later. Reports on Thursday suggested the FDA could consider additional testing in that population.
Upcoming Payments In Question
In Europe, Roche has 15 days to ask CHMP for a reexamination. The chances of success, though, are "very low," Abrahams said.
But Leerink Partners analyst Joseph Schwartz says while the news is "optically bad" for Sarepta stock, "it is largely a moot point." He noted Brazilian officials also recently suspended use of Elevidys.
He reiterated his market perform rating on Sarepta stock.
Sarepta is also facing deadlines to pay some of its debt and make a licensing payment to Arrowhead Pharmaceuticals.
"The lack of near/medium-term royalty or milestone revenue will likely further challenge their cash situation ahead of required ARWR/ debt payments," RBC's Abrahams said.
He rates Sarepta stock a sector perform with a 10 price target.
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