I've decided to put my pitch for Sarepta in a blog because I felt like getting a little more in depth for the biggest story in biopharma in 2012 (new obesity drug approvals? Puh-lease). Choosing a direction on Sarepta is very tough. For accuracy and points purposes, it's wise to avoid tossups because on average they'll score 0 and give 50% accuracy. On the other hand, I have to rate the stock in order to enter my thoughts into my CAPS diary. Given that it seems I'll never break a score of 4000, might as well go for it.
Sarepta is all over the news because they may be on the verge of an antisense RNA therapy for Duchenne muscular dystrophy. Muscular dystrophies are caused by mutations in the protein dystrophin, which stabilizes the myocyte (muscle cell) membrane. Absence of normal dystrophin leads to increased oxidative stress on the myocyte and eventually results in the death of the myocyte and its replacement with fatty and connective tissue. Dystrophin is also found in the brain, which is believed to be the reason that muscular dystrophies have a strong association with neurobehavioral disorders.
Most dystrophin mutations result in the loss of entire segments (exons) of the dystrophin gene. Certain mutations result in a single lost segment and a milder form of muscular dystrophy (Becker muscular dystrophy) because the remaining segments assemble forming a partially functional protein. Other mutations result in a downstream shift in the RNA reading frame which prevents formation of a functional dystrophin, and the resulting muscular dystrophy is much more severe (Duchenne muscular dystrophy).
Sarepta's approach to Duchenne muscular dystrophy (DMD) involves the intravenous administration of an antisense RNA segment that masks the mutated exon so that it is skipped during RNA translation. The resulting dystrophin is therefore partially functional, similar to the dystrophin protein in Becker muscular dystrophy. While this is not an ideal solution, patients with Becker muscular dystrophy are still able to walk into their 40's and 50's while patients with DMD are wheelchair-dependent by age 12 and have an average life expectancy of 25.
Like cystic fibrosis, DMD is a heterogeneous disorder in that it describes the end result of many different mutations. Because the dystrophin gene is located on the X chromosome and only one functional copy is necessary for normal muscle function, DMD is almost exclusively a disease of males. 1 in 3500 males worldwide is born with DMD. Mutations in different exons require different antisense oligonucleotides to effect the exon skipping required to generate a functional dystrophin. Sarepta's antisense oligonucleotide eteplirsen is directed against exon 51, but another oligo (AVI-5038) is in early development for mutations in exon 50. Sarepta estimates that 85% of DMD patients are treatable with exon-skipping drugs.
The current excitement over Sarepta is due to results of a randomized, double-blind phase II trial of eteplirsen in DMD. This trial enrolled twelve children ages 7-13, with four children in each of three groups (placebo, 30mg eteplirsen, 50mg eteplirsen). Subjects were required to be able to complete a distance between 200m and 400m in a six minute walk test prior to initiation of treatment. Each child received weekly infusions of the study drug for 24 weeks. The primary efficacy endpoint of the trial was percentage of dystrophin-positive muscle fibers in a biopsy, and secondary endpoints were six-minute walk distance and degree of lymphocyte infiltration in biopsy tissue.
The subjects in the 50mg cohort were biopsied at 12 weeks and no significant increase in dystrophin-positive fibers was noted. However, in April 2012 Sarepta reported that the biopsies of the 30mg cohort after 24 weeks had an average of 22.5% dystrophin-positive fibers. The street reacted negatively to the 24 week data because despite the positive histologic findings, no difference between groups was noted on the six minute walk test. While this appears to have been interpreted as a lack of clinical effect, in fact none of the groups showed diminished performance after 24 weeks indicating that this time period may have been too small to observe any deterioration.
The shocking news that has caused Sarepta's share price to as much as quadruple from recent lows was the announcement that a clinical benefit of 69.4 meters was observed in the 50mg eteplirsen group 36 weeks after initiation of treatment. The fact that was often lost in media reports was that this benefit was actually relative, in that the 6 minute walk distance actually declined by 8.7 meters in the eteplirsen group and 78 meters in the placebo group. It is also notable that after 24 weeks the study converted into an open-label extension in which the placebo subjects began receiving eteplirsen.
Sarepta's rising share price has been partially driven by media reports about two children who received eteplirsen in the phase II trial. A troubling aspect of these reports are claims that these children actually had functional improvement from when they started therapy. These claims are not consistent with the data released that show an average functional decline in eteplirsen patients, just not as severe as the decline seen in placebo patients. This indicates that either the two children who were the subject of media reports functionally improved while the other children in the eteplirsen group signifcantly declined, or that these cases (and possibly others) were subject to placebo effect and media exaggeration. As the groups were unblinded at 24 weeks, placebo effect at 36 and 48 weeks cannot be discounted.
A significant difficulty in interpretation of the six minute walk test results is the fact that this test was only recently applied to assessment of progression of DMD, and almost all that work comes from one research group at UC Davis. The first publications on six minute walk in DMD seem to have appeared around 2010, and the first attempt to develop normative data for the test was only published earlier this year http://currents.plos.org/md/article/percent-predicted-6-minute-walk-3vct9230jm3zg-1/ . This study indicates that six-minute walk distance may actually improve over a year's time in younger children with DMD due to the background of normal growth and development. There is a high degree of heterogeneity depending on age and prior treatment.
48 week data from the trial will likely be released in mid-October, and if they are consistent with or superior to the 36 week data the share price will undoubtedly gap upward again. At that point, significant public pressure will be generated for accelerated approval of Sarepta based on phase II data. I've green thumbed Sarepta on a pullback because I think that there's a high likelihood of strong 48 week data. However, I believe the small number of children in the trial, the lack of an observed clinical effect until the groups were unblinded, and the lack of standardization of the six minute walk test as an assessment of DMD progression will cause the FDA to require a phase III trial with more patients and a longer duration of blinding. [more]