Drisapersen Data Release Puts Prosena & Sarepta Shareholders On Edge Print E-mail
By Brian Wilson - Lead Contributor   
Monday, 16 September 2013 10:36
After Prosena (RNA) made an announcement last week regarding an upcoming data release due for its Duchenne Muscular Dystrophy (DMD) drug drisapersen, implied volatility for this company and its main competitor Sarepta Therapeutics (NASDAQ: SRPT) skyrocketed. Options activity has picked up tremendously as traders looked to play both sides of the catalyst.

Drisapersen development partner GlaxoSmithKline (NYSE: GSK) will be presenting the data at the 9th Annual Ologionucelotide Therapeutic  Society in Naples, Italy between 17:45-18:15 PM on Tuesday, October 8th (Rome time). The results will be from a Randomized, Double-Blind, Placebo-Controlled Trial Phase III study known as DMD 114044, which has been completed with an enrollment of 186 patients. This trial will test patients at the more tolerable 6 mg/kg dose over 48 weeks, and will aim to establish a primary efficacy endpoint with 6-minute walk test data. Secondary endpoints include safety/tolerability at the 6 mg/kg dose, plasma concentration, and quality of life.

This is a large trial that gives drisapersen an opportunity to establish better efficacy and safety data, which currently lags Sarepta’s eteplirsen. Having said this, many investors have been skeptical on Sarepta due to the small number of patients that eteplirsen was tested on. It is likely that this skepticism is supporting the huge short interest in SRPT – about 40% of float.

Also important is expectation that drisapersen will provide data necessary for approval through its breakthrough status. This hurt shares of Sarepta earlier in the summer, although investors later shrugged off the long-term implications.

Although the market understands the importantance of the GSK/Prosena drisapersen data release, it is impossible to determine at this time just how big the impact could be for shares of SRPT. Options activity implies that a failed primary endpoint for drisapersen could send SRPT somewhere close to $50/share. Strong Phase III trial results would probably send SRPT to $30/share or lower, depending on the data, although it would depend on drisapersen’s safety at 6 mg/kg and improved 6MWT efficacy.

About DMD

Duchenne muscular dystrophy (DMD) is an genetic disease caused by dysfunctional DNA on the X chromosome, with an incidence of approximately 1 in 3,500 newborn boys . DMD is caused by mutations in the important dystrophin gene, which interferes with its production and destroys muscle tissue over time. Due to the progressive damage, DMD patients usually in a wheelchair before the age of 12. Those afflicted usually die before the age of 19.

There are currently no FDA-approved viable cures for DMD, and therapy is limited to management of the symptoms of the disease.

Drisapersen & Eteplirsen

These two drugs both work through a recently discovered genetic “loophole” that allows for the production of semi-functional dystrophin. In 13% of DMD mutations, dystrophin production can be corrected by inducing skipping exon 51. If delivered properly, antisense oligonucleotides should be able to do this during DNA transcription.

Disclosure: LongSRPT




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