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UPDATE 1-FDA declines to approve PTC's Duchenne drug

(Adds details from FDA letter)

Oct 25 (Reuters) - The U.S. Food and Drug Administration has declined to approve PTC Therapeutics Inc's experimental drug to treat Duchenne muscular dystrophy, saying an additional clinical trial would be needed to prove the drug works.

The company said on Wednesday that it strongly disagreed with the agency's conclusions and plans to file a formal dispute next week. The drug, ataluren, is designed to treat Duchenne muscular dystrophy (DMD) caused by a mutation in the DMD gene known as a nonsense mutation.

The FDA's decision comes after a panel of outside FDA advisors last month concluded that although the drug might work, the company would have to do more work to prove it.

The FDA's own scientists formed similar conclusions saying the company had failed to prove the product worked, and that the company had diced data to try to extract a positive result, making the entire data set untrustworthy.

PTC's shares, which fell nearly 14 percent to $16.81 after the FDA posted its initial review on Sept. 26, fell as low as $15.20 on Wednesday before rising 4 percent to $16.80 in midday trading.

(Reporting by Toni Clarke in Washington; editing by Diane Craft)