Sarepta Therapeutics said on Monday the U.S. Food and Drug Administration declined to approve its newest treatment for Duchenne muscular dystrophy (DMD), citing safety concerns including the risk of infection and kidney toxicity.
Shares of the company plunged 12.7% to $105.05 in trading after the bell.
Analysts had expected annual sales of nearly $400 million in five years for golodirsen, the second treatment from Sarepta for DMD, a rare muscle-wasting disorder that mainly affects boys.
The Cambridge, Massachusetts-based company is also in a close race with Pfizer Inc and Solid Biosciences Inc to introduce a gene therapy for DMD in the coming years.
Sarepta acknowledged that kidney toxicity was observed in animal trials, which tested the drug, golodirsen.
However, the doses in the animal trials were "ten-fold higher" than those tested on humans, and the side effect was not observed in the human trial on which the application for approval was based, the company said.
"We are very surprised to have received the complete response letter this afternoon," Chief Executive Officer Doug Ingram said in a statement.
"Over the entire course of its review, the agency did not raise any issues suggesting the non-approvability of golodirsen, including the issues that formed the basis of the complete response letter," Ingram said.
The FDA, in a statement, said it sees the unmet medical need in DMD and the urgency to make new treatments available.
"We will continue to work with companies and the patient community to facilitate development and approval of safe and effective treatments for DMD," the health agency said.
Duchenne muscular dystrophy is a progressive disorder that begins to cause symptoms at an early age, first by hampering the ability to walk and later by causing breathing difficulties and heart problems.
Many patients die at a relatively young age from DMD, which is caused by the absence of dystrophin, a muscle building protein.
Sarepta's golodirsen skips a faulty section of the related gene, in this case called 'exon 53', to produce dystrophin.
Exondys 51, the company's first DMD treatment, was approved in 2016 against the advice of the FDA's outside panel of experts and its own reviewers, who had questioned the drug's effectiveness.
Exondys' average net price based on a patient's weight is $300,000 a year, the company said.
Sarepta had planned to price golodirsen at the same price as Exondys 51, Chief Executive Officer Douglas Ingram said in an interview prior to the FDA response.
Exondys, which targets a different mutation that affects about 13% of DMD patients, brought in sales of $301 million in 2018 and analysts expect sales to grow to $465.56 million in 2024, according to Refinitiv data.
Marathon Pharmaceuticals' drug, Emflaza, a steroid-based therapy, was approved to treat the disorder in 2017. PTC Therapeutics Inc, which sells another DMD treatment in Europe and certain other geographies, later bought the U.S. rights to Emflaza.
Also coming are gene therapies being developed by Sarepta and Pfizer Inc, which aim to help patients keep producing dystrophin after a one-time infusion.
Sarepta said it would request a meeting with the FDA to determine next steps for golodirsen.