Shares of Sarepta Therapeutics (SRPT) tumbled as much as 30% in today's trading session after the company stated that the FDA was seeking additional data for their eteplirsen drug targeting boys with Duchenne muscular dystrophy (DMD). The company had intended to file with the FDA for eteplirsen approval before the end of 2014, but now new guidance from the FDA is asking the company to show additional data that will prove the efficacy of the drug in patients with DMD. 

Duchenne muscular dystrophy is a disease whereby the boys' bodies fail to produce the proper dystrophin in the muscle needed for muscle movement. This lack of dystrophin production causes the boys' muscles to deteriorate, leading to the inability to walk. Eteplirsen had already shown in a 12-patient study that the drug allowed the patients to walk a further distance as compared to current placebo treatment. Despite this finding it is evident that the FDA is not happy about approving the drug with such a small study. 

It seems evident also that the FDA wants an analysis of the 12-patient data to be done by an independent body to determine if the hospital properly measures the amount of dystrophin levels eteplirsen produced. The stock price of Sarepta took a huge tumble after the announcement, dropping by 30%.

As of right now we think that investors should wait for the dust to settle before initiating a position. For those who already have a position in Sarepta we believe that while this news is bad in the short-term, it will eventually bounce back. As for waiting to buy Sarepta, we believe that over the next few days we will see a continuous drop as short term traders exit their positions. On the bright side, this will eventually give investors an opportunity to enter Sarepta at a lower price for the long-term. 

If we analyze today's news, it is just  that long-term investors will have to wait a little longer. Sarepta has stated that an additional trial will be started next month and that the company should have the ability to file an NDA -- New Drug Application -- by mid 2015. One thing to note is that this date is not set in stone, because the FDA stated they want to meet with Sarepta to determine what the final data will need to look like before the company may file its NDA. Therefore there is the risk that the FDA may still not feel satisfied with the additional data collection planned, and may require further studies.

Whether Sarepta will file its NDA by 2015 remains to be seen, but we are inclined to tell investors that if they do buy shares of Sarepta they better be prepared for a long-term hold.