Sarepta CEO Resigns Abruptly, Was "In Over His Head"
April 1, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
The chief executive officer of Cambridge, Mass.-based Sarepta Therapeutics , Chris Garabedian, has been abruptly replaced by Chief Medical Officer Ed Kaye, after months of tensions between investors and management over the failure to get timely approval from the U.S. Food and Drug Administration (FDA) for a muscular dystrophy drug finally boiled over.
Wall Street analysts and Sarepta investors alike have been frustrated by how long it has been taking Garabedian to get eteplirsen for Duchenne muscular dystrophy, which is currently Sarepta’s lead drug candidates. The company said in a press release late Tuesday evening that Garabedian has resigned, effective immediately.
A statement from the board made pointed references to the approval process for eteplirsen as a key goal for the company moving forward.
“We believe this change will facilitate the company’s clinical and regulatory discussions and relationships with the goal of meeting its stated timelines for bringing a potentially disease-modifying treatment to patients with DMD as soon as possible,” said John Hodgman, Sarepta’s interim Chairman of the Board.
“Dr. Kaye has a proven track record of leading teams that have brought some of the most successful rare-disease drugs to market, including Myozyme, Lumizyme and Fabrazyme. Further, he has excellent relationships with the clinical, regulatory and patient advocacy communities so critical to making this treatment a reality for this underserved patient population.”
In an interview with Forbes early Wednesday, Kaye said he was contacted abruptly Tuesday night by the company’s board, and had accepted the position, although the change happened suddenly.
“The executive team here has rallied,” he told Forbes. “They’ve been incredibly supportive. And I’ve had several conversations with the muscular dystrophy patient organizations and they’ve also been very, very supportive. And I’ve talked with some of our key opinion leaders and the physicians in the area. So it’s been a good day.”
Kaye also said that the ability to hit targeted timelines for drug approval was a major factor in any new direction Sarepta takes.
“I think, as you know, the focus for the company right now is really on the clinical research and the regulatory pathway,” he said. “And so there has really been a change in direction. And based on my background and experience, the board has asked me to really focus on our regulatory approvals at this point.
Garabedian’s ouster came suddenly, but it was not wholly unexpected. Although he is credited with having shepherded the company from a little known antiviral firm, AVI Biopharma, to the shareholder favorite it is today, the board’s focus on pushing out lucrative drugs as soon as possible—and their frustration with what was seen as Garabedian’s lack of focus—made it clear that whatever his track record had been, his current job performance was just as crucial.
The news was greeted warmly by analysts and close watchers of the company, with Sarepta gaining a slight boost of 5 percent in pre-market trading Wednesday. Columnist Matthew Harper at Forbes said this is likely because the company now seems to be under firmer management.
“The last time I wrote about Sarepta, I said that Garabedian seemed ‘in over his head,”’ wrote Harper today. “Kaye strikes me as having a better idea what it will take to get this drug approved. I don’t know what the odds of approval are, but they just went up.”
In a note expressing concern, Yaron Werber, head of Citigroup’s biotech analysis team, said in October that he viewed repeated delays as “a sign that FDA has reservations” about whether the data has shown that eteplirsen is an effective drug.
“What is most concerning to us is that FDA has communicated to Sarepta that it found inconsistencies in the dystrophin data as this is key to the NDA,” he said. Citi reiterated that although the stock is down, its analysts do not see any reason to take advantage of the weakness due to lack of “meaningful catalysts ahead,” including possible competition from drugs like Prosensa.
“As completion of the NDA is now delayed to mid-2015, there is some risk that the competitive field will shift given that Prosensa will complete its rolling NDA by year end 2014,” wrote Werber. “So this delay could have consequences depending on the outcome of the FDA review of Prosensa.”
More concerning, Werber said, is the relationship Sarepta is forming with the FDA, after some well-publicized internal concerns have leaked.
“Today's announcement adds to our level of unease with this relationship given that FDA has now returned with a long series of new requests that is designed to provide the agency with a sizable body of new data with which to evaluate the drug,” he concluded in his note. “More important, it also now delays the time to market and buys FDA more time for the field to develop.”