Sarepta Therapeutics (NasdaqGS: SRPT) surged Monday and lifted biotechnology-related exchange traded funds after the Food and Drug Administration approved the Duchenne muscular dystrophy drug eteplirsen.
Leading the charge in the ETF space on Monday, the BioShares Biotechnology Clinical Trials Fund (NasdaqGM: BBC) increased 2.2%, PowerShares DWA Healthcare Momentum Portfolio (NYSEArca: PTH) gained 3.8% and SPDR S&P Biotech ETF (NYSEArca: XBI) rose 1.9%. Meanwhile, the iShares Nasdaq Biotechnology ETF (NasdaqGS: IBB), the largest biotech ETF by assets, was up 0.1%.
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The biotech segment strengthened after Sarepta gained approval for the first therapy for Duchenne muscular dystrophy, a genetic disease that mainly affects young boys. The FDA approved the drug under its “accelerated approval” program, which can make the drugs available for sale if there are signs of improvements among patients while more study is conducted, reports Anna Edney for Bloomberg.
“Accelerated approval makes this drug available to patients based on initial data, but we eagerly await learning more about the efficacy of this drug through a confirmatory clinical trial that the company must conduct after approval,” Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research, said in a statement.[related_stories]
SRPT surged 76.6% Monday on the FDA’s approval. SRPT makes up 1.7% of BBC’s underlying holdings, 4.1% of PTH’s portfolio and 2.3% of XBI.
BBC tracks potential up-and-coming biotechnology companies that are in the clinical trials stage. PTH, which utilizes Dorsey Wright and Associates momentum strategy, focuses on companies that are showing strong relative strength or forward momentum. XBI follows a more equal-weight index of biotechnology companies.
Sam Fazeli, an analyst with Bloomberg Intelligence, believes that Sarepta’s FDA approval may pave the way for easing requirements on medicines that treat patients with rare conditions who have no other options.
“I am amazed after all that has happened,” Fazeli told Bloomberg. “This does mean that the FDA may be more lenient on very rare diseases such as DMD with no drug options at all.”
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