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PTC Therapeutics, Inc.’s (PTCT - Snapshot Report) shares fell almost 40% after it provided a regulatory update on its lead pipeline candidate, Translarna (ataluren), for the treatment of patients with nonsense genetic mutation Duchenne muscular dystrophy (nmDMD).

PTC Therapeutics declared that its first appeal of FDA’s “Refusal to File” letter, issued in February this year, for the company’s regulatory application for its experimental Duchenne muscular dystrophy (DMD) treatment, Translarna has been denied by the FDA’s Office of Drug Evaluation I (ODE-I). The company has decided to appeal to the next supervisory level of the FDA.

The FDA denied the appeal as it felt that some necessary information were missing and the data provided was inadequate. However, PTC Therapeutics believes an advisory committee meeting allowing patient advocacy is necessary. The company also believes that data from multiple clinical studies, including two of the largest placebo-controlled studies ever conducted in DMD should be properly analyzed and fairly reviewed by the FDA.

Translarna is, however, approved in the European Economic Area (EEA), and is commercially available in Germany since Dec 2014. However, the marketing authorization in EEA is subject to an annual renewal process, including an assessment by European regulators of a risk-benefit profile. The European Medicines Agency (EMA) Committee for Medicinal Products for Human Use (CHMP) issued a request for supplemental information (RSI) regarding the efficacy and overall risk-benefit profile of Translarna, in addition to the design and conduct of an additional clinical trial that would provide comprehensive clinical data.

Another company, Sarepta Therapeutics, Inc (SRPT - Analyst Report) has a pipeline candidate eteplirsen, which is under review in the U.S. for the treatment of DMD. Sarepta’s shares also dipped more than 6% on investor concerns.

PTC Therapeutics currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the healthcare sector include  Geron Corporation (GERN - Analyst Report) , Exelixis and Inc. (EXEL - Analyst Report) . All the companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Geron has an average positive surprise of 20.78% for the last four quarters.

Exelixis has an average positive surprise of 9.10% for the trailing four quarters. Its share price has jumped more than 100% year to date. The loss estimates for 2016 and 2017 have narrowed down over the past 60 days.

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