BMRN BioMarin Pharmaceutical Inc

Sarepta Therepeutics Inc.'s valuation was cut in half Friday after the U.S. Food and Drug Administration released documents suggesting regulators are questioning the efficacy of the company's drug candidate that treats a fatal form of muscular dystrophy.

Sarepta is seeking approval to sell eteplirsen as a treatment for Duchenne muscular dystrophy, a condition that destroys muscles and frequently kills patients by their 30s. The disease, which has no effective treatments, affects roughly one in every 3,500 boys world-wide.

The drug faces an FDA panel review Jan. 22, with a decision by the agency expected by Feb. 26. The FDA had granted priority review status for the treatment in August.

In documents released Friday ahead of the hearing next week, the FDA emphasized evidentiary standards aren't lower for drug candidates seeking accelerated approval.

"Although FDA is prepared to be flexible with respect to a devastating illness with no treatment options, we cannot approve drugs for which substantial evidence of effectiveness has not been established," according to the documents.

Shares of Sarepta, down as much as 60% Friday, fell 56% to $14 in midday trading in New York, giving the company a market valuation of $639 million. Through the close Thursday, the company was valued at $1.4 billion.

Sarepta declined to comment but pointed to its addendum to the documents, which provides updated efficacy data requested by the FDA and "clarification of comments in the FDA briefing document that we believe are key inaccuracies."

Also in the addendum, Sarepta urges flexibility in the FDA's review.

"The need for innovative and flexible approaches to FDA review across divisions increases as more rare disease therapies are being developed, where the contextual knowledge of patients and their diseases often evolves in parallel with clinical development," the company said.

Sarepta cited previous cases where the "variation in the type and quantity of evidence used by the FDA to assess the efficacy of novel therapeutic agents underscores the agency's flexible approach to meeting standards for drug approval."

"It is clear in the context of the review of drugs for rare diseases FDA has the authority—and specific direction from Congress—to exercise flexibility in considering all of the available data."

The documents come a day after the FDA rejected BioMarin Pharmaceutical Inc.'s new drug application for a treatment of Duchenne because of questions about the drug's effectiveness.

BioMarin said it would work with the FDA to determine the next steps for its treatment, called drisapersen, and that studies will continue. The drug, which has the marketing name Kyndrisa, remains under review in Europe.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

January 15, 2016 14:05 ET (19:05 GMT)

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