This decade’s stock market is filled with small baby-boomer investors who hope to make one last killing so they can retire in comfort.

One such investor approached me recently with his portfolio, filled with names I had never heard of. But one name stood out, a “big winner” according to my friend. It was a company called Sarepta Therapeutics (NASDAQ:SRPT).

The value of SRPT stock has increased 400% over the last two years. It opened for trade on Aug. 28 at almost $135 per share, a market cap of nearly $9 billion. This despite the fact it only began booking significant product revenue, about $140 million, early this year, and has yet to see a profit.

“This is my retirement,” my friend said. So should he sell SRPT stock, or should he hope for more?

Hope is the operative word here.

Hope for Duchenne’s

Sarepta is in the business of seeking treatments for Duchenne muscular dystrophy, a heartbreaking genetic disorder that first appears at age 3-5, usually in boys. It is caused by an absence of dystrophin, a protein that keeps muscles intact.

Until recently, most sufferers didn’t make it out of their teens. Now, with modern cardiac and respiratory care, they can make it into early adulthood. In any case, the disease is heartbreaking, expensive and eventually fatal.

Sarepta offers a treatment called eteplirsen, or Exondys 51 or AVI-4658. It’s not a cure. It can only treat some of the genetic mutations, maybe 13%. But it offers hope in a terrible situation.

Sarepta has been fighting to get Exondys 51 approved for years. Thanks in part to the lobbying of families, the Food and Drug Administration overruled their own advisory committee, and the drug won preliminary approval in September 2016. At the time, the agency only had data from 12 patients.

The whole process has been controversial. This is a $300,000 drug that may only work on some people, in a limited way. But the approval made CEO Ed Kaye a hero to the industry, and after winning the war, he left last September.

Kaye was replaced by Doug Ingram, a former executive with Allergan (NYSE:AGN). Ingram not only got the drug into the marketplace, but began getting a second Duchenne treatment ready to run the gauntlet, and is talking up a third treatment that has been tried by three patients. 

More Controversy for Sarepta

Because the need is so great, Exondys 51 was approved on an “accelerated” basis. The company has until 2021 to prove that it can deliver results. Along the way, Sarepta also won a “priority review voucher,” the FDA equivalent of a TSA pre-check. Drugs with a priority review get a faster turnaround from the agency.

Sarepta sold its priority review to Gilead Sciences (NASDAQ:GILD) for $125 million. It treated regulatory relief as an asset and cashed in its golden ticket.

So you have a CEO who got a controversial drug approved, on a preliminary basis, with an expedited review, who then used that review as an asset to raise more money. Then you have a successor who comes from a fast-and-loose corporate culture who right now looks like a hero.

Bottom Line on SRPT Stock

What I told my friend was that there’s a difference between retirement money and mad money.

Mad money is meant to make money and is made for stocks like Sarepta, the kind that might score home runs but also might be dry holes. Retirement money needs to be kept safe.

Here is how fragile SRPT stock is. The shares lost almost 19% of their value in May because a single reporter sued the FDA seeking data on its approval. On the other hand, Sarepta has shown it can make regulators dance to its tune with an “orphan” drug that isn’t for most people, and it could become a buyout candidate.

I finally suggested my friend sell any SRPT stock he sees as retirement money, and keep the “mad money” he has left on the line. Just understand that if the regulatory sun doesn’t shine or the drug doesn’t prove out, he could lose it all.

Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance, The Reluctant Detective Travels in Time, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing, he owned no shares in companies mentioned in this story.