They were hoping for an early Christmas present, but instead the families of children with spinal muscular atrophy (SMA) are devastated.

A new drug, Nusinersen, which has produced remarkable results in some children during a global trial, has been rejected for listing on the Pharmaceutical Benefits Scheme (PBS).

SMA is a muscle-wasting disease, and is the largest genetic cause of death in infant children.

In children diagnosed with the most serious form of the disease, SMA type 1, the average survival is nine months.

Nusinersen is a treatment, not a cure, and is already approved for use in Australia.

A small number of children with SMA type 1 are receiving the drug free from the manufacturer through a compassionate access scheme, but for other families the drug would cost about $1 million just for the first year.

The Pharmaceutical Benefits Advisory Committee (PBAC) considered that, "While the available evidence suggests patients may receive some benefit from Nusinersen, the benefit needed to be better quantified".

"More information on the cost-effectiveness of treatment with Nusinersen is necessary in order for it to be able to form a view on the appropriate PBS subsidy price."

Children 'don't have another 12 months to wait'

Julie Cini, CEO of Spinal Muscular Atrophy Australia, lost two children to SMA ( Supplied: LinkedIn )

Julie Cini, founder of the support group SMA Australia, has lost two daughters to the disease and has been leading the campaign to make the drug affordable for all children with SMA.

She cannot believe the PBAC's decision.

"These kids are time-poor, they don't have another 12 months to wait," she told 7.30.

"They will now continue to go untreated."

Paediatric neurologist Dr Michelle Farrar, from the Sydney Children's Hospital, said the results of the global trial of the drug were impressive.

"I was completely astonished as to what I saw," she said.

"Seventy per cent of the patients receiving the drug were alive at 15 months, compared to those on the placebo, where 30 per cent were alive.

"In addition to that, there were significant improvements in motor function."

'Heartbreaking such an amazing drug not available'

Seona and Hugo Donald with their daughter Matilda. ( ABC News: Tracy Bowden )

Seventeen-month-old Matilda Donald has SMA type 1, and has been on the free access program for Nusinersen for six months.

"It's definitely made a difference," her mother, Seona Donald, told 7.30.

"She has increased strength and endurance, and there are no signs of atrophy in any of her muscle groups.

"We are lucky she is on the drug but it is heartbreaking that such an amazing drug is not available to all children with SMA."

Stephanie Nave is two years old and has SMA type 2, so is not eligible for inclusion on the trial.

Her parents, Amanda and Mark Nave, were pinning all their hopes on Nusinersen being listed on the PBS.

"We're extremely disappointed," Ms Nave told 7.30.

"Even in the last few months, Stephanie has deteriorated.

"She is in a group where timely treatment is so important, it could be the difference between having a better quality of life and a longer life."

Julie Cini says while this is a big setback, every day counts and the fight will continue.

SMA Australia and parents are calling on Federal Health Minister Greg Hunt to use his discretionary powers to grant a short-term subsidy for the drug, so children with SMA type 2 can start using the drug immediately.