Sarepta Therapeutics Inc (NASDAQ:SRPT) reported financial results for the three and nine months ended September 30, 2016.
“We are thrilled that the first patient has been infused with EXONDYS 51. We are pleased with the early stages of the launch and that multiple insurance carriers are providing coverage for patients to have access to EXONDYS 51. We plan on providing a corporate update at the 35thAnnual JP Morgan Healthcare Conference, after EXONDYS 51 has been available for a full quarter,” said Edward Kaye, Sarepta’s chief executive officer.
“We believe our recent financing puts us in a strong financial position to execute on both our internal and external clinical development programs and global manufacturing development plans. We continue to evaluate the sale of the priority review voucher as a potential source of non-dilutive financing to help support these efforts and advance potential therapies for patients with DMD,” said Sandy Mahatme, Sarepta’s chief financial officer.
For the third quarter of 2016, Sarepta reported a net loss of $56.7 million, or $1.18 per share, compared to a net loss of $51.9 million for the third quarter of 2015, or $1.25 per share. The incremental loss of $4.8 million was primarily the result of increased expenses related to the launch of EXONDYS 51.
Excluding $10.8 million of stock-based compensation expense and restructuring expenses, non-GAAP net loss for the third quarter of 2016 was $45.9 million, or $0.95 per share, compared to a non-GAAP net loss excluding $5.7 million of stock-based compensation expense of $46.3 million for the third quarter of 2015, or $1.11 per share.
No revenue was recognized for the three months ended September 30, 2016 and 2015.
Research and development expenses were $34.3 million for the third quarter of 2016, compared to $36.7 million for the third quarter of 2015, a decrease of $2.4 million. Non-GAAP research and development expenses (excluding $3.4 million of stock-based compensation and restructuring expenses) were $30.9 million for the third quarter of 2016, compared to $34.0 million (excluding $2.6 million of stock-based compensation expense) for the third quarter of 2015, a decrease of $3.1 million.
General and administrative expenses were $22.2 million for the third quarter of 2016, compared to $15.1 million for the third quarter of 2015, an increase of $7.1 million. Non-GAAP general and administrative expenses (excluding $7.4 million of stock-based compensation and restructuring expenses) were $14.8 million for the third quarter of 2016, compared to $12.0 million (excluding $3.1 million of stock-based compensation expense) for the third quarter of 2015, an increase of $2.8 million.
The Company had $406.6 million in cash, cash equivalents, short-term investments and restricted cash as of September 30, 2016 compared to $204.0 million as of December 31, 2015, an increase of $202.6 million. The increase was driven by the net proceeds received from the Company’s public offerings in June and September 2016, offset by the use of cash to fund the Company’s ongoing operations.
Use of Non-GAAP Measures
In addition to the GAAP financial measures set forth in this press release, the Company has included certain non-GAAP measurements: non-GAAP research and development expenses, non-GAAP general and administrative expenses, non-GAAP operating expense adjustments, non-GAAP net loss, and non-GAAP basic and diluted net loss per share, which present operating results on a basis adjusted for stock-based compensation and restructuring expenses.
Stock-based compensation expenses represent non-cash charges related to equity awards granted by Sarepta. Although these are recurring charges to operations, management believes the measurement of these amounts can vary substantially from period to period and depend significantly on factors that are not a direct consequence of operating performance that is within management’s control. Therefore, management believes that excluding these charges from non-GAAP research and development expenses, non-GAAP general and administrative expenses, non-GAAP net loss and non-GAAP net loss per share facilitates comparisons of the Company’s operational performance in different periods.
Restructuring related expenses have been excluded from non-GAAP research and development expenses, non-GAAP general and administrative expenses, non-GAAP net loss and non-GAAP net loss per share as the Company believes that the adjustments for these items represent more closely the sustainability of the Company’s operating performance and understanding of its financial results.
The Company uses these non-GAAP measures as key performance measures for the purpose of evaluating operational performance and cash requirements internally. The Company also believes these non-GAAP measures increase comparability of period-to-period results and are useful to investors as they provide a similar basis for evaluating the Company’s performance as is applied by management. These non-GAAP measures are not intended to be considered in isolation or to replace the presentation of the Company’s financial results in accordance with GAAP. Use of the terms non-GAAP research and development expenses, non-GAAP general and administrative expenses, non-GAAP operating expense adjustments, non-GAAP net loss, and non-GAAP basic and diluted net loss per share may differ from similar measures reported by other companies, which may limit comparability, and are not based on any comprehensive set of accounting rules or principles. All relevant non-GAAP measures are reconciled from their respective GAAP measures in the attached table “Reconciliation of GAAP to Non-GAAP Net Loss.”
Recent Corporate Developments
Duchenne Muscular Dystrophy Program
–Sarepta Therapeutics Announces FDA Accelerated Approval of EXONDYS 51™ (eteplirsen) injection, an Exon Skipping Therapy to Treat Duchenne Muscular Dystrophy (DMD) Patients Amenable to Skipping Exon 51
–Sarepta Therapeutics and Summit Enter Into Exclusive License and Collaboration Agreement for European Rights to Summit’s Utrophin Modulator Pipeline for the Treatment of Duchenne Muscular Dystrophy
–Catabasis Pharmaceuticals and Sarepta Therapeutics Announce a Joint Research Collaboration in Duchenne Muscular Dystrophy
–Sarepta Therapeutics Announces First Patient Dosed in Phase III Clinical Trial of SRP-4045 and SRP-4053 for the Treatment of Duchenne Muscular Dystrophy Amenable to Exon 45 or 53 Skipping
–Sarepta Therapeutics Announces Favorable USPTO Decisions in Exon 51 and Exon 53 Composition of Matter Patent Interference Cases against BioMarin Pharmaceutical
–Sarepta Therapeutics Announces Pricing of $345 Million Public Offering of Common Stock. (Original Source)
Shares of Sarepta are currently trading at $43.52, down $1.02 or -2.30%. SRPT has a 1-year high of $63.73 and a 1-year low of $8.00. The stock’s 50-day moving average is $49.48 and its 200-day moving average is $27.49.
On the ratings front, Sarepta has been the subject of a number of recent research reports. In a report issued on October 18, Credit Suisse analyst Alethia Young initiated coverage with a Buy rating on SRPT and a price target of $68, which implies an upside of 53% from current levels. Separately, on October 13, Cowen’s Ritu Baral reiterated a Buy rating on the stock and has a price target of $64.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Alethia Young and Ritu Baral have an average loss of 9.1% and a return of 4.5% respectively. Young has a success rate of 27% and is ranked #3960 out of 4188 analysts, while Baral has a success rate of 39% and is ranked #578.
Overall, 3 research analysts have assigned a Hold rating and 12 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $75.71 which is 70% above where the stock closed yesterday.
Sarepta Therapeutics, Inc. is a biopharmaceutical company, which is engaged in the discovery and development of unique RNA-based therapeutics for the treatment of rare and infectious diseases. The company is primarily focused on rapidly advancing the development of its potentially disease modifying duchenne muscular dystrophy drug candidates. Sarepta Therapeutics was founded on July 22, 1980 and is headquartered in Cambridge, MA.