William Blair Weighs in on Sarepta Therapeutics Inc (SRPT) Following Favorable Decision in Patent Appeal

Sarepta Therapeutics Inc (NASDAQ:SRPT) announced yesterday that the Patent Trial and Appeal Board issued two favorable decisions for Sarepta over an intellectual property and patent interference claim appeal for both exon 51 (interference case number 106,008) and exon 53 (interference case number 106,007).

After BioMarin fought last year on claims to use exon 51 antisense oligonucleotides to treat Duchenne muscular dystrophy (DMD) and won in the decision, SRPT decided to file the appeal. The PTAB’s decision refuses BioMarin’ composition of matter claims to both exon 51 and exon 53, ruling in Sarepta’s favor in the firm’s assertions contending an infringement claim could be made for both DMD drugs eteplirsen and SRP-4053.

In reaction, William Blair analyst Tim Lugo reiterates an Outperform rating on SRPT with a price target of $88, which represents a 57% increase from where the shares last closed.

“We note that a similar litigation between BioMarin and Sarepta regarding exon 51 and exon 53 remains outstanding with the European Patent Office. Sarepta is currently opposing BioMarin’s European Patent 1 619 249 BI, which the European Patent Office decided to uphold last year, but in an amended form. […] We conservatively model that Sarepta will pay a 5% royalty rate BioMarin on EU eteplirsen sales and anticipate an appeal decision will arrive within the next few months. Until additional detail is provided regarding potential royalty structures, we will maintain our current estimates but note that further favorable IP rulings and developments could provide minor additional upside to our current expectations,” Lugo concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Tim Lugo is ranked #684 out of 4,172 analysts. Lugo has a 38% success rate and realizes 8.4% in his yearly returns. However, when recommending SRPT, Lugo loses 26.1% in average profits on the stock.

TipRanks analytics exhibit SRPT as a Strong Buy. Based on 14 analysts polled in the last 3 months, 11 rate a Buy on SRPT, while 3 maintain a Hold. The consensus price target stands at $70.17, marking a nearly 25% increase from where the stock is currently trading.

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