Baird Bullish on Sarepta Therapeutics Inc (SRPT) Amid DMD Franchise Expansion Deal

Tuesday, Sarepta Therapeutics Inc (NASDAQ:SRPT) and Summit Therapeutics PLC (ADR) (NASDAQ:SMMT) announced a deal that will grant Sarepta European commercialization rights for Summit’s utrophin modulation portfolio in exchange for an upfront amount of $40 million as well as up to $522 million in additional milestones coupled with some net sales royalties.

Specifically, this pipeline targets patients suffering from Duchenne muscular dystrophy (DMD), and the portfolio boasts SMMT’s best asset, ezutromid, the firm’s pipeline oral drug designed to modulate utrophin, a protein similar in structure and functionality to that of dystrophin, a protein that DMD patients lack and is essential for the healthy function of all muscles.

On the heels of the deal, Baird top analyst Brian Skorney sees “no change to outlook” and as such, reiterates an Outperform rating on shares of SRPT with a $102 price target, which represents a nearly 64% increase from where the stock is currently trading.

Skorney opines, “The deal is predicated on both potential to combine Summit’s technology with Sarepta’s internal exon-skipping agents and to expand Sarepta’s reach in DMD into patients not amenable to exon skipping. Though we think the deal has interesting potential, near term we think this has more read-through to Sarepta’s confidence in an eteplirsen approval in Europe.”

Moreover, from the analyst’s perspective, “The fact that this Summit Therapeutics deal is focused on Europe indicates, in our opinion, that Sarepta is confident about the potential for European eteplirsen approval and plans to have a European operation in place by the time of a potential ezutromid launch there,” particularly considering just some months prior, Sarepta was far less confident in its prospects in Europe due to persisting litigation with BioMarin contesting SRPT over Prosensa and its exon-skipping patents.

Skorney believes the utrophin regulation deal could translate to a crucial partnership, as in contrast¬†with¬†genotype-specific exon skipping, utrophin regulation has the capacity to treat all patients that have DMD, a 20% increase in target population prospects. “That said, the approach remains very early stage and no PoC trials in utrophin modulation have been completed,” Skorney concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, top five-star analyst Brian Skorney has achieved a high ranking of #80 out of 4,190 analysts. Skorney upholds a 55% success rate and garners 20.9% in his annual returns. When recommending SRPT, Skorney earns 98.8% in average profits on the stock.

TipRanks analytics demonstrate 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 12-month price target stands at $73.77, marking an 18% upside from where the shares last closed.


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