Sarepta Therapeutics Inc (NASDAQ:SRPT) reported financial results for the first quarter of 2017.
“The first quarter of 2017 showed significant progress across all areas of the business, including executing a strong launch for EXONDYS 51™ (eteplirsen), building our pipeline, working to expand globally, and forging strategic partnerships that support our goal to help as many DMD patients as possible,” said Edward Kaye, Sarepta’s chief executive officer. “Additionally, our pipeline is advancing on schedule, we have taken an important first step in building our European operations, and we look forward to entering the clinic later in the year with our gene therapy and PPMO programs. Moving through 2017, we remain focused on continuing the momentum of the EXONDYS 51 launch while building the foundation for long-term growth through re-investment in our R&D programs.”
Management also noted that due to continued patient and physician interest in EXONDYS 51, coupled with progress in the reimbursement landscape, the Company anticipates that net revenues for the year will exceed $95 million, an increase to its previously reported annual net revenue guidance of exceeding at least $80 million.
For the first quarter of 2017, Sarepta reported GAAP net income of $84.1 million, or $1.50 per diluted share, compared to a net loss of $59.8 million for the same period of 2016, or $1.31 per diluted share. The increase in income was primarily driven by the gain on sale of the Company’s Rare Pediatric Disease Priority Review Voucher (PRV) and sales of EXONDYS 51. Non-GAAP net loss for the first quarter of 2017 was $33.0 million, or $0.60 per share, compared to a non-GAAP net loss of $52.5 million for the same period of 2016, or $1.15 per share.
For the first quarter of 2017, the Company recognized net revenues of $16.3 million in product sales. No revenue was recognized for the same period of 2016.
Research and development expenses were $29.1 million for the first quarter of 2017, compared to $38.8 million for the same period of 2016, a decrease of $9.7 million. The decrease was primarily driven by lower manufacturing expenses due to the capitalization of inventory following the approval of EXONDYS 51 by the U.S. Food and Drug Administration (FDA), partially offset by increased patient enrollment in our ongoing clinical trials. Non-GAAP research and development expenses were $27.2 million for the first quarter of 2017, compared to $35.9 million for the same period of 2016, a decrease of $8.7 million.
Selling, general and administrative expenses were $26.2 million for the first quarter of 2017, compared to $20.9 million for the same period of 2016, an increase of $5.3 million, which was primarily driven by increases in professional services due to increased legal fees and commercial initiatives, compensation and other personnel expenses. Non-GAAP selling, general and administrative expenses were $22.2 million for the first quarter of 2017, compared to $16.6 million for the same period of 2016, an increase of $5.6 million.
Cash, Cash Equivalents and Investments
The Company had $391.1 million in cash, cash equivalents and investments as of March 31, 2017 compared to $329.3 million as of December 31, 2016, an increase of $61.8 million. The increase was driven by the proceeds received from the sale of the Company’s PRV, 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 selling, general and administrative expenses, non-GAAP other income 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, restructuring expenses, and other items.
1. Stock-based compensation 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 facilitates comparisons of the Company’s operational performance in different periods.
2. Restructuring expenses
Restructuring expenses have been excluded as the Company believes that adjusting for these items more closely represents the Company’s ongoing operating performance and financial results.
3. Other items
Management evaluates other items of expense and income on an individual basis. It takes into consideration quantitative and qualitative characteristics of each item, including (a) nature, (b) whether the items relates to the Company’s ongoing business operations, and (c) whether the Company expects the items to continue on a regular basis. These other items include the aforementioned gain from the sale of the Company’s PRV and associated taxes.
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 selling, general and administrative expenses, non-GAAP other income 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
— Sarepta Therapeutics Announces Appointment of Catherine Stehman-Breen, M.D., M.S. as Chief Medical Officer
— Sarepta Therapeutics Announces Addition of Kenneth Fischbeck, M.D. and Matthew Wood M.D., Ph.D. to the Company’s Strategic and Scientific Advisory Board
— Sarepta Therapeutics Announces Presentations at the 2017 MDA Scientific Conference
— Sarepta Therapeutics Agrees to Sale of Priority Review Voucher for $125M
— Sarepta Therapeutics Enters into License Agreement with Nationwide Children’s Hospital for Galgt2 Gene Therapy Program
— Sarepta Therapeutics Enters into Research Agreement and Option Agreement with Nationwide Children’s Hospital for Micro-Dystrophin Gene Therapy Program
— Sarepta Therapeutics Announces EMA Validation of Eteplirsen Authorization Application for Treatment of Duchenne Muscular Dystrophy Amenable to Exon Skipping 51
Shares of Sarepta are down nearly 3% to $33.59 in after-hours trading Thursday. SRPT has a 1-year high of $63.73 and a 1-year low of $13.25. The stock’s 50-day moving average is $30.75 and its 200-day moving average is $34.09.
Overall, one research analyst has assigned a Hold rating and 9 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 $56.78 which is 61.8% above where the stock opened today.
Sarepta Therapeutics, Inc. is a biopharmaceutical company, which is engaged in the discovery and development of unique RNA-targeted therapeutics for the treatment of rare, infectious, and other diseases. It focuses on the development of its potentially disease-modifying DMD drug candidates.