Sarepta Reports Earnings Miss; But Key SRP-9001 Data Still On Track

Sarepta Therapeutics (SRPT) has reported weaker-than-expected earning results for the first quarter. Specifically, Q1 Non-GAAP EPS of -$1.04 missed Street expectations by $1.75 while GAAP EPS of -$0.23 also fell short by $0.67.

Although total product revenue of $100.4M climbed 15.4% year-over-year, it nonetheless missed the Street consensus by $17.78M. Sarepta ended the quarter with a cash position of $2.2 bn.

Encouragingly, CEO Doug Ingram revealed that “our placebo-controlled gene therapy clinical trial, study 102, for SRP-9001 is on track to read out in the first quarter of 2021 as anticipated.” SRP-9001 micro-dystrophin is a potential treatment for Duchenne Muscular Dystrophy (DMD), a genetic condition that leads to progressive loss of muscle strength.

“Additionally, our process development, assay and manufacturing work for SRP-9001 is progressing and we continue to expect GMP [good manufacturing practice] material to be ready in July” he said.

Plus clinical data from the company’s second gene therapy program – SRP-9003 in LGMD2E – is expected in 2Q20 as previously guided.

With these comments in mind, Mizuho Securities analyst Difei Yang reiterated her buy rating and $183 price target. “Covid-19 is likely to have some impacts on product sales in FY20 and we believe 2020 revenue guidance is at risk” she warned- particularly for Exondys51.

But despite the expected short-term revenue impact from Covid-19, ultimately the analyst “continue[s] to see significant value in Sarepta’s gene therapy pipeline, including SRP-9001.” She sees Covid-19 as having minimal long-term impact to SRPT and therefore maintains her bullish stance.

Moreover, Yang believes that the read out for study 102 in 1Q21 could represent an important catalyst for the shares. So far the stock is down just over 5% on a year-to-date basis, and is falling 4% in Thursday’s pre-market trading.

Overall, analysts shares Yang’s take on Sarepta, with 12 recent buy ratings vs just 1 hold rating. This gives the stock a firm Strong Buy consensus. The average analyst price target of $199 indicates significant upside potential of 63% from current levels. (See SRPT stock analysis on TipRanks).

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