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Sarepta (SRPT) Q3 Loss Narrows, Exondys 51 Sales View Raised

Sarepta Therapeutics, Inc. SRPT reported narrower-than-expected loss in the third quarter of 2017. The biotech also increased its 2017 sales outlook for Exondys 51, a treatment for Duchenne muscular dystrophy (DMD) and its only marketed drug. Shares were up almost 3.4% in after-hours trading.

So far this year, Sarepta’s shares are up 76.3%. This compares favorably with 6.9% increase registered by the industry during this period.

Narrower Loss

Sarepta incurred a loss of 78 cents per share in the third quarter of 2017, narrower than the year-ago loss of $1.18 as well as the Zacks Consensus Estimate of a loss of 86 cents.

Quarterly Details

Sarepta’s Exondys 51, the first DMD treatment to gain approval in the United States, has shown strong performance in the quarter. In the third quarter, Sarepta recorded revenues of $46 million, up 31.4% sequentially, primarily attributable to sales of Exondys 51. The drug is under review in the EU. Revenues beat the Zacks Consensus Estimate of $38.7 million. In the prior-year quarter, Sarepta had recognized no revenues.

Research and development (R&D) expenses were $34.2 million in the second quarter, almost flat year over year. Although the company incurred lower manufacturing expense, it was partly offset by increased expenses in preclinical studies on PPMO platform, other follow-on exons and increased patient enrollment in ongoing clinical studies.

Selling, general & administrative (SG&A) expenses were $28.2 million, up 28.2% year over year, due to increased legal fees and worldwide commercial initiatives, compensation and other personnel expenses.

During the quarter, Sarepta incurred an expense of $25.6 million for settlement and license agreements related to a patent on exon-skipping technology used in DMD therapies. The settlement with BioMarin Pharmaceutical Inc. BMRN removed a major overhang on Sarepta.

In July 2017, Sarepta launched a Managed Access Program along with UK-based Clinigen to ensure availability of Exondys 51 to DMD patients in certain geographic regions outside the United States. Moreover, it also signed a gene therapy research collaboration agreement with Genethon to jointly develop treatments for DMD.

Subsequent to the quarter in September 2017, Sarepta announced positive results from a phase I/II study – 4053-101 – evaluating its Exon 53 skipping candidate, golodirsen, for the treatment of DMD patients. Golodirsen achieved a 100% response rate with 10.7 times increase in mean dystrophin protein from baseline, showing better efficiency than Exondys 51. The potential of golodirsen is impressive, and the company is planning a meeting with the FDA in the first quarter of 2018 to discuss the future course of action.

Outlook

Based on sales trends witnessed in the third quarter, Sarepta updated its guidance for Exondys 51 sales to $150 million to $155 million in 2017, higher than its prior guidance of $125 million to $130 million. The Zacks Consensus Estimate for 2017 sales is pegged at $135.16 million.

Meanwhile Sarepta is looking to build its own DMD pipeline beyond Exondys 51 by developing other exon-skipping treatments. Sarepta will have seven exon-skipping candidates in its pipeline by the end of this year that could treat 75%–80% of the DMD population.

Sarepta Therapeutics, Inc. Price, Consensus and EPS Surprise

 

Sarepta Therapeutics, Inc. Price, Consensus and EPS Surprise | Sarepta Therapeutics, Inc. Quote

Zacks Rank & Stock to Consider

Sarepta Therapeutics carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the health care sector are Adaptimmune Therapeutics PLC ADAP and Agenus Inc. AGEN. Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Adaptimmune’s loss estimates narrowed from $1.03 to 95 cents for 2017 and from 95 cents to 90 for 2018 over the last 60 days. The company delivered positive earnings surprises in two of the four trailing quarters with an average beat of 2.56%. The company’s shares are up 72.1% so far this year.

Agenus’ loss estimates remained flat for 2017 and narrowed from $1.40 to $1.36 for 2018 over the last 60 days. The company came up with positive earnings surprises in three of the four trailing quarters with an average beat of 4.27%.

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