Sarepta Therapeutics Inc (NASDAQ:SRPT) is the newest hot stock on Wall Street as it climbed from under $30 to more than $50 per share on Monday following the latest regulatory news. The Food and Drug Administration has granted accelerated approval to the company’s drug eteplirsen (used to treat a muscle degeneration disease). You may recall that Sarepta shares also skyrocketed in June following related FDA news, but it may not be the trails the drug maker is blazing with its drug. Some analysts speculate that the company has become one of the hottest takeover targets in its sector as a result of the FDA’s accelerated approval.
Multiple firms have upgrade Sarepta Therapeutics and/ or increased their price targets as a result of this latest news.
Sarepta Therapeutics as a takeover target
RBC Capital Markets analyst Simos Simeonidis upgraded the drug maker from Sector Perform to Outperform and raised his price target from $5 to $83 per share. He called the granting of accelerated approval for eteplirsen “one of the most perplexing regulatory decisions in recent history.” He added that the decision could actually have negative consequences for the review of drugs to treat rare diseases. However, he also noted that it’s a game-changer for Sarepta as he believes it has now become “one of the most attractive M&A targets in biopharma, given both eteplirsen and its pipeline of exon-skipping compounds.”
Simeonidis noted on Monday that the accelerated approval opens the door for the drug maker’s other exon-skipping compounds. Sarepta Therapeutics still has to run a trial to confirm that eteplirsen is effective, although it will be years before the results of that trial are complete. He doesn’t believe the results of the trial will matter for the drug maker’s stock soon and is surprised the FDA granted accelerated approval based on what information is available.
Sarepta expects to see $300,000 per patient annually
The analyst said in another report this morning that the commercial launch of eteplirsen (Exondys 51) is “imminent, as the drug maker’s management said on their conference call that they’ve been prepared to launch it for six months. The pricing will average $300,000 per patient per year, and doses of 2ml and 10ml vials for $1,600 and $8,000, respectively, will be available.
As part of its launch strategy, Sarepta will be teaching doctors about the need to sequence DMD (Duchenne muscular dystrophy) patients, offering support for eligible patients, and launching its financial assistance program. The company is also working with the FDA on the details of the two-year controlled trial that must be done to support the accelerated approval.
Other upgrades for Sarepta Therapeutics
Wedbush analyst Heather Behanna increased her price target for the company from $36 to $66 per share and maintained her Outperform rating. She values the priority review voucher received by the company at $5 per share. She expects the voucher to “mitigate the need for future dilutive financing.” She believes awareness of eteplirsen is “unprecedented” before the launch, and she expects adoption of the drug to be “rapid.” She pegs peak U.S. sales at $425 million in 2020, although she expects only $8.7 million this year due to a possible lag in reimbursement at the beginning.
Additionally, William Blair analyst Tim Lugo also upgraded Sarepta Therapeutics, moving from Market Perform to Outperform with a price target of $88. Bearish Jefferies upgraded the drug maker from Underperform to Hold and raised its target from $7 to $50 per share. Also Cowen upgraded the company from Market Perform to Outperform.
Shares of Sarepta Therapeutics soared by more than 12% to as high as $56.80 during regular trading hours on Tuesday following a massive increase on Monday.