Sarepta Soars Following Encouraging Exondys 51 News

Shares of Sarepta Therapeutics Inc SRPT spiked higher by more than 24 percent Tuesday. The catalyst for the move appears to be the company's 10:30 a.m. presentation at the JPMorgan Healthcare Conference, followed by an encouraging report by TheStreet's Adam Feuerstein.

As noted by Feuerstein, Sarepta said its recently approved therapy for the treatment of boys suffering from Duchenne muscular dystrophy (DMD) saw sales of $5.4 million in the fourth quarter, which exceeded Wall Street's expectations of $4.9 million.

The therapy, marketed as Exondys 51, achieved good sales in the quarter and should put to rest the worst-case fear of insurance reimbursement denials — an overhang that plagued the stock as of late.

Feuerstein said Sarepta released a second key metric, which will further alleviate investor concerns: The number of boys who have started the process required to receive insurance reimbursement is 250 to date.

There is no consensus among Wall Street analysts as to how many boys will be receiving Exondys 51 moving forward, but 250 within the first three months is in line with comparable orphan drug commercial launches.

Feuerstein noted that if all 250 patients secure insurance coverage at a cost of $300,000 to $500,000 per year, than Sarepta will record sales rate of $75 million to $125 million.

"That's a very rough forecast for Exondys 51 sales, particularly absent the actual rate of reimbursement approvals or denials, but it compares reasonably well to the current analyst consensus estimate of $138 million for 2017, according to Factset," Feuerstein wrote.

Finally, Sarepta suggested that the clinical review of its drug in Europe will likely take between 12 to 15 months to complete. If approved, the company will likely reach a settlement with BioMarin Pharmaceutical Inc. BMRN related to intellectual property rights which will pave the way for the therapy's European launch.