Sarepta, Amicus Top Biotech Picks Ahead Of Key Binary Events: Analyst

Biopharma stocks are risky investment bets that sway wildly in reaction to catalytic events. Binary events scheduled for Amicus Therapeutics, Inc. FOLD and Sarepta Therapeutics Inc SRPT render their stocks as top picks for the first half of 2021, according to an analyst at BofA Securities.

The Analyst: Tazeen Ahmad maintained a Buy rating and $194 price target for Sarepta. The analyst reiterated a Buy rating on Amicus and increased the price target from $24 to $30.

Sarepta's DMD Gene Therapy Main Valuation Driver: Of the two data readouts scheduled for Sarepta's microdystrophin gene therapy candidate SRP-9001 in Duchenne muscular dystrophy, topline functional results from Study 102 very early in 2021 is more important, Ahmad said. Results from Study 103 is due in the second quarter.

The results from Study 102, which are the first placebo-controlled data set in a significant number of patients, will likely show robust motor benefits, the analyst said. There is high excitement for a therapy such as SRP-9001.

SRP-9001, the analyst said, has the potential to be the first approved DMD gene therapy. Risk-adjusted peak sales for the asset are estimated at $2.4 billion in 2024, Ahmad said. SRP-9001 accounts for about $58 of BofA's price target for Sarepta.

"Statistically significant data with no safety concerns would add 20% upside to our NPV without changing other estimates," the analyst wrote in the note.

The stock could move even higher if investors read through to other programs. If the company can file for approval by year-end, there could be more than 50% valuation upside, BofA said.

Amicus Has Favorable Risk/reward Profile: Despite the recent run-up in Amicus shares, the risk/reward is favorable ahead of the pivotal PROPEL readout of AT-GAA - its next-generation enzyme replacement therapy, or ERT, for Pompe's disease due in the first quarter, Ahmad said.

The study is well powered to position AT-GAA as the only next-gen ERT to have shown superiority in its primary endpoint over the current standard-of-care Lumizyme, which is currently fetching annualized revenues in excess of $1 billion.

"AT-GAA would add to a stable and growing revenue base established by Galafold for Fabry disease," the analyst wrote in the note.

Positive PROPEL data could provide about 60% valuation upside, BofA estimates.

Price Action: At publication time, Sarepta shares traded around $175 and Amicus around $23.92.