Sarepta Therapeutic Shares Surge 25% Following Favorable Gene Therapy Vote; Analyst Anticipates Huge Earnings Swing In 2024

Sarepta Therapeutics Inc SRPT shares jumped nearly 24% on Monday morning after a panel of experts voted last Friday in favor of the company's DMD gene therapy for accelerated approval in treating patients with Duchenne muscular dystrophy (DMD).

What Happened: The panel vote was split 8-6 in favor of allowing accelerated approval. The U.S. Food & Drug Administration reportedly had a number of concerns regarding the risk profile of the therapy, but the panel of outside experts ultimately determined the risk-benefit skew was favorable enough to greenlight SRP-9001.

Why It's Important: On Monday, Bank of America analyst Tazeen Ahmad reiterated her Buy rating on Sarepta and raised her price target from $164 to $176. Ahmad said she anticipated the approval would happen and now has a 90% likelihood of success for SRP-9001.

Sarepta now anticipates the pbo-controlled phase 3 EMBARK confirmatory trial will be completed by September, and Ahmad projects $62 million in SRP-9001 sales in fiscal 2023.

"We continue to expect a 3-mos PDUFA delay as our base case considering the PDUFA is only 2-wks away (May 29th) and manufacturer Catalent continues to face productivity issues though SRPT notes no expected impact," Ahmad said.

Bank of America anticipates SRP-9001 could completely transform Sarepta's growth and earnings profile. The firm projects an EPS loss of $11.41 in fiscal 2023 transitioning to a profit of $1.27 per share in fiscal 2024 and $15.15 per share in fiscal 2025. Ahmad projects 19.4% revenue growth in 2023 ramping to 78.5% growth in 2024.

Benzinga's Take: The panel recommendation news was a big bullish catalyst for Sarepta shares, and the FDA must now determine whether or not to grant an "accelerated" approval by May 29. The FDA isn't bound by the panel's recommendation, so the FDA's official ruling could be another major catalyst for the stock within the next two weeks.

Now Read: FDA AdComm Narrowly Supports Approval Of Sarepta's Gene Therapy For Rare Neuromuscular Disorder

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