Uphill Battle Ahead For Gene Therapy Player Sarepta, Analysts Lower Price Targets Following Duchenne Trial Miss

Sarepta Therapeutics Inc's SRPT EMBARK Phase 3 study of Elevidys in ambulatory boys (those who can walk) with Duchenne muscular dystrophy aged 4-7 years failed to meet the primary endpoint.

Elevidys-treated patients improved by 2.6 points on their North Star Ambulatory Assessment (NSAA), a measure of motor function 52 weeks after treatment, compared to 1.9 points in placebo-treated patients. 

Needham writes that Sarepta will face an uphill battle to expand the label with existing data, and as a result, it lowered the price target from $185 to $82.

Management attributed missing on NSAA to a relatively short follow-up and a milder patient population compared to previous studies. Needham says a clear trend in 4-5 year-olds and observed activity in key secondary endpoints should allow Elevidys to keep its existing label (4-5 year-olds only).

RBC Capital notes that EMBARK's miss is likely to make optimal Elevidys label expansion more challenging, but the totality of the data coupled with favorable FDA feedback should maintain the likelihood that Elevidys can remain on the market, at least with its existing label. 

RBC lowered the price target from $217 to $148.

William Blair says that while the data package for Elevidys to be submitted to the FDA requires the agency to show flexibility, we continue to believe that the approval of Elevidys will be transformational for Duchenne patients and still represents a $1 billion yearly opportunity for Sarepta. 

Overall, the data support the efficacy of the product and support continued marketing. 

The analyst still sees almost $2 billion in top-line durable sales potential for Elevidys and the exon skipping platform and large pipeline opportunity, especially in limb-girdle muscular dystrophy. 

It maintains the Outperform rating.

Cantor Fitzgerald notes a lot of uncertainties ahead. It has downgraded to Neutral from Overweight with a price target of $40, down from $166.

Price Action: SRPT shares are down 40.3% at $64.29 on the last check Tuesday.