Jefferies Lifts Serapta To Hold Rating Following Drug Approval, Says 2020 Will Bring New Questions

Jeffries raised its rating on shares of Sarepta Therapeutics Inc

and nicely bumped up its price target, as the din dies down on the euphoria generated by the company receiving accelerated approval for eteplirsen in Duchene Muscular Dystrophy. That said, the firm is still circumspect and feels 2022, when the full approval decision is due, will bring open questions.

Among the questions raises by Jeffries are regarding the weak basis for approval and questionable efficacy, manufacturing capability to supply commercial and ongoing clinical trials and debatable market potential for exon 51 outside of the U.S.

The firm sees the positive verdict from FDA as solely due to the push by Janet Woodcock, the director of the Center for Drug Evaluation and Research, despite multiple internal oppositions. The approval is seen by the firm as the result of the FDA perceiving that dystrophin increase in skeletal muscle in some eteplirsen-treated patients reasonably predicts clinical benefits in some patients. The firm also noted that specifics of the data submitted from 13 patients at baseline and 48 weeks were not disclosed. The FDA seems to want a 2-year randomized, double-blind, controlled confirmatory trial, with the trial mandated to end by November 2010 and the final report due to be submitted by May 2021. The firm believes that the currently ongoing PROMOVI phase 3 study will not suffice.

As such, the company raised its rating on the shares of Sarepta to Hold from Underperform and upped its price target on the shares of the company to $50 from $7. The actions were based on expectations of eteplirsen commercialization until 2022. Following the 74% gain notched by the shares on Monday, the stock is up again and was up 11.36 percent at $54.50 at last check.