Serapta Prices Newly Approved Drug, Cowen Upgrades The Stock To Outperform

Sarepta Therapeutics Inc SRPT hosted a conference call on Tuesday to discuss its newly approved drug, Exondys 51 (eteplirsen) injection, which happens to be the first drug approved to treat patients with Duchenne muscular dystrophy (DMD). Sarepta said that Exondys 51 will be available in a 2mg vial ($1,600) and a 10mg vial ($8,000). Analysts at Cowen and Company were encouraged with the company's pricing and upgraded the stock to Outperform from Market Perform with a $64 price target. The analysts, led by Ritu Baral, noted that using an average patient weight of 25kg, the expected average net price per patient per year would be around $300,000 and an average gross price of $665,000 for a 25kg patient. Baral added that his estimates could prove to be "conservative," especially as Sarepta will likely increase disease and patient awareness, However, the company's management disclosed it will not provide any near-term guidance on launch metrics, including market assumptions, gross to net discounting or sales potential. Baral continued that his discounted cash flow-based valuation derives a value of $56 per share for Exondys 51 in the US alone. In addition, the company is expecting its cost of goods sold (COGS) to be in the "low teens percentage" of net sales which is "substantially" below the analyst's prior estimates. Baral is also projecting peak sales of approximately $550 million in the US and $400 million in the European Union which has at least a 55 percent chance of success and represents an incremental $8 per share of value.