Sarepta Under Pressure Amid Concerning Exondys 51 Survey Results

Shares of Sarepta Therapeutics Inc SPRT were under heavy selling pressure following a concerning report released by Leerink's Joseph Schwartz.

Schwartz completed a MEDACorp payor survey and the results suggest the reimbursement landscape for Sarepta's therapy for the treatment of Duchenne Muscular Dystrophy (DMD) called Exondys 51 is "more tenuous than management indicated recently."

The company previously stated the vast majority of patients that require treatment will indeed receive therapy this year. However, based on the analyst's insights on requests, approvals and denials processed to date for Exondys 51 show that it appears payors are denying coverage at a greater rate than providing it.

Specifically, only 20 percent of surveyed payors anticipate most or all amenable patients will ultimately be reimbursed. The survey also found that payors expect on average just 45 percent of DMD exon 51 skip amenable patients who request coverage will be reimbursed - a figure that is "much less optimistic" versus management's guidance.

"Based on the survey results herein, we now believe that the current reimbursement rate is ~50%, which puts SRPT at risk of missing revenue estimates in their second full quarter of commercial availability post-launch (1Q17) and more importantly keeps the focus on whether long term revenue projections can be attained," Schwartz stated.

Bottom line, the analyst believes the results from the survey poses a risk to consensus revenue estimates being achieved in 2017 and beyond.

Shares remain Market Perform rated with a price target lowered to $32 from a previous $33.