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Sarepta Likely To Bear The Burden Of Drug Costs; Jefferies Maintains Underperform

Sarepta Likely To Bear The Burden Of Drug Costs; Jefferies Maintains Underperform

Jefferies analyst Gena Wang maintained an Underperform rating on Sarepeta Therapeutics Inc (NASDAQ: SRPT) shares as the company is likely to bear the burden of drug costs. The analyst believes there was nothing new on the expanded access guidance as the cost recovery is likely challenging.

The analyst spoke with one KOL on recent expanded access guidance released by the regulator. Wang said the KOL sees no new information expect Form 3926 that provided an easier application process.

Related Link: Why Did Sarepta Therapeutics Plunge 20%?

Wang said, "It is extremely cumbersome for the sponsors to obtain the FDA's permission to charge an investigational drug for expanded access, and most companies elected to give up during the process, according to our KOL."

He added, "In order to obtain the FDA's permission to charge an investigational drug, a company has to prove that the cost is beyond its affordability. The process requires the company to completely open their book and hire an independent accountant to justify nearly every expense to the FDA."

Jefferies said that even if the FDA grants charging permission, its KOL emphasized that insurance firms have no obligations to pay the drugs for expanded access. The brokerage said the regulator noted it "does not decide how that charging is to be carried out" and "it has no authority to require that the Center for Medicare and Medicaid Service reimburse for investigational drugs for which FDA has authorized charging".

The analyst kept a price target of $7 based on probability adjusted DCF. Shares of the company traded 3.34 percent higher to $16.12 on Monday.

Latest Ratings for SRPT

Nov 2019MaintainsOutperform
Nov 2019Initiates Coverage OnBuy
Oct 2019MaintainsOverweight

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Posted-In: Analyst Color Health Care Reiteration Analyst Ratings General Best of Benzinga


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