Analyst: Sarepta's DMD Gene Therapy Results 'Dramatic And Far Exceeding Expectations'

Sarepta Therapeutics Inc. SRPT reported some encouraging results from the first three patients treated with the company’s microdystrophin gene therapy program for Duchenne Muscular Dystrophy (DMD), sending the stock soaring higher by 40 percent Tuesday and prompting positive commentary from Wall Street.

RBC Capital Markets analyst Brian Abrahams reiterated his Outperform rating and $112 price target for the stock.

His Thesis

According to Abrahams, the presentation at Sarepta’s R&D day event by Dr. Jerry Mendell couldn't have gone any better for investors.

Mendell revealed that patients are showing robust microdystrophin expression at an average of between 38 to 54 percent normal levels. IHC revealed 76 percent microdystrophin positive fibers. Abrahams said the numbers far exceeded Sarepta’s targets of 5 to 10 percent expression and 10 percent microdystrophin-positive fibers. RBC had set its own bar for what it could consider to be successful gene therapy at 10 percent expression and 30 percent microdystrophin-positive fibers, suggesting Sarepta’s therapy passed its test with flying colors.

At the presentation, Abrahams said the data was so good it triggered gasps from the audience and the three child patients received a standing ovation when they made a surprise appearance on stage.

H.C. Wainwright Comments

H.C. Wainwright analyst Debjit Chattopadhyay said the results were nothing short of a home run for Sarepta.

“In our R&D preview note published on June 11, 2018, we had suggested that 20% should be the threshold for a homerun situation, considering these were younger boys about four years of age, for us to potentially extrapolate into durability and adaptability,” Chattopadhyay said.

Chattopadhyay said the results are potentially transformative  and reiterated H.C. Wainwright's Buy rating for Sarepta stock.

Long Way To Go

Abrahams said such a small sample size coupled with the fact that children in the age range of the patients sometimes demonstrate natural improvement on their own leaves plenty of uncertainty, but there’s no question the results were a major step in the right direction.

“Overall we believe the results look compelling, likely exceeding even the most optimistic expectations, and likely to drive meaningful add'l upside for SRPT shares,” Abrahams said.

Price Action

After Tuesday’s big 37 percent gain, Sarepta's stock is now up 160 percent year-to-date. It traded around $141.38 at time of publication.

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Posted In: Brian AbrahamsDebjit ChattopadhyayDMDDuchenne Muscular DystrophyH.C. WainwrightRBC Capital MarketsAnalyst ColorBiotechNewsReiterationTop StoriesAnalyst RatingsTrading IdeasGeneral