Sarepta Faces Regulatory Showdown As Analysts Cut Price Targets

On Friday, the U.S. Food and Drug Administration placed Sarepta Therapeutics Inc.’s SRPT investigational gene therapy clinical trials for limb girdle muscular dystrophy (LGMD) on a clinical hold.

The decision stemmed from serious safety concerns, including three patient deaths potentially linked to these products, indicating that study participants faced or would be exposed to an unreasonable and significant risk of illness or injury.

The FDA also formally requested Sarepta to voluntarily halt all shipments of Elevidys, the company’s approved gene therapy. However, Sarepta refused this request.

Also Read: Sarepta Therapeutics’ Reorganization Boosts Investor Confidence

On Monday, Needham downgraded Sarepta, citing that FDA feedback places Elevidys’ future in question.

Analyst Gil Blum wrote on Monday, “This sets up a showdown between the FDA and the company, which is likely to result in the FDA taking ‘formal’ action against Elevidys marketing. We are concerned that with Elevidys likely to be pulled off the market, Sarepta will be challenged to meet its 2027 debt obligations.”

The analyst also anticipates further potential downside on an official notice from the agency. Needham downgraded from Hold to Underperform.

Analyst Blum adds that the current head of the FDA’s Center for Biologics Evaluation and Research, Vinay Prasad, has been openly critical of Elevidys’ approval.

Over the weekend, former CBER head Peter Marks also made comments backing that stance, adding political support for possibly pulling the drug off the market.

“At this point, we think meaningful regulatory action against Sarepta is highly likely,” Needham said.

William Blair wrote on Monday, “We view the FDA’s announcement as the worst-case scenario for the company, as it could negatively affect patient interest in Elevidys and suggest the company’s relationship with the FDA is now fractured.”

“In addition, the threat of Elevidys’s formal removal from the market could reignite the conversation regarding the company’s long-term debt obligations, which could lead to an additional overhang,” analyst Sami Corwin said.

William Blair maintains Sarepta rating at Market Perform. The analyst writes that Elevidys won’t be formally withdrawn from the market, but the updated model reflects a delayed BLA submission for SRP-9003 and lower commercial adoption of Elevidys in the ambulant patient population.

What other analysts say:

• Mizuho downgrades Sarepta Therapeutics from Outperform to Neutral and lowers the price forecast from $40 to $14.
• Piper Sandler maintains Sarepta Therapeutics with a Neutral rating, lowering the price forecast from $32 to $18.
• BMO Capital maintains Sarepta with a Market Perform, lowering the price forecast from $70 to $50.
• Leerink Swann downgrades Sarepta from Outperform to Market Perform and lowers the price forecast from $45 to $10.

SRPT Price Action: Sarepta Therapeutics stock is down 3.98% at $13.52 at publication on Monday.

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