A Biotech's Stock Just Hit Year High. This Analyst Expects It To Jump Another 16%

  • Morgan Stanley raised the price target on Sarepta Therapeutics Inc SRPT with an equal weight rating.
  • The analyst notes concerns regarding the Phase 3 EMBARK study, with a modest probability of success (60%) for that study. He also acknowledges that the option value associated with an early filing is not yet fully reflected in SRPT. 
  • "We see a likely October filing and thus December acceptance as the key catalyst for SRPT into year-end," writes the analyst.
  • The question looms whether the FDA wants to approve the treatment ahead of Phase 3 data. 
  • Related: FDA Lifts Clinical Hold On Sarepta's Dose-Expansion Part Of Duchenne Trial.
  • If management is granted priority review (based on the regulatory standard, SRP-9001 should qualify), the PDUFA would likely be ~3-6 months ahead of the Phase 3 results.
  • Thus, Morgan Stanley expects investors to view the granting of priority review as a positive and will continue to increase the option value reflected in the stock, as high as $150 (assuming the filing is accepted and priority review is granted).
  • Assuming approval, Sarepta could be over $200 and ~$75-85 if FDA defers until Phase 3 results.
  • Price Action: SRPT shares are up 4.03% at $117.46 on the last check Thursday.
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