In a stunning reversal, the Food and Drug Administration approved Sarepta Therapeutics' (SRPT) previously rejected Duchenne muscular dystrophy drug — sending SRPT stock rocketing on Friday.
XOn today's stock market, SRPT stock soared 31.4%, to 132.05, in massive volume. Shares touched a four-month high, relieving some of the pressure SRPT stock felt in August when the FDA rejected the drug now called Vyondys 53.
Vyondys 53 can treat roughly 8% of patients with Duchenne muscular dystrophy, an inherited muscle-wasting disease. In total, Sarepta estimates it can treat about 20% of patients, including with Exondys 51, a similar drug that treats up to 13% of patients.
Now, analysts are bullish on another Sarepta drug, dubbed casimersen. All three treatments belong to the same class of drugs: exon skippers. Exon skipping is a form of RNA splicing that allows cells to skip over faulty lines of genetic code. Each drug skips over a different genetic mutation.
"We believe Vyondys 53 approval removes a major overhang for the stock," SVB Leerink analyst Joseph Schwartz said in a report to clients. He kept his outperform rating on SRPT stock, but raised his price target to 216 from 186.
SRPT Stock Flies On Approval
In August, the FDA rejected Sarepta's initial application for Vyondys 53, then called golodirsen. At the time, regulators cited the risk of infection at the infusion port site and kidney toxicity. Both issues were noted in animal studies, but not in humans.
The biotech company disputed the FDA rejection over the course of four months, Chief Executive Doug Ingram said. Ultimately, regulators approved Vyondys 53 based on a statistically significant increase in dystrophin, a protein that maintains muscles. Duchenne muscular dystrophy patients lack this protein.
Ingram credited the FDA's Office of New Drugs for expediting the review.
"We owe our gratitude to both the Review Division and the OND for their objective, evidence-based approach to this review, for their fairness, and for the sense of urgency with which they addressed and resolved the (rejection) and granted this approval," he said in a written statement.
What's Next For SRPT Stock?
The FDA granted Vyondys 53 an accelerated approval. This means the approval is contingent upon a confirmatory study. That study, dubbed Essence, is currently enrolling and should have results in 2024, Needham analyst Chad Messer said in a report.
Messer kept his buy rating on SRPT stock, and raised his price target to 182 from 170.
Sarepta has said Vyondys 53 will be priced on parity with Exondys 51, its predecessor, Messer said. The price of Exondys 51 has been flat since its launch in 2016, he said. Credit Suisse analyst Martin Auster noted Exondys 51 goes for more than $600,000 a year based on a 55-pound weight child.
On an annual basis, Vyondys 53 could generate $500 million in sales for Sarepta, Auster said in a note. He reiterated his outperform rating and 190 price target on SRPT stock.
Analysts also expect the approval to help boost the chances for Sarepta's casimersen, an exon-skipping drug for Duchenne muscular dystrophy. Casimersen could treat another 8% of patients. The approval also helps override the bear case for Exondys 51 following a controversial approval in 2015.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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