Shares of Sarepta Therapeutics SRPT have soared 43% year to date, significantly outperforming the industry’s 6.9% decline. The stock has also underperformed the sector and the S&P 500 during the same period, as shown in the chart below. SRPT’s shares are trading above the 50 and 200-day moving averages.
SRPT Stock Outperforms Industry, Sector & S&P 500
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The surge in the stock price can be attributed to the encouraging sales performance of Duchenne muscular dystrophy (DMD) gene therapy Elevidys.
Elevidys – A Key Driver of Sarepta’s Top line
Currently, Elevidys is the first and only one-shot gene therapy for DMD in the United States. Since its commercial launch in June 2023, the therapy has demonstrated blockbuster potential.
Despite initially being approved in the country with a confined label to treat ambulatory DMD patients aged four to five years, the therapy added more than $200 million to Sarepta’s top line last year. It was only after Elevidys’ approval that the company crossed the billion-dollar threshold in annual net product sales for the first time in 2023.
In June, the FDA expanded Elevidys’ label to treat all DMD patients aged four years and older, regardless of ambulation status. The approval significantly expands the therapy’s targeted population. During the third quarter of 2024, Sarepta generated $181 million from Elevidys sales compared with $122 million in the second quarter, driven by the label expansion. It expects fourth-quarter sales to double on a sequential basis. For 2025, management anticipates net product revenues to be in the range of $2.9-$3.1 billion, two-thirds of which is expected to come from Elevidys sales.
Elevidys has been developed by Sarepta in collaboration with pharma giant Roche RHHBY. Per a licensing agreement between the two companies (in 2019), RHHBY has exclusive rights to launch and commercialize Elevidys in ex-U.S. markets. Management also started recording royalty revenues from ex-U.S. sales of the therapy in third-quarter 2024. During the quarter, Sarepta received $9.5 million from Roche as royalty revenues.
SRPT’s Focus on Gene Therapy Space
Following the encouraging progress with Elevidys, Sarepta is actively working to introduce new gene therapy treatments in its portfolio. Management is currently focusing on developing novel gene therapies targeting different muscular dystrophies.
In January, management started the late-stage EMERGENE study on gene therapy candidate SRP-9003 in patients with limb-girdle muscular dystrophy (LGMD) type 2E/R4 (LGMD2E/R4, or beta sarcoglycanopathy). It plans to submit a regulatory filing with the FDA next year for SRP-9003 in this indication.
Sarepta is evaluating another investigational gene therapy, SRP-6004, in an early-stage study for ambulatory patients living with LGMD type 2B/R2 (LGMD2B/R2, or dysferlinopathy). It intends to start two clinical studies on SRP-9004 to treat LGMD type 2D and SRP-9005 in LGMD type 2C by 2024-end and early 2025, respectively. Both studies will be designed to support the FDA’s approval under the accelerated pathway.
Earlier this week, management signed an exclusive licensing and collaboration deal with Arrowhead Pharmaceuticals ARWR. Per the terms, Sarepta will acquire exclusive rights to Arrowhead’s seven pipeline programs, which are being developed against a broad range of genetic diseases in muscle, central nervous system and rare pulmonary disorders. If the deal is successfully closed, it would add potential therapies that not only complement the company’s pipeline of muscular dystrophies but also expand into new indications.
In return for these rights, Sarepta will make an upfront payment of $500 million plus an equity investment of $325 million in Arrowhead’s common stock. ARWR is eligible to receive milestone payments of more than $10 billion as well as royalties on product sales.
SRPT Stock Valuation & Estimates
The company is trading at a premium to the industry. Going by the price/sales ratio, the stock currently trades at 8.45, trailing 12-month sales value, higher than 2.14 for the industry.
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Estimates for Sarepta Therapeutics’ 2024 earnings per share (EPS) have risen from $1.45 to $2.09 in the past 60 days. Over the same timeframe, EPS estimates for 2025 have increased from $10.27 to $11.10.
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Stay Invested in SRPT Stock
Sarepta stock is worth adding to one’s portfolio, considering Elevidys' strong commercial potential. The company’s decision to finance the Arrowhead deal with existing cash and announce a $500 million buyback program illustrates management’s confidence in the commercial potential of its current marketed products and upcoming product launches.
For those who have invested in the stock, we would suggest holding on to the same as it has growth potential. Consistently rising earnings estimates highlight analysts’ outlook for further growth. Sarepta holds a Zacks Rank #2 (Buy) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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