Healthcare Sarepta Therapeutics Inc. (SRPT): 4Q Dystrophin Data A Key Catalyst

Sarepta Therapeutics Inc. (SRPT): 4Q Dystrophin Data A Key Catalyst

Published By News Desk at July 20, 2017 11:15 am Morgan Stanley sees Clean beat with no red flags; expect SRPT up 5-10%

Exondys 51 beat handily ($35M vs $23M cons) and mgt. increased guidance to $125-130M. Morgan Stanley new 2017 est. of ~$145M (up from $120M) still exceed guidance, but assumes sig. slowing in 15yrs+ and acceleration in 15yrs. Morgan Stanley sees the 4Q dystrophin data from the exon 45/53 studies as a key catalyst.

Sarepta Therapeutics Inc. (NASDAQ:SRPT) reported Exondys 51 sales of $35.0M, well above MS $26.2M estimate and consensus of $23M. Mgt.also increased full year Exondys 51 revenue guidance to $125M-$130M from prior guidance of $95M+. This follows a similar increase from $80M+ last quarter. Non-GAAP loss per share of $0.46 was below MS $0.59 loss on revenue upside. Non-GAAP operating expenses of $59M were slightly below MS $60M expectation, with expense growth more weighted toward SG&A than R&D versus our numbers. Cost of sales will likely stay at a nominal level into 1Q18.

Keytakeaways from thecall: (1)2Q17 sales incl.an ~$2M increase pulled from 3Q17 due to the July 4th holiday; (2) Even with the recent patent settlement with BioMarin, mgt. still expects COGS to settle in the teens. As a reminder the deal lead to a $35M patient from Sarepta as well as a 5% royalty on DMD sales in the U.S. (through 2023) and an 8% royalty in the E.U (through 2024); (3) The patient mix remained steady at 60/40 commercial / Medicaid and mgt.expects this ratio to remain stable going forward. The average age of patients on therapy also remained ~14-15 years. Mgt. did indicate that new patient start forms were more heavily weighted to 0 to 9 year olds, suggesting the average age is likely to come down in 2H17.

In line with last quarter, 40-50% of patients are having ports placed prior to beginning therapy; (5) There were 150 prescribing physicians in 2Q17,up from 130 last quarter and 100 at the beginning of the year; (6) Mgt. remains on track to provide ADME results to EMA and expect the CHMP should complete review of Exondys 51 by 1H18; (7) Mgt.announced the roll out of its Managed Access Program (MAP) that could give early access to therapy for some ex-U.S. patients. Modest revenues from ~13countries could begin in 4Q17; (8) Mgt. remains in discussions with FDA on protocol for the Exondys 51 postmarketing study. However, the FDA has released the company from completing a study evaluating the drug for Exon 45 & 53 patients; (9) Mgt.highlighted developments with PPMO chemistry, which pre-clinical models suggest increase dystrophin production 10-30x. Mgt. is analyzing the 4053-101 European PhII study in patients amenable to exon 53skipping. Data from this trial is to be presented at a medical meeting in 4Q17.; (10) Enrollment for the ESSENCE study to evaluate SRP-4045 and SRP-4053in patients amenable to exon 45 and 53 skipping should be complete by YE17.