Bank Of America Upgrades Sarepta Therapeutics On 'Increased Conviction' Of Drug Approval

February 16, 2015

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Bank of America upgraded Sarepta Therapeutics Inc (NASDAQ: SRPT) from Neutral to Buy on Tuesday and raised its price target from $19 to $21.

Analyst Steve Byrne based the upgrade on the “increased conviction” that the company’s eleplirsen drug for Duchenne muscular dystrophy (DMD) has a 50 percent probability of approval in the U.S. Byrne previously assigned a 40 percent chance of approval.

Sarepta intends to submit an New Drug Application (NDA) in mid-2015, according to Byrne, and it “will include more exhaustive statistical analyses as requested by the FDA.”

Byrne added that with an “EV of less than $300 million, and high unmet need in this ultra-orphan population, we see the risk/reward as favorable.”

The company has “initiated dosing in Study 301 (120 ambulatory patient confirmatory study) and Study 204 (20 non-ambulatory patients)” and “will begin dosing in Study 203 (younger ambulatory patients, 4-6) in 1Q15,” according to the analyst note.

Additional safety data will also be needed for patients who “are newly exposed eteplirsen patients (at least 3-month) and results from a fourth biopsy from the on-going study 201/202.”

As far as competition is concerned, BioMarin Pharmaceutical Inc. (NASDAQ: BMRN), the maker of Prosensa, “has started a rolling NDA submission for drisapersen, eteplirsen's key competitor in the exon-51 skipping DMD space, and expects to complete the submission in 1Q15,” Byrne noted.

The analyst cautioned that “while there have been no safety red flags noted yet” for eleplirsen, data is still limited and more patients are needed to “reaffirm the safety profile.” Byrne also indicated that additional requests from the FDA could delay approval.

Sarepta Therapeutics Inc recently traded at $14.58, up 14.26 percent.