Sarepta Therapeutics, Inc. SRPT reported wider-than-expected loss in the fourth quarter of 2016. Meanwhile, the biotech company’s 2017 sales outlook fell largely short of expectations as the commercial launch of its only approved drug, Exondys 51, has been slower than expected.
Sarepta gained accelerated approval for Exondys 51 in the U.S. in Sep 2016 for the treatment of patients suffering from Duchenne muscular dystrophy (DMD) amenable to exon 51 skipping. Exondys 51 is the first approved disease-modifying therapy for DMD, a fatal paediatric muscular disease, in the U.S. as well as the company’s first product to receive marketing approval. In the U.S., Sarepta commenced shipments of Exondys 51 at the end of the third quarter of 2016.
Reimbursement hurdles and high cost of drugs are reportedly being blamed for the slower than expected launch of Exondys 51. Meanwhile, Exondys 51 is currently under review in the EU.
Shares of the company declined 11.28% in after-hours trading on Tuesday. So far this year, Sarepta’s shares are up 2.0%. However, this compares unfavorably with the 8.6% increase registered by the Zacks classified Biomed/Genetics industry during this period.
Quarterly Details
Sarepta posted a loss of $1.58 per share in the fourth quarter of 2016, wider than the year-ago loss of $1.44 as well as the Zacks Consensus Estimate of a loss of $1.26.
Loss per share excludes restructuring costs but includes the impact of share based compensation expenses and up-front license and milestone payments.
In the fourth quarter, Sarepta recorded revenues of $5.4 million, primarily due to sales of Exondys 51, which were in line with the Zacks Consensus Estimate. In the prior-year quarter, Sarepta recognized revenues of $1.3 million from the contract finalization of the Ebola portion of the July 2010 Department of Defense contract.
Adjusted research and development expenses were $27.8 million for the fourth quarter down 28% year over year. Adjusted general & administrative (G&A) expenses were 16.1 million down 22%.
Both R&D ad SG&A expenses exclude the impact of restructuring costs, share based compensation expenses and up-front license and milestone payments.
Outlook
Based on sales trends witnessed in Jan/Feb, Sarepta said it expects Exondys 51 will generate $13 million to $15 million in revenue in the first quarter of 2017, and exceed $80 million for full year. The estimates fell largely short of market expectations. The Zacks Consensus Estimate for total revenue in 2017 stood at $140.95 million.
Collaborations and Regulatory Updates
Sarepta has been pursuing strategic collaborations for the development of its disease-modifying DMD pipeline ever since it gained approval for Exondys 51. In Oct 2016, Sarepta entered into an exclusive license and collaboration agreement with Summit Therapeutics plc (SMMT) to acquire the rights to Summit’s lead candidate, ezutromid, in Europe, in Turkey and the Commonwealth of Independent States. Ezutromid is currently being evaluated in a phase II study, PhaseOut DMD, with 24-week biopsy data from the initial group of patients anticipated in 2017.
Moreover, in Sep 2016 Sarepta entered into a joint research collaboration with Catabasis Pharmaceuticals, Inc. CATB to explore a combination-drug treatment approach for DMD. The companies are studying an exon skipping treatment developed by Sarepta, together with an oral NF-kB inhibition treatment developed by Catabasis in a mouse model of DMD. In Jan 2017 the company entered into an exclusive license agreement with Nationwide Children’s Hospital, for their Galgt2 gene therapy program for treatment of DMD.
Last week, Sarepta announced that it is selling non-core asset – its rare paediatric disease priority review voucher or PRV – to Gilead Sciences Inc. GILD for $125 million which pushed up its cash funds.
Sarepta Therapeutics, Inc. Price, Consensus and EPS Surprise
Sarepta Therapeutics, Inc. Price, Consensus and EPS Surprise | Sarepta Therapeutics, Inc. Quote
Stocks to Consider
Sarepta currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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