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Sarepta's DMD Portfolio Solid, Sole Drug Dependence Concerns

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On Jul 4, we issued an updated research report on Sarepta Therapeutics, Inc. (SRPT - Free Report) . This biopharmaceutical company, based in Cambridge, MA, is focused on the development of RNA-based therapeutics targeting rare and infectious diseases. The company’s sole marketed drug, Exondys 51, is indicated for the treatment of Duchenne muscular dystrophy (“DMD”).

In the last three months, Sarepta’s share price has significantly outperformed the industry to which it belongs. The stock has gained 89.2% compared with an increase of 8.1% for the industry.

Exondys 51 Performing Well

Sarepta received accelerated approval for Exondys 51 in 2016 for treating patients who have a confirmed mutation of the DMD gene susceptible to exon 51 skipping in the United States. The drug showed impressive growth in 2017 and its sales increased 12.7% sequentially to $64.6 million in the first quarter of 2018. The increase was fueled by strong demand trends. The company expects the drug’s sales to double this year.

The company is carrying out activities to further boost the drug’s sales. Sarepta has launched a Managed Access Program in Europe and Americas to increase accessibility of Exondys 51. The drug is under review in Europe. The settlement of a patent litigation with BioMarin Pharmaceutical Inc. (BMRN - Free Report) in 2017 also helped Sarepta as it now owns global exclusive rights for Exondys 51.

However, the company’s dependence on this drug for growth is a concern as a downfall may severely impact the stock. The majority of Sarepta’s pipeline candidates are in early to mid-stage development.

Exon-Skipping Pipeline Progress

The company is building its DMD pipeline, which will enhance its approved drug portfolio. The pipeline candidates, upon approval, will be eligible for larger patient population than Exondys 51. The company has about eight exon-skipping pipeline candidates, which can treat 75-80% of DMD patients.

Golodirsen, the lead DMD candidate, has shown better improvement in patients in a mid-stage clinical study compared to results achieved by Exondys 51. In fact golodirsen has increased mean dystrophin protein production by 10.7 times from baseline against nearly three times for Exondys 51. Sarepta is on track to file a new drug application seeking approval for golodirsen in the United States by the end of 2018.

Gene Therapies

Apart from exon-skipping candidates, Sarepta is also focusing on developing gene therapies for treating DMD. The gene therapies have shown promising results so far in treating DMD patients by restoring dystrophin production in muscles throughout the body by delivering microdystrophin via adeno-associated virus. A successful development will create a treatment option eligible for all DMD patients.

Sarepta is evaluating AAVrh74.MHCK7.micro-Dystrophin in a phase I/II study in DMD patients. Preliminary data announced in June showed that the gene therapy dramatically reduced creatine kinase levels, a measure of abnormal muscle damage, and created significant levels of dystrophin.

However, these are very early results for the candidate and there is a long way to go before it becomes a potential treatment option.

Zacks Rank & Stocks to Consider

Sarepta currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks to consider in the pharma sector include Aeglea BioTherapeutics, Inc. (AGLE - Free Report) and ANI Pharmaceuticals, Inc. (ANIP - Free Report) . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Aeglea’s loss estimates have narrowed from $1.93 to $1.67 for 2018 and from $3.86 to $3.57 for 2019 over the last 60 days. The company delivered positive earnings surprise in three of the trailing four quarters with an average beat of 19.32%. Its share price has increased 16.3% in the past three months.

ANI Pharmaceuticals’ earnings estimates have increased from $5.54 to $5.70 for 2018 and from $5.72 to $6.15 for 2019 over the last 60 days. The company came up with a positive earnings surprise in three of the four trailing quarters with an average beat of 8.69%. Its share price has increased 19% in the past three months.

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