Sarepta Therapeutics, Inc. (SRPT - Free Report) incurred a loss of 43 cents per share in the second quarter of 2018, narrower than the year-ago loss of 48 cents and the Zacks Consensus Estimate of a loss of 47 cents.
Sarepta’s Exondys 51, the first duchenne muscular dystrophy (“DMD”) treatment to gain approval in the United States in 2016, continued its strong performance. Sarepta recorded revenues of $73.5 million, up 13.8% sequentially, primarily attributable to increasing demand for Exondys 51. Revenues also beat the Zacks Consensus Estimate of $71.0 million. In the prior-year quarter, Sarepta had earned revenues of $35.0 million.
Following the earnings release, shares of Sarepta were up 2.5% in after-hours trading. So far this year, Sarepta’s shares have rallied 117.5% against a 3.6% decrease registered by the industry.
Exondys 51 is currently under review in the EU. In June, the company received a negative CHMP opinion on its marketing approval application, seeking approval of Exondys 51 in Europe. This is likely to delay the approval of the drug in EU. A final decision is expected by year end.
DMD is a rare muscular degenerative disease that mostly affects boys and can be fatal before patients turn 30.
Research and development (R&D) expenses were $57 million in the second quarter, up 67.2% year over year. The rise was attributable to increased patient enrollment in late-stage studies, higher shared collaboration cost related to utrophin platform and higher costs due to pipeline expansion and ramp-up of manufacturing activities.
Selling, general & administrative (SG&A) expenses were $37.3 million, up 54.1% year over year due to higher costs related to commercial expansion.
New Gene Therapy Collaboration
Along with the earnings results, Sarepta announced that it has signed a long-term strategic investment and license and option agreement with AAV-based gene therapy company Lacerta Therapeutics, which can add three gene therapy programs to Sarepta’s pipeline. Per the deal, Sarepta has bought exclusive rights to Lacerta’s CNS-targeted gene therapy candidate for Pompe Disease. In addition, Sarepta has an option to license up to two new CNS-targeted gene therapy programs of Lacerta. In addition, Sarepta will make an equity investment of $30 million in Lacerta. While Lacerta will be responsible for management of the majority of the pre-clinical activities, Sarepta will take charge of clinical development and commercialization.
In 2018, Sarepta expects to record revenues of $295 million to $305 million
Sarepta is building its DMD pipeline, which will enhance its approved drug portfolio. The pipeline candidates, upon approval, will be eligible to treat a larger patient population than Exondys 51. The company has about eight exon-skipping pipeline candidates, which can treat 75-80% of DMD patients.
Sarepta’s most advanced pipeline candidate, golodirsen, demonstrated encouraging results in a mid-stage clinical study evaluating it in DMD patients. The candidate has also shown better efficacy than Exondys 51. Sarepta is planning to file regulatory application seeking golodirsen’s approval in the United States by the end of this year with a potential approval in 2019.
Apart from exon-skipping candidates, Sarepta is also focusing on developing gene therapies for treating DMD.
In June, Sarepta announced promising results from an early-stage study, evaluating its gene therapy as a treatment for patients with DMD.
The preliminary data from the first three patients dosed in the phase I/IIa study showed that treatment with the gene therapy, AAVrh74.MHCK7.micro-dystrophin led to a significant increase in dystrophin protein production. Micro-dystrophin is a muscle protein, which is needed for muscles to function properly. The absence of this protein causes DMD. Meanwhile, the data also showed that AAVrh74.MHCK7.micro-dystrophi dramatically reduced creatine kinase levels, a measure of abnormal muscle damage caused by DMD.
In July, however, the company said the FDA has placed an early-stage gene therapy program under clinical hold. The hold was placed due to presence of out-of-specification research material supplied by a third party. Sarepta is confident that it can respond to the letter before the end of August.
In June, Sarepta also announced that it has entered into a long-term strategic manufacturing partnership with privately-held Brammer Bio for the manufacturing and commercial supply of its potential micro-dystrophin gene therapy and other neuromuscular pipeline products.
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