Sarepta Therapeutics, Inc. (SRPT - Free Report) incurred an adjusted loss of 75 cents per share in the first quarter of 2019, wider than the year-ago loss of 28 cents per share. The wider year-over-year loss can be primarily attributed to a significant rise in operating expenses. Notably, the adjusted figure excluded one-time items, depreciation & amortization expenses, interest expenses, and income tax benefit. Including all these items, the company incurred a loss of $1.07 per share compared with a loss of 55 cents in the year-ago quarter. The loss was much narrower than the Zacks Consensus Estimate of a loss of $2.05.
Meanwhile, Sarepta’s Exondys 51 — the first Duchenne muscular dystrophy (“DMD”) treatment to gain approval in the United States — continued with its strong performance. Sarepta recorded total revenues of $87 million, up 3.1% sequentially, entirely from the sale of Exondys 51. The top line was in line with the Zacks Consensus Estimate. In the prior-year quarter, Sarepta had earned revenues of $64.6 million.
Duchenne muscular dystrophy is a rare muscular degenerative disease that mostly affects boys and can be fatal before patients turn 30.
Shares of Sarepta were up 2.4% in pre-market trading on May 9 following earnings release. The stock has gained 6.2% so far this year compared with the industry’s rise of 3.1%.
Adjusted research and development (R&D) expenses totaled $81.4 million in the first quarter, up 88% year over year. The upside was primarily driven by ramp-up of manufacturing activities for micro-dystrophin program and initiation of certain post marketing studies for Exondys 51. The metric was partially offset by lower cost related to clinical studies evaluating Exondys 51 and golodirsen.
Adjusted selling, general & administrative (SG&A) expenses were $47.8 million, up 41.8% year over year. Higher costs related to the global commercial expansion of its products and increased personnel expenses led to the uptick.
Cost of sales was also higher, reflecting higher inventory costs due to rising demand for Exondys 51 and royalty payments to BioMarin (BMRN - Free Report) , per the terms of the 2017 settlement and license agreements related to the latter’s exon-skipping technology used in DMD therapies.
Exon-Skipping Pipeline Update
Sarepta is building its DMD pipeline, which will enhance its approved drug portfolio. The pipeline candidates, on approval, will be eligible to treat a larger patient population than Exondys 51. Currently, the company has about eight exon-skipping pipeline candidates, which can treat 75-80% of DMD patients. Sarepta is also developing gene therapies for treating DMD.
In February, the FDA granted priority review to the new drug application (“NDA”) seeking accelerated approval for golodirsen. A decision is expected by mid-August.
An approval to golodirsen NDA is likely to boost Sarepta’s top line as the drug will increase the eligible DMD patient population by 8%.
Moreover, Sarepta is planning to submit a new drug application for its second DMD candidate, casimersen, by mid-2019, if study data confirms preclinical dystrophin expression. The company is planning to have three approved exon-skipping drugs – including Exondys 51, golodirsen and casimersen – in its portfolio by the first quarter of 2020, following which it expects the eligible patient population to double.
In March, the company announced positive interim data from the phase III ESSENCE study evaluating casimersen in DMD patients. Data showed that the candidate led to statistically significant mean increase of dystrophin protein production compared to baseline and placebo.
New Gene Therapy Update
Earlier this week, Sarepta expanded its gene therapy pipeline to six candidates by signing an agreement with the Research Institute at Nationwide Children’s Hospital. Per the agreement, the company gained rights to the hospital’s gene therapy candidate, calpain 3, which is being evaluated for Limb-girdle muscular dystrophy (“LGMD”) type 2A.
In February, Sarepta announced positive preliminary results from an early-stage study evaluating gene therapy, MY-101 for treating LGMD. Data showed robust protein expression in muscles, which was significantly higher than the pre-defined threshold value.
Zacks Rank & Other Stocks to Consider
Sarepta currently carries a Zacks Rank #2 (Buy).
A couple of other top-ranked stocks in the pharmaceutical sector includeCelsion Corporation (CLSN - Free Report) and Fibrocell Science Inc (FCSC - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Celsion’s loss estimates narrowed from 94 cents to 78 cents for 2019 as well as for 2020 over the past 60 days.
Fibrocell’s loss estimates narrowed from $2.68 to $1.15 for 2019 and from $2.55 to 97 cents for 2020 over the past 60 days.
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