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Sarepta (SRPT) Q1 Loss Widens Y/Y, Revenues Beat Estimates

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Sarepta Therapeutics, Inc. (SRPT - Free Report) incurred an adjusted loss of $1.04 per share for the first quarter of 2020, wider than the year-ago adjusted loss of 75 cents per share. The wider year-over-year loss can be primarily attributed to a significant rise in operating expenses.

Notably, the adjusted figure excludes one-time items, depreciation & amortization expenses, interest expenses, income tax benefit, stock-based compensation expense and other items. Including all these items, the company incurred a loss of 23 cents per share compared with a loss of $1.07 in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of $2.29.

Sarepta recorded total revenues of $113.7 million, up 30.6% year over year. Revenues beat the Zacks Consensus Estimate of $113.38 million by a slight margin.

Shares of Sarepta were down 4.4% in after-market trading on May 6, following the earnings release. In fact, the company’s shares have declined 5.1% so far this year against the industry’s increase of 3.6%.

 

Quarter in Details

Sarepta’s Exondys 51 — approved for treating Duchenne muscular dystrophy (“DMD”) — continued with its strong performance. The company derived product revenues of $100.4 million, mainly from the sale of Exondys 51, up 15.4% year over year.

Please note that the FDA granted accelerated approval to its second DMD drug, Vyondys 53, in December 2019. However, patient initiation on the drug has been facing challenges due to current restricted environment where physicians are facing difficulties in monitoring patients regularly. The company stated on its earnings call that initiation treatment with both drugs is being affected due to COVID-19.

The company recorded $13.2 million in collaboration revenues related to its licensing agreement with Roche (RHHBY - Free Report) for commercialization of its gene therapy candidate, SRP-9001 as DMD therapy in ex-U.S. markets.

Adjusted research and development (R&D) expenses totaled $114.2 million in the first quarter, up 40.3% year over year. The increase was primarily due to increased clinical activities related to its micro-dystrophin program and pipeline candidate, casimersen, partially offset by lower clinical activities for Exondys 51 and Vyondys 53.

Adjusted selling, general & administrative (SG&A) expenses were $54.5 million, up 14% year over year. Higher costs related to the global commercial expansion of its products and increased personnel expenses increased SG&A expenses.

Sarepta stated that while the COVID-19 pandemic is causing short-term challenges in terms of revenues, the company’s strategy remains unchanged. The company has significant cash to continue with its clinical studies and business operation amid this pandemic. However, it plans to provide an updated guidance for 2020 on its second-quarter earnings call due to the unpredictable nature of COVID-19.

Pipeline Update

Sarepta is on track with its clinical studies amid restrictions related to COVID-19. The company has designed and manufactured a number of RNA-based candidates, which are being evaluated by the Department of Defense now as potential therapies for COVID-19. Last month, the company entered into a cooperative research and development agreement with the United States Army Medical Research Institute of Infectious Diseases to jointly identify antisense oligonucleotides with activity against SARS-CoV-2 using Sarepta’s proprietary PMP platform.

In January 2020, the company has initiated a rolling submission of a new drug application seeking approval for its third exon-skipping DMD product, casimersen. It expects the submission to be completed in the second quarter of 2020.

Sarepta is progressing well with the development of the micro-dystrophin gene therapy candidate, SRP-9001, in a phase II study in DMD patients and study data readout remains on track, which is anticipated in the first quarter of 2021. However, the company anticipates delay in study data readout for its next generation RNA candidate, SRP-5051 from mid-2020 to the second half of this year.

In February 2020, the company closed the previously announced licensing agreement with Roche related to commercialization of Sarepta’s lead gene therapy candidate, SRP-9001, as DMD therapy in ex-U.S. markets, following a potential approval. Sarepta received $1.2 billion in upfront payment from Roche, which includes $750 million in cash and approximately $400 million in exchange of its common stock. The company is also eligible to receive additional $1.7 billion in regulatory and sales milestones along with royalties on net sales. The companies will equally share global development cost for SRP-9001.

Sarepta Therapeutics Inc Price, Consensus and EPS Surprise

 

Sarepta Therapeutics Inc Price, Consensus and EPS Surprise

Sarepta Therapeutics Inc price-consensus-eps-surprise-chart | Sarepta Therapeutics Inc Quote

Zacks Rank & Stocks to Consider

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

A couple of better-ranked biotech stocks include Seattle Genetics Inc (SGEN - Free Report) and Immunomedics, Inc. (IMMU - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Seattle Genetics’ loss per share estimates have narrowed from $3.23 to $3.10 for 2020 and from $1.41 to 81 cents for 2021 in the past 30 days. The company’s average four-quarter positive earnings surprise is 16.15%. The company’s stock has surged 44.1% so far this year.

Immunomedics’ loss per share estimates have narrowed from $1.65 to $1.60 for 2020 and from $1.03 to 87 cents for 2021 in the past 30 days. The company’s stock has surged 52.2% so far this year.

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