Sarepta Therapeutics Stock (SRPT) Down Into The Open on FDA Policy Concerns

Sarepta Therapeutics' stock (NASDAQ:SRPT) is down 6.46% pre-market, as markets react to increased regulatory scrutiny and persistent safety concerns surrounding its gene therapy, Elevidys. The decline reflects growing uncertainty among investors regarding the future of Elevidys and its potential revenue stream.

The negative sentiment surrounding Sarepta has been amplified by the FDA's recent decision to lift the clinical hold on Rocket Pharmaceuticals' (RCKT) gene therapy, RPA501, for Danon disease. This decision, contingent upon a modified dosage and revised immunomodulatory regimen, has prompted concerns that the FDA may adopt a more stringent approach to immunomodulation for gene therapies in general.

This could have direct implications for Sarepta's Elevidys, particularly for non-ambulatory patients, potentially requiring additional immunomodulatory steps beyond the current sirolimus protocol.

Analyst opinions on Sarepta remain divided, further contributing to market volatility. Citi analysts recently initiated coverage on Sarepta with a “Sell” rating and a price target of $14.

Their bearish outlook is predicated on what they describe as “persisting and substantial material forward risks,” including the potential for Elevidys approval to be withdrawn and the possibility of additional liver-related fatalities associated with Sarepta's AAVrh74 gene therapy. These concerns underscore the sensitivity of markets to any perceived safety issues related to Elevidys.

Conversely, Bank of America (BofA) has taken a more nuanced stance, raising its price target on Sarepta to $17 from $10 while maintaining an “Underperform” rating.

BofA's revised valuation is based on a survey of 15 neurologists treating Duchenne muscular dystrophy (DMD) patients. The survey revealed that 14 of these physicians plan to continue dosing ambulatory patients with Elevidys, anticipating that nearly one-third of their untreated ambulatory patients could ultimately receive the therapy. This suggests that, despite safety concerns, physicians still see value in Elevidys for a specific patient population. BofA believes this continued use among ambulatory patients warrants adding value for Elevidys back into its financial model.

The contrasting analyst perspectives highlight the inherent uncertainty surrounding Sarepta's future. The FDA's evolving regulatory landscape and the ongoing debate about the risk/benefit profile of Elevidys are creating a challenging environment for the company. The stock's pre-market decline reflects the market's apprehension as investors await further clarity on these critical issues.