For biotech stocks like Sarepta Therapeutics (NASDAQ:SRPT), most big moves are connected, somehow, to the Food and Drug Administration (FDA) in the United States. So what happens when the FDA endorses your product and then decides it needs more time to review it? For Sarepta—in Wednesday’s trading, anyway—your stock takes a double-digit dip.
Sarepta, only days ago, was on top of the world when an advisory committee with the FDA declared its support for accelerated approval on Sarepta’s Duchenne muscular dystrophy treatment, SRP-9001. SRP-9001 is a co-production between Sarepta and Catalent (NASDAQ:CTLT), and the recommendation should have put SRP-9001 on a fast track to success. However, the FDA isn’t legally obligated to act on the approval of advisory committees and decided to pass on SRP-9001, at least for a while, as the FDA studied the matter further.
While the FDA’s demands aren’t exactly stringent—they required “modest additional time”—the delay naturally sets back Sarepta’s plans. Further, Sarepta announced that it would “…remain in a quiet period…” as the FDA continued its considerations. The FDA, for its part, noted that if the Phase 3 studies worked out as the FDA expected, then it would consider a “non-age restricted” expansion of testing. The FDA expects to complete its review by June 22, which, at just under a month with two holiday weekends in there, shouldn’t be that bad.
The FDA may be uncertain about SRP-9001, but analysts are very clear about Sarepta. With 20 Buy ratings and three Holds, Sarepta Therapeutics stock is a clear Strong Buy. Plus, with an average price target of $176.50 per share, it offers investors 35.26% upside potential.