Before the Move: Watch Sarepta ahead of FDA decision on DMD gene therapy

Shares of Sarepta Therapeutics (SRPT) are in the spotlight this week as the Food and Drug Administration is expected to announce a decision on June 22 regarding the company’s Biologics License Application for SRP-9001, which is currently under review for the treatment of ambulant individuals with Duchenne muscular dystrophy, or DMD, who have a confirmed mutation of the DMD gene. UBS expects the stock to trade to $170-$180 if the gene therapy receives approval for a 6-7-year old population in addition to 4-5-year old children.

LOW RISK TO APPROVAL: In a research note ahead of the updated PDUFA deadline for accelerated approval of Sarepta’s SRP-9001 , UBS noted that the current consensus expectation is for approval in the 4–5-year old population. However, the firm is hearing some low-level optimism around the potential for approval in the 6-7-year olds in addition to 4-5-year olds, with the thesis being the company’s recent update may have driven some patient group lobbying of FDA. If this outcome materializes, UBS expects the stock to trade to $170- $180. The firm also highlights that it had several questions around the risk to approval and/or EMBARK outcome due to the empty capsid issue flagged in the AdCom briefing docs. UBS would highlight the dosing for EMBARK is based on full capsids and so this issue should not be a concern from an efficacy standpoint. The firm sees low risk of some approval being granted given ‘9001’s compelling safety profile to-date, the analyst added in a recent note previewing the decision.

EMBARK DEEP DIVE: Ahead of FDA’s decision on SRP-9001, Barclays conducted a deep dive on Phase 3 EMBARK data. Its analysis suggested a low statistical bar for a positive outcome, where 1-year NSAA benefit of 1.23-1.39 versus placebo would be sufficient to support a potentially positive outcome despite aggressive assumptions for standard deviation. The firm also believes that EMBARK could provide a better outcome versus historical data given better patient stratification, higher dose, and better manufacturing process. Although it could not completely rule out the slim chances of either a broader label or a complete response letter, Barclays expects a high probability of SRP-9001 approval by June 22 with a label limited to DMD patients aged 4-5. Regardless of any scenario, it expects a high probability of positive EMBARK trial results in December to support a full approval without age limitation. The firm reiterated an Overweight rating on Sarepta shares with a price target of $170.

PRICE ACTION: In Wednesday afternoon trading, shares of Sarepta have dropped almost 4% to $126.51.

“Before the Move” is The Fly’s recurring series of exclusive stories that identify potentially market moving events, along with analyst predictions, ahead of the news.