Sarepta rises as Pfizer’s disappointing DMD results remove competitor overhang

Shares of Sarepta Therapeutics (SRPT) are on the rise on Thursday after Pfizer (PFE) announced that CIFFREO, a Phase 3 global, multicenter, randomized, double-blind, placebo-controlled study evaluating the investigational mini-dystrophin gene therapy, fordadistrogene movaparvovec, in ambulatory patients with Duchenne muscular dystrophy, or DMD, did not meet its primary endpoint.

Commenting on the news, Mizuho says it sees Pfizer’s “disappointing” Phase 3 results as positive for Sarepta, with the former unlikely to have the necessary clinical data to submit fodadistrogene movaparvovec for regulatory approval. Both Barclays and Baird believe Pfizer’s failure removes the competitor overhang on Sarepta’s shares.

DMD FAILURE: Pfizer announced that CIFFREO, a Phase 3 global, multicenter, randomized, double-blind, placebo-controlled study evaluating the investigational mini-dystrophin gene therapy, fordadistrogene movaparvovec, in ambulatory patients with Duchenne muscular dystrophy did not meet its primary endpoint of improvement in motor function among boys 4 to 7 years of age treated with the gene therapy compared to placebo. The primary endpoint in the final analysis was assessed by change in the North Star Ambulatory Assessment at one year after treatment. Key secondary endpoints, including 10-meter run/walk velocity and time to rise from floor velocity, also did not show a significant difference between participants treated with fordadistrogene movaparvovec and placebo.

The overall safety profile of fordadistrogene movaparvovec in the CIFFREO trial was manageable, with mostly mild to moderate adverse events, and treatment-related serious adverse events generally responding to clinical management.

POSITIVE FOR SAREPTA: Mizuho sees the disappointing CIFFERO results as positive for Sarepta’s Elevidys, given Pfizer will unlikely have the necessary clinical data to submit fodadistrogene movaparvovec for regulatory approval. As a result, the firm believes Elevidys will have no near-term competition, and sees potential upside to its Elevidys sales forecast and consensus estimates. Mizuho made no change to its Buy rating or $179 price target on Sarepta shares.

OVERHANG REMOVAL: Baird notes that Pfizer’s gene therapy Phase 3 study failure in ambulatory patients with DMD is leading to immediate investor debate over the positives for Sarepta, such as no more competition, versus the negatives, such as potential regulatory concerns. The firm says it is “incrementally positive” on the removal of the competitor overhang as it argues that Pfizer’s failure was “inevitable” and thinks the FDA was “already well aware of the Pfizer program’s shortcomings.” The firm, which doesn’t see “a significant reason for a change of heart over what we expect to be a label expansion for Elevidys by June 21,” maintains an Outperform rating and $170 price target on Sarepta Therapeutics shares.

Voicing a similar opinion, Barclays notes that Pfizer’s DMD failure leaves Sarepta as leading player in development of DMD gene therapy and further supports Elevidys clinical benefit with solid safety profile, evidenced with Phase 3 EMBARK nominal statistical significance on secondary endpoints of time-to-rise and 10-meter walk/run. Additionally, Pfizer’s recent second death also supported Sarepta’s Elevidys superior safety profile, the firm adds. Consistent with its prior assessment, Barclays continues to see on time label expansion by PDUFA date of June 21, with ~70-80% POS expand to ambulatory patients and ~20-30% POS to both ambulatory and non-ambulatory patients. Overall, the firm believes Pfizer’s outright failure remains an overhang for Sarepta shares. Barclays keeps an Overweight rating on Sarepta with a $185 price target.

PRICE ACTION: In morning trading, shares of Sarepta have gained about 4% to $124.44, while Pfizer’s stock has dropped a little over 1% to $27.28.