IBD Stock Of The Day Sarepta Therapeutics will lead the gene therapy market for Duchenne muscular dystrophy, an analyst said Monday as he boosted his price target on SRPT stock.
In response, Sarepta stock jumped 1.7% to close at 114.41.
SVB Securities analyst Joseph Schwartz expects Sarepta to launch its gene therapy in the U.S. in the second quarter. Abroad, he calls for the company's drug, known as SRP-9001, to launch in the second half of 2024. The company has submitted its application for approval and said in an email that it expects to hear back from the Food and Drug Administration next month.
Sarepta's gene therapy will follow the company's already approved treatments for the muscle-wasting disease. Schwartz predicts it will beat therapies from Pfizer and Solid Biosciences to the market.
"We expect SRP-900 to capture the majority of sales given its likely first-to-market advantage and favorable profile to date," he said in a note to clients.
SRPT Stock: Lengthy Consolidation And Flat Base
Enthusiasm for Sarepta's gene therapy has bolstered SRPT stock of late.
Shares are forming a flat base with a buy point at 120.33, according to MarketSmith.com. SRPT stock also is holding up well above its 50-day moving average after emerging from a monthslong consolidation.
Schwartz boosted his price target on SRPT stock to 145 from 126. He maintained an outperform rating on shares.
Sarepta already sells three Duchenne treatments that use another mechanism. During a recent conference, Sarepta said one of those drugs — Exondys 51 — led to a 5.4-year survival benefit. But the gene therapy could treat a wider array of patients. The company hopes to replace the missing dystrophin protein in Duchenne patients with a shortened form known as micro-dystrophin.
Sarepta partners with Roche on the gene therapy.
Final-phase results from Sarepta's and Pfizer's studies are expected in the fourth quarter of 2023 and by the end of 2023, respectively. But Schwartz says the Food and Drug Administration could give the gene therapy accelerated approval. This allows a drug to launch early, contingent upon further testing. Such a development could help further stoke SRPT stock.
He also expects Solid Bio to distantly trail the duo, and cut his price target on SLDB stock to 1 from 12.
Room For Multiple Players
Schwartz says there is room in the market for multiple gene therapies and treatments that use other mechanisms, like Sarepta's RNA-directed drugs.
"Our model forecasts that the Duchenne muscular dystrophy gene therapy market will peak in 2029 with about $5 billion in total sales between the three programs, and we note we model our peak penetration estimates for each relatively conservatively," he said.
Sarepta's gene therapy could capture $2.1 billion of that, peaking in 2028, he said.
Analysts following SRPT stock expect sales to skyrocket over the next several years. From about $702 million in 2021, they predict sales will grow to north of $3.5 billion in 2027, according to FactSet.
At the same time, the company is expected to turn around losses — projected for $6.68 and $4.71 per share in 2022 and 2023, respectively — to a per-share gain of $2.95 in 2024.
Highly Rated Biotech Stock
SRPT stock has a strong Composite Rating of 95 out of a best-possible 99, according to IBD Digital, putting it in the top 5% of all stocks in terms of fundamental and technical measures. Shares also have a nearly perfect Relative Strength Rating of 98. This means SRPT stock ranks in the leading 2% of all stocks when it comes to 12-month performance.
The stock's EPS Rating, however, remains a middle-of-the-road 51 due to years of losses. Those could turn around if Sarepta gains approval for its gene therapy.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
