Sarepta (SRPT) Q3 Loss Widens Y/Y, Revenues Beat Estimates

Sarepta Therapeutics, Inc. SRPT incurred an adjusted loss of $1.14 per share in the third quarter of 2019, wider than the year-ago loss of 56 cents per share. The wider year-over-year loss can be primarily attributed to a significant rise in operating expenses.

Notably, the adjusted figure excludes one-time items, depreciation & amortization expenses, interest expenses, and income tax benefit. Including all these items, the company incurred a loss of $1.70 per share compared with a loss of $1.15 in the year-ago quarter. The Zacks Consensus Estimate was pegged at a loss of $1.34.

Meanwhile, Sarepta’s Exondys 51 — approved for treating Duchenne muscular dystrophy (“DMD”) — continued with its strong performance. The company derives revenues solely from the sale of Exondys 51. Sarepta recorded total revenues of $99 million, up 4.5% sequentially, which beat the Zacks Consensus Estimate of $97.5 million. In the prior-year quarter, Sarepta had earned revenues of $78.5 million.

Shares of Sarepta have declined 14.5% so far this year against the industry’s increase of 0.2%.


Operating Expenses

Adjusted research and development (R&D) expenses totaled $110.5 million in the third quarter, up 72.1% year over year. The increase was primarily due to the ramp-up of manufacturing activities for micro-dystrophin program, partially offset by lower cost due to winding down of activities on the Utrophin platform by Sarepta’s partner, Summit.

Adjusted selling, general & administrative (SG&A) expenses were $59.6 million, up 40.2% year over year. Higher costs related to the global commercial expansion of its products and increased personnel expenses increased SG&A expenses.

Sarepta’s cost of sales was also higher, reflecting higher product costs due to rising demand for Exondys 51. Royalty payments to BioMarin BMRN per the terms of the 2017 settlement and license agreements related to the latter’s exon-skipping technology used in DMD therapies also drove cost of sales.

Pipeline Update

In August, the FDA issued a complete response letter ("CRL") to the new drug application (“NDA”) seeking accelerated approval for its most advanced DMD candidate, golodirsen. The regulatory authority cited two concerns — the risk of infections related to intravenous infusion ports and renal toxicity seen in pre-clinical models. Sarepta is working with the FDA to address the issues raised in the CRL and find a path to get the candidate approved as early as possible.

Moreover, Sarepta stated on its third-quarter earnings call that it will submit a NDA for its second DMD candidate, casimersen, after getting clarity on golodirsen NDA.

Meanwhile, the company is conducting a phase II study — MOMENTUM — on its next-generation PPMO platform candidate, SRP-5051, in DMD patient amenable to exon 51 skipping, an indication similar to Exondys 51.

Sarepta is progressing well with the development of the micro-dystrophin gene therapy candidate, SRP-9001, in a phase II study in DMD patients. Dosing of 24 patients has been completed.

Sarepta Therapeutics, Inc. Price, Consensus and EPS Surprise


Sarepta Therapeutics, Inc. Price, Consensus and EPS Surprise

Sarepta Therapeutics, Inc. price-consensus-eps-surprise-chart | Sarepta Therapeutics, Inc. Quote


Zacks Rank & Stocks to Consider

Sarepta currently carries a Zacks Rank #4 (Sell).

A couple of better-ranked stocks in the biotech sector are Vertex Pharmaceuticals Inc. VRTX and Alkermes plc ALKS. Both stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vertex’s earnings per share estimates have moved up from $4.58 to $4.81 for 2019 and from $6.03 to $6.62 for 2020 in the past 30 days. The company delivered a positive earnings surprise in all the trailing four quarters, with the average being 17.59%. Share price of the company has increased 18.2% so far this year.

Estimates for Alkermes have moved up from earnings of 36 cents to 52 cents for 2019 and from a loss of 11 cents to earnings of 42 cents for 2020 in the past 30 days. The company pulled off a positive earnings surprise in all the last four quarters, with the average being 236.8%.

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