Sarepta Therapeutics Reports Wider Y/Y Loss, Revenues Miss - Analyst Blog

The share price of Sarepta Therapeutics ( SRPT ) fell 8.3% after the company announced its second-quarter results on Aug 7. Nevertheless, share prices have recovered approximately 13.8% thereafter.

Sarepta reported second quarter loss of 85 cents per share compared to a loss of 60 cents per share in the year-ago quarter. Excluding loss on change in warrant valuation, loss per share was 75 cents compared to a loss of 53 cents per share in the year-ago quarter. The Zacks Consensus Estimate for the quarter was a loss of 78 cents per share.

Sarepta Therapeutics, Inc - Earnings Surprise | FindTheBest

Second quarter revenues decreased 12.5% from the year-ago quarter to $2.6 million, short of the Zacks Consensus Estimate of $4.0 million. The decrease was primarily due to decreases in revenue from the company's government contracts.

Other Details

Research and development expenses increased 58.9% year over year to $20.6 million. General and administrative expenses increased 73.1% year over year to $12.2 million. Sarepta continues to expand clinical and regulatory activities in support of the development of its programs in Duchenne muscular dystrophy (DMD). The increase in operating expenses was primarily due to expansion of manufacturing, pre-commercial and medical affairs activities as Sarepta expects a potential approval of its lead DMD candidate eteplirsen next year.

2014 Guidance

Sarepta now expects loss from operations to come between $135 and $145 million, as compared to its previous guidance of $110 to $120 million.

Pipeline Update

We note that Sarepta received new guidance for eteplirsen in Apr 2014 on the basis of which it intends to file for FDA approval by year end. Sarepta continues to expect to file a new drug application (NDA) for eteplirsen by year end based on the guidance provided by the agency. Sarepta intends to conduct several studies on eteplirsen based on the FDA's guidance.

Our Take

Second quarter results were disappointing. Sarepta is entirely dependent on eteplirsen for growth. Sarepta is also planning to file eteplirsen for a conditional approval in Europe based on the existing eteplirsen data set.The approval of eteplirsen would be a huge boost for the company. Eteplirsen, if developed successfully, would be able to capture a major share of this orphan disease market.

The recent outbreak of Ebola virus has also put focus on Sarepta's experimental candidate, AVI-7257 for the treatment of the same. We expect investor focus on updates from the same.

Sarepta Therapeutics currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Allergan ( AGN ), Actelion Ltd. ( ALIOF ) and Gilead Sciences ( GILD ). All three stocks carry a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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