Sarepta Therapeutics (SRPT) unveiled promising results Tuesday for a gene therapy that targets a form of muscular dystrophy affecting children — and SRPT stock popped.
The study was a key test of drug material created using Sarepta’s commercial process, RBC Capital Markets analyst Brian Abrahams said in a report to clients. It could also help dispel some concerns after an earlier test cast doubt on the gene therapy’s benefit in older children.
The study helps “substantially reduce any lingering manufacturing overhangs on the program and represents a key de-risking step towards future approvability of what we believe will be a multibillion dollar product,” Abrahams said.
In morning trading on today’s stock market, SRPT stock jumped 12% near 84.20.
SRPT Stock Pops On Gene Therapy Test
Sarepta tested its one-time gene therapy in 11 children with Duchenne muscular dystrophy, a muscle-wasting disease. These children don’t produce enough of a protein needed for muscle function and strength. Sarepta’s gene therapy inserts a shortened version of the gene that codes for that protein, dystrophin.
Following treatment, the children showed an average dystrophin level of 55.4% of normal. There were also no new safety issues. The study of commercial-scale drug material is an important step for Sarepta to begin Phase 3 testing, Mizuho Securities analyst Difei Yang said in a note to clients.
“We believe the company is ready to start the anticipated Phase 3 study sometime after a final (Food and Drug Administration) meeting expected in mid-2021,” she said. “We do not see this meeting as a major hurdle for the company given the totality of clinical data presented to date.”
Yang has a buy rating and 160 price target on SRPT stock.
Benefit Also In Older Children
The news is also a boon for SRPT stock. In January, shares tanked more than 51% in a single day. Sarepta said the gene therapy produced large amounts of dystrophin in a midstage study. But that didn’t lead to a functional benefit.
Sarepta noted a lack of response in older children and said there were healthier patients in the placebo group. But younger patients did show a statistically significant improvement. The results posted Tuesday affirm Sarepta’s argument, RBC’s Abrahams said.
He kept his outperform rating on SRPT stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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