Sarepta's Meaningless Q1 Results

The words of the great big-band leader Duke Ellington came to mind after hearing the first quarter results from Sarepta Therapeutics (NASDAQ: SRPT  ) : "It don't mean a thing."  Here are the highlights from those results -- and why they're practically meaningless.

Sad trombone?
If you didn't know any better, you might think that the "sad trombone" riff needs to be played while reviewing Sarepta's financial results from the first quarter. The biotech reported a non-GAAP net loss more than double that of the same quarter last year. This time around, Sarepta's non-GAAP loss totaled $13.0 million, or $0.41 per share. During the same period last year, that loss was only $6.0 million, or $0.27 per share. 

The situation didn't look any better on a GAAP basis. Sarepta announced a GAAP loss in the first quarter of $15.4 million compared to a loss of $6.9 million in the first quarter of 2012.

Sarepta didn't find a happier tune on the top line, either. Revenue for the quarter came in at $4.5 million. That figure reflects a drop of almost 60% from 2012 first quarter revenue of $11.2 million.

There were positive notes in the results, though. Sarepta's net loss, while larger year-over-year, still handily beat the average analysts' estimate of a $0.62 per share loss. Also, the company reported a cash stockpile (including cash equivalents and short-term investments) of $175.2 million as of the end of first quarter. That total is down only $12.5 million from the balance announced at the end of 2012.

Strike up the band
Shares were up more than 8% in early trading on Thursday. It wasn't because of the financial results, though.

Investors are excited about the prospects of accelerated approval for eteplirsen, which targets treatment of rare Duchenne muscular dystrophy, or DMD. Sarepta CEO Chris Garabedian said that the company is "encouraged by [its] initial interactions with the U.S. Food and Drug Administration regarding a potential accelerated approval regulatory path for eteplirsen." 

Sarepta executives stated that the company plans to submit all documents needed for the FDA to consider eteplirsen for accelerated approval by the end of May. It will also move forward with submission of its Chemical, Manufacturing, and Controls, or CMC, package to the agency.

The company is unsure how long it will take for the FDA to respond. And no one knows what that response will be.

The FDA could take a cautious stance and opt against an accelerated pathway for eteplirsen. Another experimental DMD drug -- drisapersen from GlaxoSmithKline (NYSE: GSK  )  -- reportedly resulted in patients experiencing kidney toxicity. Last quarter, Garabedian alluded to possible FDA concerns about this safety issue, but he shrugged off any worries about eteplirsen producing similar effects.

However, the FDA could just as easily give the green light for an accelerated approval pathway for eteplirsen. While the number of patients involved in previous studies was small, the results were very positive and the need for some treatment for DMD patients is great. 

Sarepta's first-quarter results really are immaterial in the bigger scheme. What really matters is eteplirsen and how quickly it can get to market. Good news on that front would get Sarepta in full swing. Nothing else means a thing for now.

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