What happened

A month full of news related to the progress it's making toward helping patients with Duchenne muscular dystrophy (DMD) sparked a 12.9% rally in Sarepta Therapeutics (SRPT -2.83%) shares last month, according to S&P Global Market Intelligence.

So what

DMD is a life-shortening, muscle-wasting disease caused by the limited or non-existent production of dystrophin, a protein important to muscle building. DMD is diagnosed in thousands of patients, and there are limited treatment options available.

Sarepta Therapeutics aims to change that.

A person arranges cut up pieces of construction paper into an upwardly pointing arrow.


The company's already won FDA approval of Exondys 51, a therapy that boosts dystrophin production in about 13% of patients, and it's working on additional drugs that could help even more people.

Recently, the company has announced a number of market-moving news items.

  • It announced that it's secured an exclusive license to Duke University's efforts to use the CRISPR/Cas9 gene-editing approach to restore dystrophin production in DMD patients.
  • It reported that the FDA OK'd its new GALGT2 gene therapy clinical-trial program and micro-dystrophin drug clinical trial program.
  • Its $475 million of convertible senior unsecured notes offering went off without a hitch, raising roughly $421 million, net of fees.
  • Sarepta's CEO, Doug Ingram bought about $2 million of common stock at $52.44 per share.
  • Anthem, the nation's second-biggest insurer, eased up access to Exondys 51 by reducing the hurdles necessary to qualify for reimbursement coverage.

Now what

Exondys 51 is already generating nine-figure annualized sales even though it targets only a small percentage of the DMD patient population. With fewer hurdles to qualifying for drug coverage, it's likely that Exondys 51's sales will increase from their third-quarter pace of $46 million.

Because Exondys 51 won FDA approval after only limited clinical trials, the road may be paved for the company to secure similarly quick approvals for other therapies in its pipeline. The micro-dystrophin program could conceivably help between 60% to 70% of DMD patients, and the GALGT2 gene therapy and CRISPR/Cas9 approach could address the majority of DMD patients. If those trials succeed, Sarepta Therapeutics has a good shot at closing in on achieving sales north of $1 billion per year.

The company's successful offering is also good news because it gives Sarepta Therapeutics the financial firepower necessary to execute on its clinical-trial programs and commercialize its drugs. The company's sitting on more than $1 billion in cash and equivalents following the offering.

Overall, we won't know for a while if Sarepta's newest drug candidates are winners, but we already know that Exondys 51 is on pace to be a top seller, and the company also plans to discuss the possibility of securing approval for its exon-51 skipping drug in 2018. Given Sarepta's healthy financial position and a full pipeline of opportunities, it's understandable why investors are excited.