What's fueling this rocket-like surge? Sarepta's shares rose in response to the far better-than-expected commercial launch of its Duchenne muscular dystrophy (DMD) therapy Exondys 51, as well as the advancement of its other DMD therapies in the clinic, such as golodirse, indicated for patients amenable to skipping exon 53.
Exondys 51 reportedly generated $154.6 million in sales for the full-year of 2017, according to the company's recent pre-earnings release. That puts Sarepta's first commercial product in elite company in terms of the strength of its initial commercial launch, especially within the realm of orphan drugs. Even more impressively, though, the company expects Exondys 51 sales to build on this momentum to reach between $295 million to $305 million for the full year of 2018.
With one of the only FDA-approved DMD products on the market and a skyrocketing top-line, the obvious question to ask is: Is Sarepta now an acquisition target? The Republican tax bill, after all, should infuse a significant amount of cash into this space, perhaps driving an unprecedented amount of mergers and acquisitions this year.
Unfortunately, Sarepta doesn't come across as a particularly compelling buyout target just yet. Exondys 51's efficacy still needs to be confirmed in a larger study, and the biotech's valuation is among the richest within the orphan-drug subsector. There are also a multitude of other DMD treatments in the clinic that could eventually cut into Sarepta's market share down the road. As such, investors should probably temper their enthusiasm regarding Sarepta's takeover prospects, and instead focus on the company's progress in the clinic for now.