What happened

Check out the latest Sarepta Therapeutics earnings call transcript.

After competitor Wave Life Sciences (WVE -1.29%) said on Dec. 6 it planned to launch a phase 2/3 clinical trial to evaluate WVE-210201 in Duchenne muscular dystrophy (DMD) patients amenable to exon 51 skipping, Sarepta Therapeutics' (SRPT -8.21%) shares fell 15.7% in December, according to S&P Global Market Intelligence.

So what

For now, Sarepta Therapeutics' Exondys 51 is the only FDA-approved treatment to improve dystrophin production that may slow disease progression in DMD patients for whom skipping exon 51 is helpful. However, that may change in the future if competitors, including Wave Life Sciences, prove their own treatments are also effective and safe.

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A muscle-building protein, dystrophin is necessary for muscle development and repair. Unfortunately, DMD patients aren't able to produce enough dystrophin because of genetic mutations, resulting in a life-shortening loss of muscle function. Wave Life Sciences hopes its drug candidate, like Exondys 51, will delay muscle loss by skipping over a mutation at exon 51 that's preventing the formation of the dystrophin protein. 

Last month, Wave Life Sciences reported that safety and tolerability data from its phase 1 study warrant WVE-210201 advancing into phase 2/3 trials, which will begin in 2019. The company also said that it's adding a higher-dose cohort to its phase 1 study and that data from phase 1 that will contribute to an eventual FDA filing will be available in the second half of 2019.

If Wave Life Sciences' trial succeeds and regulators OK its therapy someday, it could dent Exondys 51's revenue, which totaled $78.5 million in Q3 2018, up 70.7% from the same quarter last year.

Now what

Competition shouldn't be discounted altogether, but investors might want to consider Sarepta Therapeutics' larger opportunity in expanding beyond Exondys 51 to treat more DMD patients. Exondys 51 only helps 13% of the DMD patient population, so Sarepta Therapeutics is investing heavily in programs that skip other exons in an effort to increase its addressable market. For instance, Sarepta Therapeutics filed for FDA approval of golodirsen last month. If approved, it can address an additional 8% of the DMD population.

As more programs advance, Sarepta Therapeutics hopes it will eventually market therapies addressing the needs of most patients. Because these are high-priced therapies that are necessary for patients and many more people could benefit from new drugs in the future, Sarepta Therapeutics could be a stock growth investors ought to consider buying after its tumble.