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Why Sarepta's Q1 Results Won't Spark a Rebound for the Beaten-Down Biotech

By Keith Speights - May 6, 2021 at 6:10AM

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The company's revenue soared in Q1, but its bottom line still looked ugly.

Sarepta Therapeutics (SRPT -0.15%) has experienced a disastrous year so far, with its shares losing more than half their value. But Wall Street analysts still think that the biotech can turn things around and have an average price target that reflects an 85% premium to the current share price.

That turnaround might have to wait, though. Sarepta announced its first-quarter results after the market closed on Wednesday. The biotech stock slipped more than 3% in after-hours trading at one point. Here are the highlights of Sarepta's Q1 update.

Scientist holding a vial with cartoon DNA molecules surrounding.

Image source: Getty Images.

By the numbers

Sarepta reported revenue in the first quarter of $146.9 million, a 29% year-over-year increase. This result topped the consensus Wall Street revenue estimate of $143.3 million.

The biotech announced a Q1 net loss of $167.3 million, or $2.10 per share, based on generally accepted accounting principles (GAAP). In the prior-year period, it posted a GAAP net loss of $17.5 million, or $0.23 per share.

Sarepta's non-GAAP adjusted net loss in the first quarter totaled $122.5 million, or $1.54 per share. This was worse than the adjusted net loss of $79.8 million, or $1.04 per share, recorded in the prior-year period. It was still better than the average analyst estimate of a net loss of $1.77 per share, though.

Behind the numbers

Most of Sarepta's solid revenue increase in the first quarter came from higher sales of its Duchenne muscular dystrophy (DMD) drugs. However, the company also benefited from increased collaboration revenue of $8.8 million from Roche.

There were several factors behind Sarepta's significant bottom-line deterioration in Q1. The company's year-over-year GAAP comparisons were skewed by the sale of a priority-review voucher in the prior-year period that netted $108.1 million. 

Sarepta also spent a lot more in the first quarter of 2021 than it did in the same period of 2020. Its cost of sales soared 43% to $22.3 million, with part of this increase due to the write-offs of batches of DMD drug Exondys 51 because of quality issues. Research and development costs also jumped 43% to $195.1 million, in large part because of increased manufacturing costs with the company's gene therapy programs.

There was one area where Sarepta saw improvement in Q1. Selling, general, and administrative (SG&A) expenses fell 14% year over year to $71.1 million. The primary reason for this decline was a reduction in professional services as the company relied less on third-party selling.

Sarepta also recognized a $10 million settlement charge related to its contingent settlement payments to BioMarin. These payments were connected with the approval of Amondys 45 in the first quarter.

Looking ahead

The company is set to benefit from another priority review voucher (PRV) sale in the second quarter. In February, Sarepta agreed to sell its PRV for Amondys 45, and the transaction closed on April 13.

After the disappointing results for experimental DMD gene therapy SRP-9001 earlier this year, though, Sarepta needs some pipeline successes to make a major comeback. The company recently reported positive results from one cohort in a study comparing SRP-5051 with Exondys 51. Sarepta also said that it's still on track to report results in Q2 from another study of SRP-9001.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends BioMarin Pharmaceutical. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Sarepta Therapeutics, Inc. Stock Quote
Sarepta Therapeutics, Inc.
SRPT
$108.84 (-0.15%) $0.16
Roche Holding AG Stock Quote
Roche Holding AG
RHHBY
$42.08 (0.19%) $0.08
BioMarin Pharmaceutical Inc. Stock Quote
BioMarin Pharmaceutical Inc.
BMRN
$95.14 (0.07%) $0.07

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