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Why Sarepta Therapeutics Tumbled Today

By Eric Volkman – Oct 13, 2021 at 4:47PM

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Investors weren't wowed by a company update, or by news of a fresh stock issue.

What happened

On the back of two pieces of news released after market hours on Tuesday, Sarepta Therapeutics (SRPT 0.14%) stock fell by over 12% today. Investors were displeased with a company update about its fundamentals, and a new share issue.

So what

In separate press releases, Sarepta gave investors a glimpse of its upcoming third-quarter earnings release, and provided details of that share issue.

A medical professional using a microscope.

Image source: Getty Images.

The preliminary quarterly results were quite limited; Sarepta merely provided a rough figure for its net product revenue. The company anticipates this line item will be around $166.9 million; according to data compiled by Yahoo!, on average analysts covering the stock were modeling $167.7 million on the top line.

Meanwhile, at the end of September Sarepta had around $1.6 billion in cash, equivalents, and investments. That's down, although not alarmingly so, from the $1.9 billion as of the end of December 2020.

No other preliminary figures were provided. 

As for the share issue, Sarepta divulged that it is floating $500 million worth of its common stock in an underwritten public offering. The company said it also aims to grant the issue's underwriters a 30-day option to collectively buy up to an additional $75 million worth of that stock. 

Now what

Sarepta will use the proceeds from this flotation "principally for the continuation of, and initiation of further, clinical trials, commercialization, manufacturing, business development activities, including the potential licensing or acquisition of complementary products, technologies and entities, and other general corporate purposes."

The company didn't specify the timing of the new share issue.

While the preliminary top-line number isn't far down from the average analyst estimate and the stock issue is not too dilutive, neither development is particularly encouraging. But Sarepta is a fairly resilient biotech, so those bullish on its prospects shouldn't be spooked by these latest news items.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Sarepta Therapeutics Stock Quote
Sarepta Therapeutics
SRPT
$122.98 (0.14%) $0.17

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