A lot will change in the next 10 years, but our need for innovative medicines is unlikely to be one of them. That's one thing that makes some biotech companies exciting long-term investment opportunities, at least highly innovative ones that look well-positioned to deliver solid clinical and regulatory progress over long periods.
Let's consider one company that might have what it takes: Sarepta Therapeutics (SRPT +1.70%). The biotech has performed well so far this year, and it could maintain that momentum for a while. Let's find out why.
A significant label expansion is on the way
Sarepta Therapeutics' strong performance on the stock market this year reflects the fact that investors expect it to earn a crucial approval from the U.S. Food and Drug Administration (FDA). But first, some background information.
Sarepta develops therapies for rare diseases. Its most important area of specialization is Duchenne muscular dystrophy (DMD), a rare, progressive disorder, typically diagnosed in young boys, that causes muscle weakness. All of its currently approved products target DMD, but none is more important than Elevidys, which earned the green light in June of last year.
NASDAQ: SRPT
Key Data Points
Elevidys is the first gene therapy approved by the FDA to treat DMD. It targets the underlying causes of the disease. However, last year's regulatory nod was under the accelerated approval pathway. To earn full approval, Sarepta Therapeutics had to conduct a confirmatory clinical trial. The company completed it late last year and promptly sent an application for full approval to the FDA.
Though the market was not too impressed with Sarepta's data readout for this confirmatory trial for Elevidys, the FDA seemed more receptive. The agency will not convene a group of independent experts to discuss the medicine's approval. That's a great sign for Sarepta. Elevidys is currently indicated for ambulatory DMD patients between the ages of four and five. With this approval, restrictions with regard to age and ambulatory status will be lifted.
The FDA should decide on the matter by late June.
Plenty more promising programs
Last year, Sarepta Therapeutics generated revenue of $1.2 billion, about 33% higher than the previous fiscal year. Elevidys meaningfully contributed to the company's performance despite being on the market for only about half of the year. Elevidys' revenue came in at $200.4 million. That number should be much stronger this year, especially if the FDA signs up on Elevidys' label expansion.
Beyond Sarepta's financial results, the company has shown strong innovative potential by developing effective therapies for a disease for which there aren't many. And it doesn't plan on stopping. The company is working on several more potential treatments for DMD. Experience counts for something in the biotech industry -- as it does in most others. A team of researchers that has been able to develop treatments for a disease, especially one as rare and as difficult to tackle as DMD, is more likely to do so again than a team that has never made a breakthrough.
But Sarepta is also looking to expand beyond DMD. The company has several programs that target Limb-Girdle muscular dystrophy, a group of muscle-related diseases. Sarepta recently started a phase 3 study for a potential therapy in this field.
The company's pipeline features over 40 programs across various therapeutic areas, from the neuromuscular field it is best known for to the central nervous system and cardiovascular diseases. Sarepta has also found partners -- a helpful thing for smaller biotechs. It developed Elevidys in collaboration with Roche.
It is true that Sarepta Therapeutics remains unprofitable. Last year, it incurred an adjusted net loss per share of $0.64, much better than the adjusted loss per share of $3.32 reported in 2022. However, with Elevidys' soaring revenue and multiple exciting pipeline candidates, the company should be able to maintain strong revenue growth for a while and eventually turn a profit.
I wouldn't worry too much about the red ink on the bottom line; Sarepta Therapeutics looks like a solid biotech stock to buy and hold onto for a while.
