Sarepta Therapeutics (Nasdaq: SRPT) announced an at-the-market equity offering sales agreement with Citadel Securities on Tuesday. Under the terms of the agreement, the company can offer and sell up to $40 million of its common stock.

With Sarepta selling (or at least clearing the way to sell), is now a good time for investors to buy? Let's take a look.

Buy?
 The single most compelling reason to buy Sarepta is the promise of its eteplirsen drug in treating Duchenne muscular dystrophy, or DMD. There are currently no disease-modifying therapies available for the condition.

Eteplirsen shows great potential for treating DMD. Sarepta announced positive results in April from its phase 2b clinical trial. The study found that the drug produced consistent levels of dystrophin, the protein needed for muscular function that is lacking in patients with DMD.

In July, the company announced even better news. Treatment with eteplirsen over a 36-week period achieved significant clinical benefits for patients. Dr. Jerry Mendell, director of the centers for gene therapy and muscular dystrophy at Nationwide Children's Hospital and principle investigator of the phase 2b study, stated that eteplirsen was "the most promising advance to treat the underlying cause of muscular dystrophy I've seen in my more than 30 years in the field."

How big is the potential DMD market? The disease affects an estimated 8,000 boys and young men in the U.S., with 400 to 600 more new diagnoses each year.

Drugs for other rare diseases generate revenue exceeding hundreds of thousands of dollars per patient annually. Vertex Pharmaceuticals (Nasdaq: VRTX) charges nearly $300,000 per patient per year for its Kalydeco drug, used in the treatment of a rare form of cystic fibrosis.

Cerezyme, a drug used to treat type 1 Gaucher disease, falls in the same ballpark. Genzyme, a business unit of Sanofi (NYSE: SNY), has charged more than $300,000 per patient per year for the drug. That price looks practically cheap compared with the $400,000 price tag for Soliris, the blood disease drug sold by Alexion Pharmaceuticals (Nasdaq: ALXN).

Sarepta might not be able to charge at the levels of these other drugs, but potential sales for eteplirsen could still be large if things go well. One analyst estimates the market could exceed $600 million annually in the U.S. alone.

Bye?
 We can certainly make a case for passing on Sarepta as an investment, though. For one thing, the stock has soared nearly 300% since July. Maybe, just maybe, it's time for a breather.

The company (formerly known as AVI BioPharma) has been in business since 1980. During its 32-year history, Sarepta amassed losses topping $319 million yet never generated any material revenue from product sales. That's a long dry spell.

Sarepta obtains nearly all of its revenue from contract work for the U.S. government. The bad news on that front is that the company completed all of its contracts in June except for one agreement to develop therapeutics against Ebola and Marburg viruses. In August, the government sent a stop-work order on the Ebola portion of this contract.

The loss of these contracts, with their accompanying revenue, explains why Sarepta is looking to get some more cash via sale of its stock.

The risk also exists that Sarepta could stumble in a clinical trial or that another company gains headway. GlaxoSmithKline (NYSE: GSK) is one potential rival. It partners with Prosensa in DMD drug development.

Bide?
 Cautious investors might want to simply bide their time for now. The company expects to release additional results at the 48-week mark from its open label extension study in October. It also plans to initiate enrollment of a phase 3 trial in late 2013.

Waiting to find out the October results and give the stock a little time to consolidate gains could be a prudent approach.

Back to buy
 My take, though, is that buying a modest position in Sarepta now makes sense. This position could then be increased if the company announces good news in October and with its phase 3 trial.

Sarepta appears to be ahead of every other player in the largely untapped muscular dystrophy field. The huge run-up in the stock over the past few months could just be the beginning.

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