Sarepta (SRPT) Q1 Loss Narrows, Exondys 51 Sales Pick Up

Sarepta Therapeutics, Inc. (NASDAQ:SRPT) reported narrower-than-expected loss in the first quarter of 2017. Meanwhile, the biotech company increased its 2017 sales outlook for Exondys 51 as patient and physician interest for the drug increased in the first quarter, coupled with progress in the reimbursement programs.

Sarepta posted a loss of 70 cents per share in the first quarter of 2017, narrower than the year-ago loss of $1.31 as well as the Zacks Consensus Estimate of a loss of 85 cents.

Loss per share excludes restructuring costs and gain from asset sale but includes the impact of share-based compensation expenses.

So far this year, Sarepta’s shares are up 26.6%. This compares favorably with 4.8% increase registered by the Zacks classified Biomed/Genetics industry during this period.

Quarterly Details

Sarepta gained accelerated approval for Exondys 51 in the U.S. in Sep 2016 for the treatment of patients suffering from Duchenne muscular dystrophy (DMD) amenable to exon 51 skipping. Exondys 51 is the company’s first product to receive marketing approval. In the U.S., Sarepta commenced shipments of Exondys 51 at the end of the third quarter of 2016. The drug is under review in EU.

In the first quarter, Sarepta recorded revenues of $16.3 million, up 201% sequentially, primarily due to sales of Exondys 51. Revenues beat the Zacks Consensus Estimate. In the prior-year quarter, Sarepta recognized no revenues.

Adjusted research and development expenses were $27.2 million for the first quarter, down 24.2% year over year, due to lower manufacturing expenses owing to the capitalization of inventory following the approval of Exondys 51 by the FDA. Adjusted selling, general & administrative (SG&A) expenses were $22.2 million, up 33.7% due to increased legal fees and commercial initiatives, compensation and other personnel expenses.

Both R&D and SG&A expenses exclude the impact of restructuring costs and share-based compensation expenses.

Sarepta earned proceeds of $125 million from the sale of its rare pediatric disease priority review voucher (PRV) – gained at the time of Exondys 51 approval - to Gilead Sciences Inc. (NASDAQ:GILD) . The sale increased funds, which should support its DMD pipeline development.

Outlook

Based on sales trends witnessed in the first quarter, Sarepta said it expects Exondys 51 to generate $95 million in 2017, exceeding its prior guidance of $80 million. The Zacks Consensus Estimate for 2017 is pegged at $95.04 million.

Meanwhile Sarepta is looking to build its own DMD pipeline beyond Exondys 51 by developing other exon-skipping treatments. Sarepta has about eight exon-skipping candidates in its pipeline that could treat 75%–80% of the DMD population.

Zacks Rank & Stocks to Consider

Sarepta Therapeutics carries a Zacks Rank #4 (Sell).

A couple of better-ranked stocks in the health care sector include Heska Corporation (NASDAQ:HSKA) and Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) . While Heska sports a Zacks Rank#1 (Strong Buy), Regeneron carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Heska’s earnings estimates increased from $1.53 to $1.65 for 2017 and from $1.80 to $2.01 for 2018 over the last 60 days. The company posted positive earnings surprises in all of the four trailing quarters with an average beat of 291.54%. The company’s shares are up 47.2% so far this year.

Regeneron’s earnings estimates remained almost stable for 2017 and 2018, respectively, over the past 30 days. The company recorded positive earnings surprises in three of the last four quarters, the average being 8.08%.

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