Sarepta Therapeutics (NASDAQ:SRPT) plunged 45% in early trading Tuesday after the EMBARK study, a pivotal study of gene therapy ELEVIDYS for Duchenne muscular dystrophy, did not reach statistical significance versus the placebo. The update from the company prompted at least two downgrades on Wall Street.
The study showed a 2.6-point increase on the North Star Ambulatory Assessment, a measure of motor function, versus a 1.9-point improvement for the placebo group. The 0.65 points difference between treated and placebo groups did not reach statistical significance (n=125; p=0.24).
Meanwhile, the study showed statistically significant results on all key pre-specified secondary endpoints, including time to rise (p=0.0025), and 10-meter walk test (p=0.0048). There were no new safety signals in the EMBARK study.
While missing on statistical significance, management still believes that ELEVIDYS can yet be fully approved for a broader label of DMD boys.
Following the results, analysts from Oppenheimer downgraded the stock from Outperform to Perform and removed its price target. The analysts said they are stepping to the sidelines until they get greater clarity on: "(1) FDA discussions/feedback, (2) timelines for potential full approval, (3) a full safety dataset to be presented at a medical conference next year, and (4) more insight into potential label expansion in all ages regardless of ambulation."
Analysts from Cantor Fitzgerald lowered the rating to Neural from Overweight and slashed its price target to $40 from $166. The results, according to the analysts, make it difficult for a broad age label and even if approved, these data could mitigate full usage considering the size of the effect.
"There are a lot of uncertainties ahead, and we're moving to the sidelines as a result of what we expect to be volatile times," the analysts commented.