JPM17: Sarepta's New Numbers Impress Investors, Stock Gained $300 Million Overnight

Published: Jan 11, 2017

JPM17: Sarepta's New Numbers Impress Investors, Stock Gained $300 Million Overnight January 11, 2017
By Mark Terry, Breaking News Staff

Sarepta Therapeutics stock jumped after the company’s chief executive officer, Ed Kaye, provided updates on Exondys 51 sales at the JP Morgan Healthcare Conference yesterday. The company’s drug for Duchenne muscular dystrophy (DMD) was approved in September 2016, and in its first quarter of sales, brought in $5.4 million.

“We want to make sure that everybody knows the physicians and their patients are interested in Exondys,” Kaye said in an interview Monday night with CNBC’s Meg Tirrell at the JP Morgan conference. “This [the $5.4 million in sales] is the proxy for that. It’s really not a bad number for a first quarter.”

The drug, which underwent a dramatic and controversial regulatory approval process in the U.S., is reportedly priced at $300,000 per year, but because that figure is based on a patient’s weight (about 25 kg), analysts believe the actual price is closer to $450,000 or $500,000. With just some extremely quick, back-of-an-envelope math basing the price on $400,000, the $5.4 million figure suggests about 13 or 14 patients were treated.

The news that the company was generating revenue for the drug was an apparent relief to investors, because some insurers were reluctant to cover the drug. Insurance company Anthem, which has 38 million health care customers, chose not to pay for the drug, arguing that it is “investigational and not medically necessary.”

Humana agreed to cover the drug, but only for six months, at which point it will only cover the next six months if the patient continues to be ambulatory.

In the interview, Kaye indicated that 250 boys with DMD have received genetic testing and are working through the insurance process to receive Exondys 51. The average age of those patients is 13 years. Adam Feuerstein, writing for The Street, says, “If all 250 DMD boys secure insurance coverage at an annual Exondys 51 price in the range of $300,000 to $500,000 per year, sales would be $75 million to $125 million. That’s a very rough forecast for Exondys 51 sales, particularly absent the actual rate of reimbursement approvals or denials, but it compares reasonably well to the current analyst consensus estimate of $138 million for 2017, according to Factset.”

Of those boys, 60 percent have commercial insurance coverage. The remaining 40 percent are covered by Medicaid.

Kaye said, “Our expectation is for a steady ramp and we’ll see quarter over quarter increases. We’re not seeing a decline in the interest for the drug.”

The drug is not yet approved in Europe, and is expected to take another 12 to 15 months.

According to Kaye’s presentation, [see graphic on The Motley Fool article] about 8 percent of patients’ coverage is being denied, about 13 percent are favorable and/or covering, and 79 percent, his graphic indicated, “of Covered Lives are pending policy decisions, reviewing case-by-case or approved with restrictions.”

Sarepta also announced yesterday that it had entered into a research and option deal with Nationwide Children’s Hospital on their microdystrophin gene therapy program, as well as a Galgt2 gene therapy program. “We are taking a multi-front approach in the battle against Duchenne muscular dystrophy,” Kaye said in a statement. “We find this therapeutic approach to be of particular interest as it has the potential to treat all patients suffering from the disease regardless their mutation.”

Sarepta is currently trading for $36.91.

Back to news