Sarepta Therapeutics appears to have right-sized itself after laying off over a third of its staff, announcing a significant pipeline shift and adding a black box warning to its Duchenne muscular dystrophy gene therapy Elevidys.
Analysts were cautiously optimistic after Sarepta Therapeutics announced a business overhaul late Wednesday that included a pipeline shift to its siRNA platform assets and the jettisoning of some 500 employees. The biotech also tagged its embattled gene therapy for Duchenne muscular dystrophy, Elevidys, with a black box warning for acute liver injury and acute liver failure, after the death of two teenage patients this spring.
“With the stock up about 30% after the close, we believe investors have increased confidence that the company can pay off its long-term debts and we view it as highly unlikely that Elevidys will be pulled from the market,” William Blair said in a note to analysts Thursday morning.
Sarepta’s stock was trading at $21.65, up nearly 18%, as of publication Thursday.
BMO Capital Markets was similarly positive on the Elevidys front, writing in a Wednesday evening note that the “ambulatory approval [is] out of the woods.”
“Elevidys ambulatory label will receive a black box warning, suggesting its approval status is derisked,” BMO said, while adding that the focal pivot to the company’s siRNA assets “can give a fresh/[positive] spin to the story.”
“The only risk we see moving forward is the death of a third Elevidys patient,” BMO said. This ominous warning aside, the analysts pointed to second-half readouts in myotonic dystrophy type 1 (DM1) and facioscapulohumeral muscular dystrophy type 1 (FSHD)—both for siRNA assets—as being an “upside opportunity” that could attract new or more investors.
Sarepta also reported $513 million in sales for its entire DMD portfolio in the second quarter when it announced the restructuring. In an investor note Wednesday, Jefferies said that if the company “can prove the rate of fatal liver [toxicity] can stop creeping higher (and remains confined in non-ambulatory DMD), the Street could have confidence in Elevidys becoming a sustainable $500M+ product - at least in ambulatory DMD.”
Sarepta’s announcement has gained a lot of traction on social media as well, with an X post by Adam Feuerstein pointing to the promotions of Ian Estepan to president and chief operating officer and Louise Rodino-Klapac to president of research and development and technical operations, both with salary bumps to $800,000, and another Reddit post also highlighting the salaries of the biotech’s executives.
