What the bad jobs report means for markets
BMO Capital downgraded Sarepta Therapeutics (NASDAQ:SRPT) from Outperform to Market Perform on Monday, slashing its price target to $70.00 from $120.00 following reports of a second fatal case of acute liver failure in non-ambulatory patients treated with Elevidys. The stock, currently trading at $36.18, has fallen over 70% in the past six months, though InvestingPro analysis suggests it may be undervalued at these levels.
The second death has prompted Sarepta management to explore potential changes to the immunosuppressive regimen used alongside the treatment, according to BMO Capital’s research note.
BMO Capital indicated that while such adverse events are consistent with known AAV gene therapy risks (citing similar deaths with Zolgensma), the firm believes Elevidys maintains a favorable benefit-risk profile specifically for ambulatory patients.
The research firm expects the news to create significant pressure on Sarepta’s stock, similar to the 27% drop observed after the first reported death, due to multiple uncertainties now facing the company. For deeper insights into Sarepta’s financial health and detailed analysis, access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks.
These uncertainties include potential withdrawal of Elevidys approval for non-ambulatory patients, missed 2025 guidance targets, risk of additional patient deaths, and possible implications for Sarepta’s limb-girdle muscular dystrophy (LGMD) program. Analyst targets currently range from $40 to $137, reflecting the wide range of potential outcomes for the company.
In other recent news, Sarepta Therapeutics announced promising results from its ENDEAVOR study for the Duchenne muscular dystrophy treatment, ELEVIDYS. The study showed high levels of protein expression and a consistent safety profile in young participants. Despite these positive developments, Sarepta faced challenges as Piper Sandler downgraded the company’s stock from Overweight to Neutral following a second patient death related to ELEVIDYS, leading to a halt in shipments for non-ambulatory patients. Piper Sandler also reduced its sales forecast for ELEVIDYS, citing safety concerns. In contrast, Scotiabank (TSX:BNS) upgraded Sarepta’s stock to Sector Outperform, noting a favorable risk-reward scenario and potential catalysts for growth. Additionally, Sarepta received a platform technology designation from the FDA for its gene therapy vector, rAAVrh74, used in limb-girdle muscular dystrophy treatments. Goldman Sachs maintained its Buy rating for Sarepta, highlighting the importance of commercial execution and potential risks related to regulatory approvals. These developments reflect the dynamic landscape surrounding Sarepta Therapeutics as it navigates both opportunities and challenges in its gene therapy programs.
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