Sarepta stock downgraded to Sell by Deutsche Bank on safety concerns

Investing.com - Deutsche Bank (ETR:DBKGn) downgraded Sarepta Therapeutics (NASDAQ:SRPT) from Hold to Sell on Monday, slashing its price target to $9.00 from $25.00 following a series of negative developments for the biotech company. According to InvestingPro data, the company’s stock has already lost over 88% year-to-date, with its market capitalization now standing at $1.38 billion.

The downgrade comes after Sarepta shares plunged 37% on Friday amid reports that the FDA requested the company voluntarily halt shipments of its gene therapy Elevidys, according to Deutsche Bank. The stock’s RSI indicates oversold conditions, as revealed by InvestingPro, which offers 13 additional key insights about the company’s current situation.

The company disclosed a patient death due to liver failure in a limb-girdle study, marking the third death among patients receiving therapies using Sarepta’s AAV gene therapy vector.

Deutsche Bank noted that while the latest death occurred in a Phase 1 trial for a different gene therapy asset and not Elevidys itself, both treatments use the same AAVrh74 vector, making this distinction "purely semantics" given the safety concerns.

The bank expressed concern that even if Elevidys remains on the market with a black box warning, the series of events and what it described as a "lack of transparency" could seriously damage patient demand and take years to rebuild trust within the Duchenne muscular dystrophy community.

In other recent news, Sarepta Therapeutics is facing significant developments that are crucial for investors to note. The company reported preliminary second-quarter sales of $282 million for its Duchenne muscular dystrophy treatment, Elevidys, marking a 25% decline from the previous quarter. In response to safety concerns, the FDA has added a black box warning to Elevidys following patient deaths due to acute liver failure. Additionally, Sarepta announced a major restructuring plan, including a workforce reduction of approximately 36%, aimed at generating $400 million in annual cost savings by 2026.

Baird has downgraded Sarepta from Outperform to Neutral, citing transparency issues and existential uncertainty surrounding the company. BMO Capital reduced its price target to $50, maintaining a Market Perform rating, while BofA Securities lowered its target to $20, noting concerns about acute liver failure risks. Morgan Stanley (NYSE:MS) reiterated an Equalweight rating with a $40 price target, highlighting the continued challenges faced by Elevidys. Sarepta plans to submit an enhanced immunosuppressive regimen and is prioritizing its ARWR-partnered siRNA programs to address these challenges.

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