Sarepta stock downgraded to sell by H.C. Wainwright after second death

H.C. Wainwright downgraded Sarepta Therapeutics (NASDAQ:SRPT) from neutral to sell and slashed its price target to $10.00 from $40.00 following a second patient death related to the company’s Duchenne muscular dystrophy treatment. The stock, already down over 70% year-to-date, is trading near its 52-week low of $34.10.

Monday, Sarepta announced another death due to acute liver failure in a non-ambulatory DMD patient treated with ELEVIDYS. The company is now suspending shipments of ELEVIDYS to non-ambulatory DMD patients until an immunosuppressive regimen can be agreed upon with regulators and implemented. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 4.02, though it’s currently burning through cash rapidly.

The research firm noted that while both deaths occurred in non-ambulatory patients, the risk profile is now heightened for all DMD patients, including those who are ambulatory. H.C. Wainwright expressed concern that the clinical data supporting ELEVIDYS efficacy across DMD subtypes was already underwhelming.

The firm anticipates an increasing number of patients and physicians will opt against treatment unless robust long-term safety data emerges, particularly demonstrating a near-zero risk of treatment-related mortality.

H.C. Wainwright has significantly reduced its ELEVIDYS forecasts and raised its terminal rate of decline to -1% from -2% previously, resulting in the substantial price target reduction and downgrade to sell. InvestingPro analysis suggests the stock is currently undervalued, with 11 analysts recently revising their earnings expectations downward. Get access to detailed valuation metrics and 12 additional ProTips with an InvestingPro subscription.

In other recent news, Sarepta Therapeutics has experienced significant developments affecting its operations and stock evaluations. The company reported a second fatal case of acute liver failure in non-ambulatory patients treated with its Duchenne muscular dystrophy gene therapy, Elevidys, prompting Sarepta to suspend commercial shipments for these patients. In response, BMO Capital downgraded Sarepta from Outperform to Market Perform, while Piper Sandler downgraded it from Overweight to Neutral, both citing safety concerns. Piper Sandler also lowered its price target to $36, highlighting the anticipated impact on Elevidys sales.

Conversely, Scotiabank (TSX:BNS) upgraded Sarepta to Sector Outperform, seeing the recent negative news as already reflected in the stock price, and pointed to upcoming catalysts that could drive the stock higher. Sarepta’s gene therapy vector received platform technology designation from the FDA, potentially expediting future drug development processes. Goldman Sachs maintained its Buy rating with a $100 price target, emphasizing the importance of Sarepta’s commercial execution and potential diversification of its pipeline. Despite the challenges, Sarepta is projecting $13 billion in free cash flow by 2030 and is exploring new opportunities to enhance its growth.

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