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Investing.com - Sarepta Therapeutics (NASDAQ:SRPT) stock jumped 33% in after-hours trading after the company announced a strategic review that will result in approximately $400 million in cost savings through workforce reductions and pipeline prioritization. The announcement comes as the $1.8 billion market cap biotech company faces significant challenges, with its stock down over 87% in the past year. According to InvestingPro analysis, the company is currently undervalued despite these headwinds.
The biotech firm reported preliminary second-quarter 2025 net product revenues of approximately $513 million, slightly above the consensus estimate of $509 million, according to Cantor Fitzgerald, which reiterated its Neutral rating and $20.00 price target on the stock. This continues the company’s strong revenue growth trajectory, with InvestingPro data showing a 59% year-over-year increase in revenue.
Sarepta also announced an update to the ELEVIDYS label, which will now include a black box warning, following safety concerns including two recent patient deaths, with the most recent occurring months after gene therapy administration.
The strategic review includes a workforce reduction of approximately 500 employees and prioritization of the company’s pipeline, including its siRNA platform, as Sarepta faces $1.15 billion in convertible notes due in 2027. While debt concerns exist, the company maintains a strong liquidity position with a current ratio of 4.02, indicating sufficient assets to cover short-term obligations. Get deeper insights into Sarepta’s financial health with InvestingPro, which offers 10 additional key ProTips for informed investment decisions.
Cantor Fitzgerald attributed the stock’s after-hours surge primarily to short covering and the removal of worst-case scenarios, such as ELEVIDYS being completely withdrawn from the market, though the firm expressed "deep concerns about the safety of the treatment" and expects ELEVIDYS sales to be "rocky given heightened safety concerns."
In other recent news, Sarepta Therapeutics announced preliminary second-quarter 2025 financial results, reporting total net product revenue of $513 million. This includes $282 million from its gene therapy Elevidys, although this represents a 25% decline from the previous quarter. The company revealed a strategic restructuring plan, aiming to cut 36% of its workforce and save approximately $400 million annually. Despite the decline in Elevidys sales, Sarepta remains confident in meeting its 2027 debt obligations, as noted by Needham, which reiterated a Buy rating with a $50 price target. Meanwhile, H.C. Wainwright maintained a Sell rating with a $10 price target, expressing skepticism about a significant recovery in Elevidys sales. Concerns about potential FDA action against Elevidys appear to be easing, with Mizuho (NYSE:MFG) maintaining an Outperform rating and a $40 price target. Sarepta agreed to the FDA’s request for a black box warning on Elevidys, addressing issues related to acute liver injury. The company is also reprioritizing its pipeline, pausing several programs while advancing its siRNA platform.
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