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Sarepta Therapeutics (NASDAQ:SRPT) stock fell 42% Wednesday following news of a second fatal acute liver failure case linked to its Duchenne muscular dystrophy treatment Elevidys. The sharp decline has pushed the company’s market capitalization down to $2.1 billion, with the stock now trading near its 52-week low of $18.30.
The biotechnology company has suspended shipments of Elevidys for non-ambulatory commercial patients in response to the safety concerns, according to Mizuho (NYSE:MFG), which lowered its price target on Sarepta to $40 from $85 while maintaining an Outperform rating.
Mizuho cut its ambulatory sales forecast for the drug by 25% and now projects zero sales for the non-ambulatory setting, compared to its previous estimate of $400 million annually.
Despite the sharp decline, Mizuho believes the selloff represents a buying opportunity, stating that at current levels, the stock price "has zero value for Elevidys or the pipeline and trades below our $25/share valuation for the exon-skipping business alone."
Based on positive key opinion leader feedback, Mizuho expects Elevidys will still be used to treat ambulatory DMD patients, though the second fatal case "may increase concerns about Elevidys’ safety and slow down adoption in the ambulatory setting."
In other recent news, Sarepta Therapeutics has faced multiple downgrades and price target reductions from several financial firms due to safety concerns surrounding its Duchenne muscular dystrophy treatment, Elevidys. TD Cowen downgraded Sarepta from Buy to Hold, cutting its price target to $24, citing a potential withdrawal of FDA approval due to safety issues, including a 30% liver function test elevation rate. Evercore ISI also lowered its price target to $28, maintaining an "In Line" rating after a second death related to Elevidys prompted the firm to adjust its sales projections. Goldman Sachs downgraded Sarepta to Neutral with a $29 price target, emphasizing uncertainties around safety risks and regulatory feedback.
Wolfe Research initiated coverage with a peerperform rating, setting a fair value of $19 per share and projecting revenue recovery by 2025, despite potential ongoing safety issues. The firm noted that non-ambulatory revenue has been removed from near-term projections. Sarepta has paused dosing in its ENVISION study and halted shipments for non-ambulatory patients while exploring an enhanced immunosuppression regimen to address safety concerns. The company has also withdrawn its fiscal year 2025 revenue guidance of $2.3-2.6 billion. Analysts express concerns about potential long-term impacts on Elevidys’ sales and the company’s financial outlook.
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