Mid-cap biotech Sarepta Therapeutics (SRPT) develops treatments for Duchenne muscular dystrophy (DMD), a very rare (one in 3,500 to 5,000 males have the disease), fatal neuromuscular disease caused by gene mutation, notes Mike Cintolo, growth stock specialist and editor of Cabot Top Ten Trader.
The disease is usually diagnosed around age four, leads to life in a wheelchair around 12, and (on average) results in a lifespan of 20 to 25 years. Exondys 51, Sarepta’s first DMD treatment (and sole source of revenue), targets around 13% of the DMD population and has been growing rapidly.
First quarter sales, reported last Thursday, were up 295% to $65 million, and should grow nearly 100% in 2018! One fly in the ointment was that European regulators requested more information on the treatment before they can give it the green light (expect a four-month delay in approval there).
But investors still drove shares higher given that Sarepta has 15 other treatments in various stages of development (most are early-stage). Plus, it expanded its gene therapy portfolio with five products for Limb-Girdle Muscular Dystrophy (LGMD) through a partnership with Myonexus.
LGMD has a market size similar to DMD, but these LGMD drug candidates cover around 70% of that market. Now all eyes are turning to June 19 when Sarepta will host an Investor Day, complete with its product development strategy and in-depth review of pipeline programs. It’s still speculative, but Sarepta has big potential if management executes.
SRPT has been up and down on speculation and news over the years, but more stable hands took over in mid-2017 and since August the pattern has been one of mostly higher highs and higher lows with the stock reliably bounding off its 50-day moving average line.
More recently, shares topped near 85 in March and, like many growth stocks, etched a tidy seven-week zone (between 71 and 84), with support at the 50-day line appearing a couple of times. Then Thursday’s conference call catalyzed a blastoff to new highs on excellent volume. Look to buy on a pullback of a few points.
