Shares of Sarepta plunged 48.92% to $86.30 in premarket trading, a stunning $82.65 drop from Thursday’s close, after the company said its gene therapy as a one-time treatment for the rare disorder Duchenne muscular dystrophy failed to show benefits compared with a placebo.
The unexpected miss stirred doubt on the potential for the therapy and also spooked investors in rival companies such as Solid Biosciences (SLDB) – Get Report and Rocket Pharmaceuticals (RCKT) – Get Report, which also posted double-digit percentage declines.
Sarepta and its gene therapy platform had been seen by analysts as promising in the weeks leading up to Thursday’s data, with Baird analyst Brian Skorney adding the stock to the bank’s “Fresh Pick” list amid expectations that the trial results were a shoe-in.
While analysts expressed disappointment in the trial results, they were also quick to note that the gene therapy approach could still work as a potential treatment.
Barclays analyst Gena Wang noted that while a disappointment, the drug is likely to remain active in Sarepta’s pipeline and eventually hit the market albeit with a more modest benefit. Her team cut their price target to $125 from $192, reflecting a roughly two-year launch delay.
RBC analyst Brian Abrahams, meantime, said that while the primary endpoint miss was “clearly a disappointment” and adds risks to the company’s longer-term development plans, “real signs of activity” in results mean could still be a path forward.
His team cut its one-year price target to $143 from $200, though noted that the plunge in share price “seems excessive” given the program could still be viable.
SVB Leerink’s Joseph Schwartz also cut his one-year price target to $125 from $197 on expectations that Sarepta will now require so-called study 301 data for approval, though he too noted that now could be an “opportune time” to get involved with stock ahead of other data expected from the company in the second quarter.