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Sarepta Therapeutics, Inc. Message Board

  • vskomarovsky vskomarovsky Mar 25, 2013 9:37 PM Flag

    By Terry Chrisomalis - March 25, 2013

    Why This Stock Is Poised for Long-Term Success
    By Terry Chrisomalis - March 25, 2013 | Tickers: BMY, PFE, SRPT | 0 Comments

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    Terry is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

    There is currently a big medical need for a drug that treats Duchenne Muscular Dystrophy. This disease basically halts motor function and movement as the years go bye. There are hardly any options for these patients, and a breakthrough drug from a pharmaceutical company can prove to be monumental for them.

    One such company has achieved tremendous results in Duschenne Muscular Dystrophy, and this company is known as Sarepta Therapeutics (NASDAQ: SRPT).

    Results that matter

    On Oct. 3, 2012, Sarepta Therapeutics announced results from its phase two trial in Duschenne Muscular Dystrophy. Patients in the study, who took eteplirsen, were on average able to walk 89 meters more than those who just took the placebo drug instead after 48 weeks.

    What's even more incredible is that when patients had muscle biopsies performed on them at the beginning of the study, researchers noticed that they had no dystrophin proteins being created. But by the end of the study, the levels of dystrophin protein had increased to 52%. Obtaining 52% for patients is great, as that is considered to be normal movement levels for functional humans.

    One hit wonder

    When many people think about Sarepta Therapeutics, they only think about their Muscular dystrophy drug. But in truth, this RNA based pharmaceutical company is not just a one hit wonder. They have received a contract from the government, worth $291 million, to fund trials for phase one testing for Ebola and Marburg virus. This opportunity is great, because currently there is no effective therapeutic for either Ebola or Marburg virus, so advancement in these two drugs can also prove to be profitable.

    So, Sarepta Therapeutics has much more to offer than a one trick pony drug, and it's basing all of its drugs on RNA technology. A key difference about Sarepta's RNA technology, compared to other RNA companies, is that Sarepta can activate both a messenger RNA and a precursor messenger RNA. In other words it can turn gene expressions on or off, while other competing RNA technologies can only turn off interference.

    Market opportunity

    Muscular dystrophy is a rare disease, but the market potential is huge. The average amount of money to be made is around $400,000 per patient per year. There are about 1,500 people diagnosed with Muscular dystrophy in the United States each year. So in the United States alone, Sarepta can make $600 million per year on eteplirsen. That's not including their attempt to gain approval later in Europe and Asian countries!

    Sentiment: Strong Buy

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    • Seems like we're in the Yosemite Sam phase of coverage now. Let a thousand weird flowers bloom, i guess. Whatever.

    • Buyout potential

      With such a good drug on hand, it wouldn't surprise me for a big pharma company to make a bid for Sarepta. There are many big pharmaceutical companies with cash on hand, but I think that Pfizer (NYSE: PFE) will be the one to make a bid for Sarepta Therapeutics. Pfizer has drugs in their pipeline that have competing generic drugs, coming out to steal market share because of their patent expiration.

      One such drug is one of Pfizer's top sellers, Lipitor. Lipitor generated an estimated amount of $9.6 billion in 2011, and the drug is used to lower patients' cholesterol. With such a big product going off market, and the fact that Pfizer has around $25 billion cash on hand, it wouldn't hurt to add Sarepta Therapeutics to its arsenal. Pfizer would again have a drug which wouldn't have many competitors, and wouldn't have to worry about about patent expiration for many years out.

      Another possible buyout could come from Bristol-Myers Squibb (NYSE: BMY) . Recently Bristol-Myers had some important drugs go off patent, thus allowing generic versions to come into play. One such drug was Plavix, which saw sales tumble 60% to $740 million in the second quarter of 2012. Other such drugs were Avapro and Avalide, which saw a combined sales decline of 53% to $117 million.

      I feel that Bristol-Myers would want to acquire Sarepta Therapeutics, as it could bolster its portfolio with a new billion dollar drug. It is no question that Bristol-Myers has seen drug failures in its pipeline. It is also no question that patent expiration continues to cripple its bottom line revenue. Therefore I believe that it would be in Bristol-Myers best interest to take a look at Sarepta Therapeutics for future revenue.

      Final thought

      I believe that Sarepta Therapeutics will change the way Duscenne muscular Dystrophy patients are treated, and help evolve treatment for those patients with no other options on the table. They have a decent sized pipeline, targeting other rare diseases like Ebola and Marburg virus.

      The stock still trades relatively low compared to its true value price, and a couple catalysts could send the stock higher. Investors would have a good reason to keep Sarepta Therapeutics for the long-term in their portfolio.

      Sentiment: Strong Buy

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