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Sarepta shares slip after offering announcement

The Associated Press

Shares of Sarepta Therapeutics Inc. slid Friday in the first trading day since the drug developer announced an agreement for an at-the-market offering of its shares.

THE SPARK: The Cambridge, Mass., company said Wednesday that it entered into an at-the-market equity offering sales agreement with Further Lane Securities LP. Under the deal, Sarepta may sell up to $125 million in shares through Further Lane.

At-the-market offerings involve the selling stock over time at prevailing market prices instead of selling the shares at once at a set price.

Sarepta said it will use the proceeds to help fund late-stage clinical testing of eteplirsen, its potential treatment for Duchenne muscular dystrophy, and for manufacturing preparations for the drug.

THE BIG PICTURE: Duchenne muscular dystrophy is a rare and fatal genetic disease that causes increasing muscle weakness and affects one of every 3,500 boys worldwide. Sarepta said death usually occurs before patients reach age 30.

Sarepta has no drugs on the market. Eteplirsen is its most advanced product.

THE ANALYSIS: WBB Securities analyst Steve Brozak said he has "material reservations" about these offerings in part because they can dilute the value of the stock for other shareholders and because companies generally have less of an idea about who will buy their stock.

Brozak, who has a "Sell" rating on Sarepta shares, said he doesn't believe the offerings are an effective long-term strategy to build value for the company or shareholders.

A Sarepta spokesman did not immediately return calls from The Associated Press seeking comment.

SHARE ACTION: Down 51 cents, or 1.3 percent, to $39.10 Friday morning, while broader trading indexes climbed less than 1 percent. The stock is still up about 52 percent so far this year.