Analysts remain optimistic about Elevidys after Sarepta reports patient death

Shares of Sarepta Therapeutics (SRPT) are under pressure on Tuesday after the company shared a safety update related to its Elevidys, the only approved gene therapy in patients with Duchenne muscular dystrophy, in which it reported a patient death after suffering acute liver failure. Commenting on the “incredibly sad” development, Leerink said it continues to view the benefit/risk of Elevidys treatment favorably, and thinks the stock reaction for Sarepta is “overdone,” although it could provide a lift for next-generation microdystrophin gene therapy developers such as Regenxbio (RGNX) and Solid Biosciences (SLDB) who use different capsids and transgenes.

SAFETY UPDATE: Sarepta Therapeutics has shared a safety update related to Elevidys, which it notes is the “only approved gene therapy in patients with Duchenne muscular dystrophy.” The company stated, “We are profoundly saddened to share that a young man with Duchenne muscular dystrophy has passed away following treatment with Elevidys, having suffered acute liver failure. Acute liver injury is a known possible side effect of Elevidys and other AAV-mediated gene therapies and is highlighted in the prescribing information. Although it is not a new safety signal and the benefit-risk of Elevidys remains positive, acute liver failure leading to death represents a severity of acute liver injury not previously reported for Elevidys, which to date has been used to treat more than 800 patients in clinical trials or as a prescribed therapy. 

“In addition, testing revealed this patient had a recent cytomegalovirus infection which was identified by the treating physician as a possible contributing factor. CMV can infect and damage the liver, a condition known as CMV hepatitis. Patient safety and well-being are Sarepta’s top priority. We continue to gather and analyze the information from this event. The event has been reported to the relevant health authorities and Sarepta intends to update the prescribing information to appropriately represent this event. We have also reported the event to Elevidys clinical study investigators and prescribing physicians.” 

WEAKNESS IN SHARES EXPECTED: Jefferies expected stock price weakness Sarepta following news of a Duchenne muscular dystrophy patient death caused by acute liver failure. Although liver toxicity is a known side effect, death caused by ALF “would represent a new safety signal for Elevidys,” notes the firm, which believes uncertainty around safety will loom unless the company deems the death not to be drug-related. The bull case is the unmet need in DMD remains high, adds the analyst, who has a Buy rating and $165 price target on Sarepta shares.

Also commenting on the news, JPMorgan said that shares are likely to further dislocate from fundamentals. The firm says the sentiment overhang could persist until there is a potential label update or Elevidys use guidance from the physician community, though the fundamental impact on Elevidys sales are unlikely to be known until nearer-term quarterly reports. JPMorgan reiterates an Overweight rating on the shares based on the long-term potential of Elevidys and the expanding pipeline.

NOT THE END: RBC Capital keeps an Outperform rating and $161 price target on Sarepta, noting that while the news of an Elevidys patient death is “certainly not good,” it is “perhaps not altogether surprising” that a fatal AE – adverse event – could possibly be observed occasionally. The development could give physicians further pause when considering whether to start a patient on Elevidys, but side effects to this degree seem very rare, and given that the disease itself remains deadly with few other treatment options, this should not be the “end of Elevidys,” the firm tells investors in a research note. The stock’s 24% decline on the news seems overly bearish, presenting a “fundamental buying opportunity,” RBC adds.

STOCK REACTION OVERDONE: Leerink notes that while an “incredibly sad” development for the young man, his family, and the Duchenne muscular dystrophy community, it appears that this is a unique event with a very low incidence rate. Leerink continues to view the benefit/risk of Elevidys treatment favorably, and thinks the stock reaction for Outperform-rated Sarepta is “overdone,” although it could provide a lift for next-generation microdystrophin gene therapy developers such as Regenxbio and Solid Biosciences who use different capsids and transgenes.

FAVORABLE RISK-REWARD: BofA also noted that acute liver failure is a known side effect of AAV-mediated gene therapies and is already included in the Elevidys label, with management highlighting they have dosed over 800 patients to date without any reports of ALF. The firm thinks the risk-benefit profile of Elevidys remains favorable as this seems to be an isolated incident given the large number of patients dosed to-date without any safety signals, but adds that it will continue to monitor the situation. BofA thinks the news could result in weakness in the stock today, which it would view as “a particularly attractive entry point,” and it adds that Sarepta remains a top 2025 pick with a Buy rating and $210 price target.

PRICE ACTION: In Tuesday morning trading, shares of Sarepta have dropped almost 23% to $78.05.