Sarepta Therapeutics Stock Has A Nightmarish Week After DMD Patient Death, But Retail And Analysts Aren't Giving Up

Shares of Sarepta Therapeutics Inc. have lost more than 26% this week, heading for their worst such performance in over a year, after the company disclosed the death of a Duchenne muscular dystrophy (DMD) patient treated with its Elevidys drug.

The company said that the fatal adverse event had happened to a 16-year-old DMD patient, who suffered acute liver failure following treatment with its gene therapy.

"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," the company said, adding that the drug has been used to treat over 800 patients in clinical trials or as a prescribed therapy.

Sarepta also noted that the patient had a recent cytomegalovirus (CMV) infection, which the treating physician identified as a possible contributing factor. 

On Stocktwits, news of the fatal event triggered a more than 1,900% jump in message volume over the past week through Thursday's close. However, sentiment did not take a hit, flipping from 'bearish' to 'extremely bullish' over the last seven days.

SRPT sentiment and message volume as of March 20. | source: Stocktwits

One user said that while the news was saddening, "what's even more sickening is that bears are hoping this drug is pulled from the market just to make a few thousand dollars." 

"This drug treats people with a life-threatening illness, where patients have a life expectancy of 30 years without proper treatment."

Others remained optimistic, with one user calling Sarepta a "major takeover target" and setting a" $300 BO [buyout] TARGET." 

Wall Street largely dismissed long-term concerns over Sarepta, according to reports compiled by The Fly, with analysts at Leerink and Barclays calling the selloff overdone. 

Leerink noted the adverse event had a very low incidence rate, while Barclays pointed out that liver toxicity was a known side effect with multiple potential contributing factors. 

Jefferies acknowledged acute liver failure could signal a new safety risk but maintained that the high unmet need for DMD treatments supports the bull case. 

RBC Capital said this should not be the "end of Elevidys" and saw the stock's weakness as a buying opportunity. 

Mizuho argued Sarepta's valuation already reflects little value for Elevidys, primarily factoring in its exon-skipping and limb-girdle treatments.

However, some analysts urged caution. 

JPMorgan warned that sentiment overhang could persist until further physician guidance or a potential label update, with the sales impact likely to remain unclear until upcoming earnings reports. 

Deutsche Bank cut Sarepta's price target to $99 from $124 and lowered its peak U.S. Elevidys sales projection to $3.67 billion from $4.23 billion.

Several firms suggested the news could accelerate the development of next-generation microdystrophin gene therapies, such as those from Regenxbio (RGNX) and Solid Biosciences (SLDB), which use different capsids and transgenes.

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