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RBC Capital Markets has downgraded Sarepta Therapeutics Inc (NASDAQ:SRPT) as it weighs recent investor feedback, company commentary, and public statements from senior FDA officials.
The analyst reports that after extensive discussions with investors over the past several weeks, expectations for the FDA’s label decision on Elevidys have significantly increased, especially with shares now up 50% in the last six months.
“We believe many investors expect at least an expanded label to cover 6yo+ ambulatory pts, which, while still a reasonably likely scenario in our view, now seems more baked in,” RBC writes.
RBC analyst writes that there are hopes for potential expansion into nonambulatory patients, but this seems less probable given more limited data in this population and the possibility that the Agency may be more cautious on benefit/risk in less well-studied populations given recent Pfizer Inc. (NYSE:PFE) safety questions.
An RBC analyst anticipates significant share growth due to a potential $2.6 billion peak in annual U.S. sales. Shares have risen by about 50% in the last six months, indicating investor expectations for label expansion and regulatory flexibility.
However, the analyst perceives slightly tempered messaging from the FDA and the company, reducing the upside potential in their scenarios to a fair value of $142, down from $157, and cutting the rating from Outperform to Sector Perform.
Therefore, while maintaining current holdings, RBC suggests waiting for a better entry point before increasing positions ahead of the PDUFA decision scheduled on 21 June.
Price Action: SRPT shares are down 9.19% at $112.12 at last check Tuesday.
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