Leerink Sees Expectations for Sarepta's (SRPT) Exondys 51 Launch 2017 as Too High
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Leerink affirms Sarepta (Nasdaq: SRPT) at Market Perform with a price target of $51, seeing Exondys 51 launch expectations as too high for 2017.
Analyst Joseph P. Schwartz commented today:
Consideration 1: true DMD prevalence remains unknown and may range from ~9k-16k in the US; the addressable population for Exondys 51 ranges from 1,200-2,100 (Fig 2).
- By our ests., a "start form" number of ~200 patients would need to be provided in early January in order for investors to be confident in 2017 consensus sales estimates of $215M. Based on our estimates for Exondys 51 average per patient consumption/price at this point of the launch ($604,000/patient/year), we calculate that 190-212 patients are required be on drug in 1Q17 and 2Q17 in order to hit these periods' consensus revenue estimates. Because Exondys 51 only treats genotyped (~60%), exon 51 skip-amenable (~13%), and ambulatory patients (~50-60%) with DMD, we think the community would need to identify and evaluate ~4,500-6,000 DMD patients (Fig 3) by Jan ’17 to satisfy the 190-212 estimate.
Consideration 2: Exondys 51 price Is likely >$400K for 4Q16 and FY2017; Still, $215M sales consensus implies an avg. of ~356-401 treated pts. are required in order for 2017 consensus rev ests. to be achieved.
- At our recent meeting, mgmt spoke of two types of gov't. discounts – Medicaid and 340B (LINK) when addressing our questions about the average drug price which they estimated to be around $300k. However, these programs can only introduce a ~23.1% discount to the drug price since only one of the discounts can occur at a time. Therefore, based on the price of Exondys 51 per vial, it currently appears that mgmt. has underest. the true price of the drug which they will realize.
Consideration 3: Although our below-consensus sales projections of ~$7.3M (4Q16) and ~$101M (FY2017) look achievable based on both patient-level ests and other rare disease drug launch analogues, street consensus ests for FY2017 (~$215M) seem excessive.
- Applying our latest pricing estimates (Fig 5) to consensus numbers – ~$7.3M (4Q16) and ~$215M (FY2017) – Street analysts appear to expect an average of ~48-54 (4Q16) and ~356-401 (FY2017) patients that are treated with Exondys 51 (Fig 5) using the 31 and 35 kg of patient body weight. Since Exondys 51 is only approved in the US, these patient numbers imply ~2-3% (4Q16) and ~17-19% (FY2017) market penetration, respectively (Fig 6) of our assumed prevalence of ~2,100 exon 51 skip-amenable patients. Among Rare Disease Drugs (n=17), Only Soliris®, Kalydeco®, Orkambi®, and Procysbi® Breached the ~20% Penetration Mark in Their First Full Year of Launch (Fig.7). According to Sarepta, IV-Infused drugs like Myozyme® (Pompe Disease) and Vimizim® (MPS IV-A/Morquio A Syndrome) Are Better Comparables For Exondys 51 Launch.
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