Shares in biotech Sarepta soar after FDA allows shipments of Elevidys to resume

Shares of Sarepta Therapeutics, a small-cap developer of genetic medicines to treat rare neuromuscular and central nervous system diseases, soared 14% yesterday, July 29. The driver of the gains was the announcement that U.S. health regulators had authorized the biotech to resume shipments of its gene therapy that accounts for the majority of its revenue. Still, analysts caution that sales momentum will need to be maintained for the company to make a looming debt repayment. 

Shares of Saperta jumped 14% to close at $15.80 per share yesterday. In premarket trading today, they are up another 50% as of this writing. The reason for the rally was the company's announcement that it will soon resume shipments of its gene therapy Elevidys for Duchenne muscular dystrophy, a genetic disease where muscles lose their strength and the patient gradually loses the ability to walk, stand, and even breathe. 

Shipments of the drug had been suspended at the request of the U.S. FDA due to safety concerns. Since the beginning of the year, two teenagers have died from Elevidys side effects, leading to the FDA's request. Sarepta had initially refused to voluntarily pause shipments of Elevidys, before changing its mind and agreeing to the request. The regulator reversed the request late on Monday. 

The FDA review of safety data included the case of an 8-year-old in Brazil. The FDA concluded the death was unrelated to treatment with Elevidys and confirmed that Sarepta can resume shipments.

The FDA will continue to investigate the patient deaths, the latest being that of a 51-year-old in a clinical trial for a different muscular dystrophy drug. 

Analysts are cautiously optimistic about the shipments resuming but are waiting to see the impact on the bottom line, writes Yahoo Finance. Sarepta needs to continue strong sales of Elevidys to be able to repay $1.5 billion in convertible debt due in 2027. 

Elevidys’ return to market means the worst-case scenario is removed for now, said Cantor Fitzgerald analysts led by Kristen Kluska. However “safety concerns keep us on the sidelines,” they added. Kluska has a "neutral" rating on Sarepta at a target price of $14 per share.

BMO Capital Markets analyst Kostas Biliouris has doubled his target price on the stock from $25 to $50 per share, maintaining his "market perform" rating.

Leerink Partners analyst Joseph Schwartz wrote in a note to clients on Monday, "We remain on the sidelines until we gain better visibility into how demand trends."

One of the few who had maintained a "buy" rating on the stock was Jefferies analyst Andrew Tsai. He said his firm did not doubt the company's ability to get the product back on the market and is now watching how sales follow. Still, he wrote, "We acknowledge Elevidys' sales outlook was looking murkier when SRPT went against the FDA's wishes... If SRPT's internal stress tests of the... franchise 'flooring' at $1.4B annually into 2027... then the Street might have greater confidence in SRPT's ability to pay off the $1.1B+ of converts in 2027." 

Year to date, Sarepta stock has collapsed 86%. As of yesterday, six out of the 29 analysts covering Sarepta have a "buy" recommendation on it versus 17 "holds," two "underweights," and four "sells," according to MarketWatch. The average target price is $26.90 per share. 

Elevidys is the first gene-based drug to be approved to treat Duchenne muscular dystrophy (DMD) in the U.S. It is injected intravenously just once, after which Elevidys helps the body to produce a shortened, but functional, version of the dystrophin protein, called micro-dystrophin. This is important because DMD is caused by a lack of dystrophin, leading to progressive muscle weakness and degeneration.

The drug received accelerated partial approval in 2023, despite doubts from some FDA members about its efficacy in treating DMD. Sales of Elevidys have since provided a significant portion of Sarepta's revenue. In the fourth quarter of 2024 and first quarter of 2025, they accounted for about half of the top line. After Sarepta's regulatory troubles began in July, HC Wainwright analysts led by Mitchell S. Kapoor revised their target price on the stock from $10 per share to $0 per share, explaining that the battle with U.S. regulators was "unwinnable."

In June 2024, Peter Marks, then the director of the FDA's Center for Biologics Evaluation and Research, is said to have pushed for the drug to be approved to cover nearly all patients, regardless of age or wheelchair status, despite the fact that the drug failed a large, phase III trial last year, overruling three panels of experts and senior staff, reported medical news media outlet Stat. Marks left the FDA in March. His successor Vinay Prasad has criticized the decision to expand approval of Elevidys.

The AI translation of this story was reviewed by a human editor.