Sarepta Therapeutics (SRPT) currently has some investors watching this biopharmaceutical company from the sidelines, waiting to see how the FDA approval for one of its drugs for an orphan indication resolves, but Brian Skorney, Senior Analyst at Robert W. Baird & Co., says the company is poised to see upside regardless of the FDA outcome.
“[Sarepta] is a really great opportunity. There is a lot of sort of near-term binary risk perceived on the name, because there is a sentiment that the company is going to request accelerated approval from the FDA on a very, very small patient population that, if it is approved, it would be the smallest patient database of any drug ever approved. I think that’s created a little bit of a valuation inefficiency, in that a lot of investors have been scared to be involved ahead of that data point,” Skorney said.
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Sarepta appears to be significantly undervalued when compared to peers, and Skorney expects a correction in the stock price to benefit the drug manufacturer once the market realizes the value of its muscular dystrophy treatment.
“I think with the FDA approval or without FDA approval, there is a lot of upside to this company, when you kind of think of some of the valuations that are comparable to it for other very small orphan indications where you’ve seen very substantial clinical benefits in a company like a Vertex (VRTX). I think is a relatively reasonable comparison and has probably $8 billion or $9 billion in market cap for their CF franchise, versus Sarepta, which as I said — about $1 billion for their muscular dystrophy franchise. I think there is a pretty significant valuation disparity between those two right now,” Skorney said.
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