Sarepta Therapeutics Inc. (NASDAQ:SRPT) won unexpected accelerated approval for its Duchenne muscular dystrophy (DMD) drug last month, despite questionable evidence of its clinical efficacy, acknowledged by the agency’s own reviewers. However, Sarepta is ready to launch the rare disease drug in the US, with the first patient dosed with commercial Exondys 51 this week.
In an October 9 research report, Wedbush analyst Heather Behanna raised the price target on Sarepta stock from $66 to $72, citing expectation of a “rapid start” although logistical challenges may remain. The research firm adjusted the biotech company’s 2016 revenue down to $4.8 million, but increased peak sales from $420 million to $439 million assuming that by 2022 more than 1,000 boys (or an estimated 80% of genotyped DMD patients in the US) will be on Exondys 51 therapy.
The analyst believes there is already “near unprecedented awareness” of Exondys 51, so that DMD families will be more than ready to buy the drug. Sarepta’s drug is the only approved treatment for the muscle-wasting genetic condition. DMD typically affects young boys, causes weakness in the arms and legs and eventually affects the lungs and heart, leading often to death in their 20s or 30s. The analyst believes that while it may take 30-90 days for reimbursement and some more time to schedule appointments for patients, causing “modest” 4Q sales, concerns about reimbursement may be “overdone.”
Exondys 51 is designed to target some 13% of DMD population, and has weight-based pricing. The Wedbush analyst expects the highest penetration of the drug to be in ambulant boys, followed by younger ambulant boys. “We estimate a blended net price will reach $342K by 2022, down from $412K at launch, as addition of boys at younger ages will also bring down the average weight of boys on therapy,” she wrote. Ms. Behanna assumes a 50% chance of Sarepta winning regulatory approval for its drug in Europe, with a 5% royalty to rival BioMarin Pharmaceuticals if it withdraws its appeal in the lawsuit between the two companies.
On Friday, the second-biggest US health insurer, Anthem Inc, declined to cover Exondys 51, calling it “investigational and not medically necessary.” "Exondys 51 failed to show it improves health outcomes, and therefore it is not a covered benefit for our members," Anthem spokeswoman Leslie Porras said in an emailed statement. However, UnitedHealth Group Inc, the biggest US health insurer, does plan to cover the drug, while Aetna Inc will conduct a clinical review before deciding on its coverage policy.