Downside Risk In Sarepta Shares Greater Than Upside Potential, Janney Says

A Wall Street Journal opinion piece suggested some eteplirsen reviewers might have escalated the conflict within the agency through a “differing-professional-opinions” (DPO) proceeding.

Janney’s Debjit Chattopadhyay maintained a Neutral rating on Sarepta Therapeutics Inc (NASDAQ: SRPT), with a fair value estimate of $30.

DPO Proceedings

“If the DPO clause has been invoked, the final decision on eteplirsen may now rest with the agency commissioner, which suggests the large N, randomized-study faction within the agency has the upper hand with regards to eteplirsen approval, in our view,” Chattopadhyay mentioned.

If the DPO clause has been invoked, the analyst expects a final decision to be announced within the next two weeks.

Related Link: Drug Trial Extension By FDA Doesn't Change Baird's Outlook On Sarepta

Downside Risk Higher

Until then, Chattopadhyay recommends staying on the sidelines, given that the downside risk from the current levels is higher than the upside potential.

“If the DPO proceedings were initiated, it was probably done prior to the PDUFA date of May 25th. It also implies the division chair was leaning positively towards an accelerated approval, in our view,” the analyst stated.

What To Expect

Chattopadhyay believes the request for addition dystrophin data was likely to have come from the Ad Hoc DPO Review Panel Chairperson, who would have been responsible for the appointment of the review panel.

However, the analyst pointed out that process could be further delayed if the submitter of the DPO believes that his/her issues were not addressed properly.

Sarepta was down about 10 percent Wednesday morning, but began to recover. Shares traded at $25.26, down 5 percent on the day.

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