Sarepta Therapeutics' Reorganization Boosts Investor Confidence

Sarepta Therapeutics, Inc. (NASDAQ:SRPT) stock is trading higher on Thursday after the company issued an after-hours update on ongoing label expansion efforts for Elevidys, its approved gene therapy for Duchenne muscular dystrophy.

The U.S Food and Drug Administration (FDA) has requested that the label include a black box warning for acute liver injury (ALI) and acute liver failure (ALF).

Sarepta agrees with this change, which appears to resolve any material issues with the ambulant portion of the Elevidys label. In June, Sarepta temporarily suspended shipments of Elevidys for non-ambulatory patients.

Also Read: Did The FDA Make A Mistake? Sarepta’s Elevidys Approval Under Scrutiny

A Sarepta committee is reviewing cases of ALF and exploring additional immunosuppression regimens. The committee agreed on an enhanced immunosuppressive regimen with sirolimus for Elevidys in non-ambulant patients.

Sarepta will submit the expert panel’s findings and proposed protocol to the FDA and will discuss a proposal to gather data on the regimen in a new cohort (Cohort 8) of the ENDEAVOR study (Study SRP-9001-103) as a pathway to re-establish dosing in the non-ambulant setting.

Additionally, Sarepta is assessing real-world data generation opportunities for ambulant patients through investigator-initiated trials.

Strategic Restructuring

The company announced a strategic restructuring plan to prioritize programs, meet its 2027 financial obligations, and support its long-term financial viability.

The measures are projected to deliver approximately $400 million in annual cost reductions, significantly lowering the company’s average annual non-GAAP R&D and SG&A expenses to between $800 million and $900 million starting in 2026. These include:

A 36% workforce reduction, impacting approximately 500 employees, projected to generate approximately $120 million in annual cash cost savings in 2026

Pipeline reprioritization is expected to deliver approximately $300 million in annual non-personnel cost savings starting in 2026

Over $100 million in cost savings anticipated through the end of 2025, net of estimated severance and one-time charges totaling $32-$37 million

Preliminary Second Quarter 2025 Financial Highlights

Total net product revenue of $513 million, with Elevidys revenue of $282 million. RNA-based PMOs net product revenue of $231 million.

Cash, cash equivalents, restricted cash, and investments of approximately $850 million as of June 30.

Sarepta will continue to support its four on-market Duchenne therapies and all associated clinical trial activities.

The strategic pivot emphasizes chronically administered therapies for neurodegenerative and pulmonary diseases.

This reprioritization will result in the pause of several programs, including most of the gene therapies in development for limb-girdle muscular dystrophy (LGMD).

Sarepta expects to submit the Biologics License Application for SRP-9003 for LGMD type 2E/R4 later this year.

Sarepta intends to seek strategic alternatives, including partnering, for programs that it no longer intends to fund directly.

Management Update

In conjunction with the restructuring, Sarepta named Ian Estepan President and Chief Operating Officer and Ryan Wong CFO.

Analyst Take

William Blair writes that the FDA’s request for a black box warning suggests that complete removal of Elevidys from the market is highly unlikely.

“…we believe investors have increased confidence that the company can pay off its long-term debts…,” analyst Sami Corwin wrote on Thursday.

William Blair expects Elevidys to face short-term challenges as patients and doctors are showing more hesitation.

The analyst also notes that investors are likely to remain cautious about Elevidys's long-term potential until early results from the ENDEAVOR trial demonstrate that the updated immunosuppression approach is effective and sales resume among patients who can still walk.

William Blair reiterates the Market Perform rating.

Price Action: SRPT stock is up 15.9% at $21.30 at the last check on Thursday

Read Next:

• Delta Air Lines To Pay $8.1 Million To Settle DOJ Probe Over Alleged Misuse Of Pandemic Relief Funds

Image: Shutterstock