Sarepta Therapeutics Inc (NASDAQ:SRPT) shares jumped on a sweeping restructuring plan that includes cutting about 500 jobs, or 36% of its workforce, in a move aimed at reducing annual operating expenses by $400 million by 2026.
The biotech company said it will sharpen its focus on high-impact drug development programs, particularly its small interfering RNA (siRNA) platform targeting neurodegenerative and pulmonary diseases such as facioscapulohumeral muscular dystrophy (FSHD), myotonic dystrophy type 1, and Huntington's disease.
Shares of Sarepta soared nearly 21% following the announcement, as investors welcomed the cost-cutting measures and renewed strategic focus.
Analysts at Jefferies said the restructuring, along with recent regulatory updates and pipeline prioritization, should lift the stock further.
“Cost reductions and pipeline refocus ensures profitability,” the firm wrote in a note, adding that Sarepta's internal stress tests suggest its Duchenne muscular dystrophy (DMD) franchise could generate a floor of $1.4 billion in annual revenue through 2027.
Sarepta's gene therapy for DMD, Elevidys, will receive a black box warning for liver toxicity in ambulatory patients—a move that Jefferies said would have “no real sales impact.” However, the company is still in discussions with the US Food and Drug Administration over pausing use in non-ambulatory patients following reports of liver-related fatalities.
To resume clinical trials and commercial dosing in this patient population, Sarepta plans to submit a new protocol this week that incorporates sirolimus as a prophylactic measure to mitigate liver stress.
The company also preannounced second-quarter product sales of $513 million, slightly above Wall Street expectations, though down 31% from the prior quarter. Sales of Elevidys came in at $282 million, falling short of consensus estimates and marking a 25% quarter-over-quarter decline.
Jefferies noted that investor sentiment toward Elevidys remains cautious, with the market assigning “minimal value” to the product given safety concerns. Still, positive trends in upcoming sales data or successful trial restarts could shift the outlook, analysts said.