Sarepta Therapeutics Inc (NASDAQ:SRPT) shares jumped 25% at the open on Tuesday after the US Food and Drug Administration recommended the company lift a voluntary pause on shipments of its gene therapy ELEVIDYS for ambulatory Duchenne muscular dystrophy (DMD) patients.
The regulator’s move follows its determination that the death of an eight-year-old patient in Brazil, which had prompted a temporary halt, was unrelated to the therapy. The patient’s death on July 25, was attributed to complications from a severe flu infection and immunosuppression, according to media reports and company disclosures.
The FDA’s decision clears the way for Sarepta to resume US shipments of ELEVIDYS for ambulatory DMD without the need for a new safety study.
Jefferies analysts said the pause, which lasted roughly a week, is likely to have only a modest impact on third-quarter sales and could help reaccelerate growth in the back half of the year.
“The positive news will support the notion ELEVIDYS might indeed floor at $500 million annually into 2027,” Jefferies wrote in a note, adding that Sarepta’s shares could trade above $20 as investor confidence rebounds.
ELEVIDYS, which has full FDA approval for ambulatory DMD, had faced increased scrutiny after the death was made public. While the FDA had asked Sarepta to temporarily suspend all ELEVIDYS shipments, Tuesday’s announcement reaffirms the therapy’s clean safety record in ambulatory patients, with over 760 treated and no fatalities linked to the drug.
The FDA has not requested additional studies in ambulatory DMD, according to Jefferies. Sarepta continues to collaborate with the agency, including on a separate protocol to address safety concerns in non-ambulatory DMD, where a voluntary pause on shipments remains in place.
The company is testing sirolimus as a prophylactic treatment in a new Phase Ib cohort to reduce liver-related side effects and potentially resume the ENVISION confirmatory study for non-ambulatory DMD. Sarepta’s goal is to eventually secure full approval for ELEVIDYS in that broader patient population.
Sarepta’s internal forecasts suggest its DMD franchise could generate up to $1.4 billion annually by 2027, including over $900 million from its PMO therapies.