Sarepta Therapeutics Inc (NASDAQ:SRPT) is one of the week’s biggest winners from the J.P. Morgan healthcare conference, with the company running up on the back of a CEO presentation which – for the most part – focused on the launch progress of the company’s Duchenne’s muscular dystrophy (DMD) asset, Eteplirsen. The company is now calling for drug Exondys 51 (don’t ask us why, for us, Eteplirsen was a pretty solid name) and so for the purposes of this discussion, we will refer to it by its brand name going forward.
Those familiar with the history of this one will know that the company had a pretty tough time getting Exondys 51 past the FDA. Basically, the clinical benefit was negligible as implied by a host of highly publicized clinical trials, and this led a number of opinion leaders to suggest that the drug shouldn’t be approved. However, it was proven safe, and there is no currently available alternative for DMD sufferers. Further, when it came to advisory panel, there was a large showing by the DMD community – parents, sufferers, advocates etc. – all bidding to get the drug approved, despite its negligible benefit.
Anyway, when it came down to it, the drug picked up approval, and Sarepta got to marketing it right away. Ironically, but beneficially, the uncertainty surrounding the approval actually served to provide some pretty far-reaching (and completely free) marketing for Sarepta within the DMD community. Many expected that this would help get the drug off to a running start, and this seems to have been proven accurate.
Before we get into the numbers, it is worth pointing out that there was also some degree of concern over whether the insurance industry in the US would cover the drug. Anthem Inc (NYSE:ANTM) refused to, and concerns that other big insurers would follow suit weighed on sentiment heading into the first quarter of sales. With company CEO Ed Kaye having taken the stage at J.P. Morgan, however, these concerns seem to have disappeared, or at least, have been allayed.
During the fourth quarter of 2016, sales for the drug hit $5.4 million, and there are more than 250 patients for which start forms have been submitted. Start forms are basically the document a physician must submit when he or she first starts prescribing the drug to an individual. 250 patients may not sound like a lot, but for a drug the costs $300,000 annually, it is pretty substantial.
Also addressed was the insurance situation. Most of the patients currently taking the drug are covered by insurance, be it commercial or Medicaid, and – according to the CEO – nearly 80% of commercial insurers have not yet decided whether to cover the drug or not. Chances are these insurers are watching early uptake numbers closely, and with the 250 start forms in place, and the decent (albeit not excellent) fourth-quarter sales numbers, many of these 80% will likely be leaning towards accepting the drug for coverage going forward.
So what is next? Well, having gotten off to a pretty decent start in the US, Sarepta must now turn its focus to the European market, in an attempt to replicate the FDA’s decision on the drug with the EMA. This will essentially double the market potential of Exondys 51, and in a condition whereby there aren’t that many sufferers (DMD is classed as a rare disease in both Europe and the US) the wider potential population over which Sarepta can throw its Exondys net, the better the chances of the company turning a profit on this drug are.
From a near-term perspective, we are looking for any news on insurers – and their coverage decisions – as potential catalysts. If the company can pick up some big names on its coverage roster, and we have no doubt that it will, then there is some immediate upside from the announcement of such. Similarly, however, and herein lies the risk, there’s definitely some downside on any big insurers deciding – and publishing the fact that – they aren’t willing to cover Exondys.
All said, the J.P. Morgan conference has proven a sentiment shifter for Sarepta in many regards, and will likely be considered a success by the retail markets going forward into the first quarter of 2017, and beyond.
One to keep an eye on.
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