q********g
发帖数: 10694 | 1 观点很象这里Jenny12以前说的。从中也学习到一些分析医药股的方法。例文欣赏。
http://seekingalpha.com/article/895051-sarepta-therapeutics-loo
Sarepta Therapeutics Looks Highly Undervalued
September 28, 2012 | 37 commentsby: Sean Anderson | about: SRPT
R.S. Analytics wrote up the long case for Sarepta Therapeutics (SRPT)
earlier this month here. I agree with that thesis, and won't bore everyone
by repeating it here since R.S. did such a great job telling it already.
There are, however, a few points that I'd like to expand on.
In particular, I think that SRPT's lead drug candidate, eteplirsen, for the
treatment of one form of Duchenne muscular dystrophy, and the related
developmental pipeline has a very high chance of successful approval by the
FDA.
While most analysts who cover the stock basically agree regarding the
likelihood of FDA approval, their valuations all strike me as
extraordinarily conservative. On a risk-adjusted basis (as I discuss below),
I think the company is worth between $44.50 and $47.50 per share. It is
hard for me to see how the stock should trade anywhere below $30.00, yet
analyst price targets range from $9.00 to $26.00, and the stock closed today
at $15.06 as I write this. So I think the stock is extraordinarily cheap
right now.
I expect, based on preliminary results from a Phase IIb study and some
extraordinary statements from the families of half of the patients treated
in that study, that final study results to be presented in October (though
the company could release top-line results any day) will act as a catalyst
to realize some of this hidden value.
The Case For Eteplirsen
Eteplirsen is a treatment that has just completed a Phase IIb study for the
treatment one group of Duchenne muscular dystrophy (DMD) patients, those who
have genetic defects in what is known as exon 51.
I'll go through the results of the study in a little more detail below, but
the high-level overview is that, while the study was small (8 patients on
the drug, including 6 who completed the study, and four patients in the
control group), the results after 36 weeks of the 48 week trial showed a
large and statistically significant improvement in the ability of patients
to walk. In addition, results from biopsy at 24 weeks demonstrated that
eteplirsen does cause muscle fibers to make dystrophin, the protein that is
missing in DMD patients, and there appear to be no adverse side effects.
Most impressive of all, however, are the stories from the parents of three
of the six patients who received the drug and completed the study discussing
dramatic improvements in the mobility and quality of life of their children
. This is a disease where patients simply don't get better without treatment
, yet we have three whose improvement was remarkable enough for their
families to speak out.
The study included 4 boys receiving a 50 mg/kg dose of eteplirsen, four
receiving a 30 mg/kg dose, and four in the placebo control group (though the
four in the control group began receiving eteplirsen after 24 weeks). All
were between 7 and 13 years old at entry into the study, and all group
assignments were double blinded until at least 24 weeks. Two of the patients
in the 30 mg/kg group experienced rapid progression of their disease
shortly after the trial began, were unable to walk at all after 24 weeks,
and are therefore excluded from the 36-week analysis.
On average, patients could walk 396 meters in six minutes when they entered
the study. The control and 50 mg/kg groups both experienced marginal
decreases in walk test performance after 12 weeks (an average decline of
around 4 meters). After 24 weeks, the 50 mg/kg treatment group average score
equaled its score at the beginning of the test, versus a 28 meter decrease
in the control group. At week 32, the 50 mg/kg group's average score fell by
3 meters from the start of the trial, versus a 63 meter average decline in
performance of the control group. By week 36, the 50 mg/km group score fell
an average of 9 meters, versus an average decline of 78 meters in the
control group. The 32 and 36 week scores were both statistically significant
. The two boys remaining in the 30 mg/kg group experienced a decline of
around 43 meters from their initial scores, still well below the control
group's 78 meter average decline, but not statistically significant.
The bear case seems to focus on the small sample size. Of course, more data
is always preferable to less data, but the fact that the trial reached
statistical significance with such a small sample size speaks to the large
difference in performance between the treatment and control groups.
Nevertheless, the criticism that the control group performance simply may
not adequately reflect the normal progression of DMD, thus skewing the
results, is a reasonable consideration in interpreting these results. The
release of the data from the 48-week study should go a considerable way
toward resolving the current uncertainty.
Second, eteplirsen-treated patients showed dystrophin (the protein that is
missing in DMD patients) in their muscle fibers at the 24 week look, whereas
placebo-treated patients did not (there was no 36 week biopsy, though there
will be biopsy results at 48 weeks). Had we not seen dystrophin production,
I would have written off the walk test results as a statistical fluke
despite their high significance. At the same time, the presence of the
protein alone isn't sufficient in my view to show that the drug is an
effective treatment, since what's important is the presence of a functional
version of the protein in the patient's muscle cells. The combination of the
biopsy and the walking test results is much more impressive than either
would be alone.
Third, there appeared to be no adverse side effects from treatment. The
other exon 51-skipping treatment in development, by Prosensa's (licensed to
GlaxoSmithKline (GSK)) appears to cause proteinurea (proteins in the urine).
While proteinurea is a small problem compared to DMD, the data so far give
eteplirsen the edge in safety considerations.
Finally, we have impressive anecdotal evidence from study participants. Of
the six patients receiving treatment, the families of three have gone public
with their stories of how their children improved dramatically while on the
trial. I'd encourage everyone looking at Sarepta to watch these news
reports: Justin Trovillion, Billy Elsworth, and Max Leclaire.
Max's parents are the most outspoken of the three families that have come
forward (they have another son with DMD whom they are desperate to get onto
the drug after seeing Max's improvement. They've made some startling
comments, such as "elevator stuck at school... max skipped down full flight
of stairs, burst out doors while teachers stared in awe…. he almost doesn't
remember why he uses an elevator (we still make him for safety)," and ""My
husband noticed first at the airport…. He said, 'I think he's on the drug
and a high dose.' Max opened one of the McDonald's milk jugs with the sealed
top. He never had that sort of grip strength." Max's parents maintain
Twitter feeds (here and here) that you might want to read to get a better
feel for their impressions.
I have never seen a trial where one half of the treatment group has gone
public discussing the improvement in the patient's lives. Sarepta, as you
can see from the company's letter to parents, is not looking for publicity
among parents because the company doesn't have the manufacturing capacity to
start a compassionate use program. My bottom line is that DMD patients over
seven years of age simply do not get better, and here we have three out of
six whose families have made their improvement public. The comments that R.S
. cited from Jerry Mendell (quoted in this Nature editorial), the principal
investigator (and a well respected scientist who does not work for Sarepta
and is putting his reputation on the line) that he saw "an unprecedented
treatment effect" in the study back this up.
The Catalyst
The investigators will present results from the full 48-weeks of the study
at the World Muscle Society Congress in Australia, which runs from October 9
through October 13. They have submitted a placeholder abstract without data
, and Sarepta management has indicated that Saturday, October 13 is the
likely date of the talk. Given the importance of these results to the
company, it's likely that the company will release the top-line numbers in a
press release before the meeting. We could see this any day.
FDA Considerations
Assuming that the positive results from the 36-week look hold up in the 48-
week results, which I think is very likely given the information we've seen
so far, Sarepta hopes to file a new drug application seeking approval from
the FDA to market the drug based on the results of the Phase IIb study. They
will discuss this with the FDA staff at the end of study meeting that
should take place later this year. If the FDA indicates that it would review
eteplirsen on the basis of the Phase IIb data, then we would likely have a
decision from the FDA late in late 2013. If not, then the NDA will have to
wait until Sarepta runs a Phase III trial, which would push a decision off
by a little more than a year. Note that, even if Sarepta files an NDA using
the Phase IIb results, under FDA guidelines they will still need to conduct
a confirmatory Phase III trial.
So - again, assuming the study results hold up after 48 weeks - will the FDA
review eteplirsen based on very good results from a single, small trial?
There is no doubt, the FDA likes all of the data that it can get, and, for
most drugs, requires at least one positive phase III trials before approval.
The small sample size in Sarepta's current trial is a strong factor
militating against approval without an additional study. Nevertheless,
assuming the 48 week data confirms the positive results seen at 36 weeks, I
think the FDA will review eteplirsen on the results of the Phase IIb trial,
for several reasons:
First, as discussed above, the results are dramatic.
Second, there is no other effective treatment for these patients, who suffer
rapid declines in function and early mortality. The FDA also recognizes
that, given the cost constraints, it needs to evaluate drugs for rare
conditions based on reduced data sets. A few examples of FDA approval based
on small studies are the approval of Alexion's Soliris for a second
condition based on 13 patients and the approval of Novartis's Afinitor for
tuberous sclerosis based on positive results in nine patients in a 28-
patient open label study.
Third, as R.S. pointed out, Congress has taken action in this year in the
Food and Drug Administration Safety and Innovation Act and the Creating Hope
Act to encourage the development of new treatments for rare diseases and
for childhood diseases. Both acts had strong bipartisan support.
Fourth, my firm's diligence suggests that physicians who treat muscular
dystrophy are enthusiastic about being able to prescribe eteplirsen. This is
usually a pretty good indicator of how the FDA will react.
Fifth, diligence also indicates strong support in the muscular dystrophy
parent community, which is small but well organized, for an early review (if
you want to see why, just watch the patient videos from this trial above).
Sixth, the FDA will face considerable political pressure to act quickly.
Remember, these are Jerry's kids. It's hard for me to think of a more
sympathetic group than suffering and dying children, or a rare condition
that has such a high public profile as muscular dystrophy. I'm a pretty
cynical guy and a stickler for statistical purity at the FDA, and, even
setting aside my firm's pecuniary interest, I still want these patients to
have the treatment option as soon as possible.
Finally, given the absence of adverse side effects in the Phase IIb study,
there seems to be little risk that eteplirsen will harm patients who receive
it.
The only real downside to an early review by the FDA is that, if the drug is
approved, ethical considerations would make it impossible for the Phase III
study to have a placebo control arm (there will be a confirmatory Phase III
study even if the FDA indicates that it will review eteplirsen based on the
Phase IIb results). This is less of a concern in a DMD study than it is in
most other conditions, since the prognosis for patients is uniformly bleak,
and therefore it should be obvious from a single arm study whether
eteplirsen is effective.
While I would still be a bull if I thought that the FDA would definitely
require a Phase III study before review (and my valuation, below, does not
assume an early review), I think the prospects for FDA review next year are
strong.
Valuation
For the most part, the analysts who cover Sarepta and I are on the same page
regarding the likelihood that eteplirsen will ultimately be approved (and
will be approved on an expedited basis by the FDA). In my opinion, however,
their valuations are well below where the market values a company with a
drug that shows the potential of eteplirsen.
There are around 12,000 DMD patients in the United States. Of these, around
13% have defects in exon 51, the genetic defect that eteplirsen treats, or
around 1,560 US patients. Once approved, I'd expect eteplirsen to penetrate
about 70% of that market, or around 1,092 patients per year.
Analysts speculate that eteplirsen will be priced between $250,000 and $450,
000 annually. This is consistent with the experience of Alexion (ALXN),
which sells its Soliris treatment for neuromyelitis optica, another rare
disorder, for $500,000. Using a base case of $350,000, that gets us to peak
sales in the US of just over $327 million. Note that this does not take into
consideration the possibility that eteplirsen will significantly prolong
the lifespan of DMD patients, who typically die by their mid-20s; if the
drug does increase lifespans, then the number of patients alive at any given
time will increase).
Sarepta is currently in preclinical studies to use the same technology for
exon 45 and exon 50 defects, which together are about as prevalent as are
exon 51 defects. The company estimates that 85% of DMD patients could
ultimately benefit from exon-skipping technology, which accords with my
understanding of the mechanisms of DMD (if anyone is interested in
discussing this further, leave a comment and I can go into the science in
detail). While there are several steps from pre-clinical studies to a
marketed drug, conceptually there is very little difference among the
different genetic defects that lead to DMD, so a technology that helps
patients with an exon 51 defect should be adaptable to others.
Finally, investors need to consider sales outside the US. Although Sarepta
still has an appeal available, the European Patent Office has upheld Prosena
's patent for exon-skipping treatments for exon 51 and 46 in DMD, which
could prevent marketing eteplirsen in Western Europe.
Taking it all together, assuming that the technology that underlies
eteplirsen is effective as it appears to be from the Phase IIb results we've
seen so far, it's hard for me to see how peak sales for Sarepta's DMD
program would fall below $1.0 billion per year.
Alexion is a good example of a similar company that is around three years
ahead of where Sarepta is now (four years if the FDA requires a Phase III
study before reviewing eteplirsen), with one approved product and several
strong candidates in the near-term pipeline for rare diseases. Analysts'
projections for peak sales for Alexion cluster around $2.5 billion per year.
With a $21.6 billion market cap, this works out to a current price of 8.65
times peak sales.
Giving Sarepta the Alexion multiple on $1.0 billion of peak sales would
value Sarepta around $8.7 billion. Of course, we need to discount this.
Using a 20% discount rate and assuming that Sarepta is four years behind
Alexion, that values Sarepta's DMD program around $4.2 billion. We need to
take a further haircut to reflect the increased approval uncertainty, since
Alexion has one approved drug versus none so far for Sarepta. That's an art
rather than a science, but let's set that at 2/3. This values Sarepta's DMD
program around $1.4 billion.
An alternate comparable is Synageva Biopharma (GEVA), which is developing an
enzyme replacement therapy for the treatment of two rare diseases,
lysosomal acid lipase deficiency and cholesteryl ester storage disease. As
with Sarepta, Synageva has no currently approved product, but has presented
very promising results from a small Phase II study (they will begin their
Phase III late this year or early next year), with a pipeline of other
compounds and an interesting drug development platform. Analysts put peak
sales for their lead product in the $1.0 billion per year range. With
Sarepta looking at a potential market about the same size, with a similar
probability for regulatory success, and discounting by one year at 20% (on
the assumption that Sarepta needs to do a Phase III study before FDA review)
, that puts the value of Sarepta's DMD program at 83% of Synageva's $1.3
billion market cap, or $1.1 billion.
We need to be a little careful with Sarepta's capital structure, because the
company has issued warrants in several financings. There are 22.6 million
shares outstanding, plus options and warrants to purchase another 7.0
million shares, so the diluted share count is 29.6 million shares. So I
value the company's DMD program at just over $40.00 per share using ALXN as
a comp and just over $37.00 when comparing to GEVA. Biomarin Pharmaceuticals
(BMRN) is the other obvious rare disease comparable, but it's much harder
to do a direct comparison to Sarepta, given Biomarin's licensing agreements
and its development relationship with Sanofi-Aventis (SNY).
On top of this, we need to add the roughly $50 million that Sarepta will
receive upon the exercise of options and warrants, the value of the exon-
skipping development program outside DMD (my estimate is $100 million, the
value of given the promise that it has shown in DMD). The value of the rest
of the company is small compared to my view of the value in the DMD program,
but the company's market capitalization of around $80 million before we saw
the 36 month DMD results is a decent proxy, less around $10 million for
cash burn since then, and less another $20 million to reflect uncertainty
from the Department of Defense stop work order in the company's Ebola
program.
Finally, if the FDA approves eteplirsen, the company probably will receive a
transferable priority review voucher from the FDA, which would accelerate
FDA review of one drug by four months. While this would have limited value
in Sarepta's hands, an additional four months of sales of a blockbuster drug
on patent would have real value. I've seen some speculation that this could
be worth around $100 million, but, given that nobody has traded one of
these vouchers yet, I'm much more conservative, putting a $25 million value
on this. That's $225 million on top of the value of the DMD program, or $7.
60 per diluted share, giving me a total valuation of $44.50 to $47.50 per
share for Sarepta.
Risks to My Thesis
Any of the following would make me reconsider my analysis:
(1) 48-week results that do not live up to my expectations based on what we'
ve seen so far in the Phase IIb trial and the public statements from the
families.
(2) Negative comments from the company following the end-of-study meeting
with the FDA.
(3) Pushback from payors regarding price (but ask yourself this-would you
want to be the Scrooge insurance company that forces children to stay in
wheelchairs?)
(4) Strong positive results from Prosena's competing product.
(5) Adverse intellectual property developments.
In addition, there is no doubt that Sarepta will need to raise additional
money to continue its research and development, including the funding of a
Phase III study for eteplirsen. If the final Phase IIb data is good, I would
expect the company to raise capital after that data is released (and I don'
t think they would have any difficulty doing that).
The company also has an at-the-market equity offering (ATM) agreement in
place to sell up to $40 million of stock through Citadel. Citadel's
advertised trading as a percentage of volume hasn't gone up since the
company signed the ATM agreement in early September, and I have no other
reason to believe that the company has issued any stock under the ATM, so I
assume that the company has not yet issued any stock under the program.
While the ATM would only cover a few day's volume, it is still an overhang,
with the possibility that Citadel might sell stock into any bump up in the
stock price.
While I do not expect the market to suddenly converge to my valuation, I
hope that the upcoming release of the final Phase IIb results will cause
investors to give more consideration to the relative valuation of Sarepta's
DMD program.
Recent Weakness
Sarepta is trading down about a dollar from its September 18 price. I
suspect the decline relates to the registration statement the company filed
on September 19, registering the just under 5 million warrants outstanding.
Since the company is quite straightforward in its reporting of outstanding
options and warrants, this shouldn't have been a surprise to anyone. In any
event, I have always had the warrants built into my model. If I'm correct
about this, then the decline from the registration of the warrant stock
should be transient.
The stock suffered a similar fall early this month, after the ATM program
announcement. Although the overhang from this program, and the need to raise
additional capital, is real, the company's capital needs are also clear to
anyone who has followed the story.
Please Tell Me Why I'm Wrong
This is the first stock I've written about on Seeking Alpha. While my
excitement is genuine, I'm always open to the possibility that I'm missing
something important, particularly where a stock is trading well below half
of what I think it is worth. It seems to me that the analyst community,
while it recognizes the potential of eteplirsin, is extraordinarily
conservative in their valuation, perhaps because they simply don't want to
get too far ahead of the market. I would be very grateful if any bears would
let me know why you think I'm wrong. In return, I'll be happy to answer any
questions left in the comments either about the science or my analysis.
Disclosure: I personally have no positions in any stocks mentioned, and no
plans to initiate any positions within the next 72 hours. However, the fund
of which I am a member has a position in Sarepta stock and options. Our
position may change at any time. I wrote this article myself, and it
expresses my own opinions. I am not receiving compensation for it. I have no
business relationship with any company whose stock is mentioned in this
article. | q********g
发帖数: 10694 | 2 兼问一下，为什么今天跌这么多？是不是跟明天早上的conference call有关？ | j*****2
发帖数: 306 | 3 the CC schedule is leak. and most of people don't willing to gamble for the
result, especailly, when most of the LONG gained big already.
【在 q********g 的大作中提到】
: 兼问一下，为什么今天跌这么多？是不是跟明天早上的conference call有关？
| i******r
发帖数: 861 | | m***9
发帖数: 1671 | | j*****2
发帖数: 306 | 6 300buck
here we come :D
still a 10X ahead
【在 m***9 的大作中提到】
: 今天double了，昨天下跌估计是迷魂阵
| j*****2
发帖数: 306 | 7 but here to confirm by BIOFISH, anyway, I will LONG until 100++
【在 m***9 的大作中提到】
: 今天double了，昨天下跌估计是迷魂阵
| g*********1
发帖数: 725 | 8 Congratulations, Jenny, I remembered that you began to LONG it when it was
around 7.
【在 j*****2 的大作中提到】
: 300buck
: here we come :D
: still a 10X ahead
| j*****2
发帖数: 306 | 9 just sold at 40.38, damn it, too fast, force me to sell..
【在 g*********1 的大作中提到】
: Congratulations, Jenny, I remembered that you began to LONG it when it was
: around 7.
| b*****h
发帖数: 783 | 10 Congratulation!, I missed it . hehe..
【在 j*****2 的大作中提到】
: 300buck
: here we come :D
: still a 10X ahead
| | | j*****2
发帖数: 306 | 11 biggest play this year is SVNT, 2nd is SRPT. Congs. for myself :D
pending the EXEL & HEB play forward, go go go :D
next year, TAX 13% at CA. damn it..
【在 b*****h 的大作中提到】
: Congratulation!, I missed it . hehe..
| f******t
发帖数: 478 | 12 牛呀！
【在 j*****2 的大作中提到】
: biggest play this year is SVNT, 2nd is SRPT. Congs. for myself :D
: pending the EXEL & HEB play forward, go go go :D
: next year, TAX 13% at CA. damn it..
| s**********9
发帖数: 846 | 13 厉害！佩服！恭喜！
【在 j*****2 的大作中提到】
: biggest play this year is SVNT, 2nd is SRPT. Congs. for myself :D
: pending the EXEL & HEB play forward, go go go :D
: next year, TAX 13% at CA. damn it..
| q********g
发帖数: 10694 | 14 非常感谢，您的建议让我在15块左右hold住了。
我刚才出门上班前卖掉了39.75。
【在 j*****2 的大作中提到】
: just sold at 40.38, damn it, too fast, force me to sell..
| q********g
发帖数: 10694 | 15 再捐1000伪币到版上。对了，如果有谁邀请股版风格跟这里比较一致的活跃分子来俱乐
部，我贡献120伪币，发完为止，至于120伪币怎么分，你们自己决定，真心真意的，别
上马甲。
这个俱乐部对我收益很大，大象的领导，众网友的帮助，非常感谢。 | q********g
发帖数: 10694 | 16 the other I have is NBS. any suggestion? Thanks a lot.
【在 j*****2 的大作中提到】
: biggest play this year is SVNT, 2nd is SRPT. Congs. for myself :D
: pending the EXEL & HEB play forward, go go go :D
: next year, TAX 13% at CA. damn it..
| d******t
发帖数: 1114 | 17 又翻了一倍，牙签肉你是不会吃的，呵呵
【在 j*****2 的大作中提到】
: just sold at 40.38, damn it, too fast, force me to sell..
| j*****2
发帖数: 306 | 18 I don't know ar, if NBS go over 1buck, please alert me, I will start do FA.
else, no interest.
【在 q********g 的大作中提到】
: the other I have is NBS. any suggestion? Thanks a lot.
| q********g
发帖数: 10694 | 19 Thanks. I will watch on it every week!
.
【在 j*****2 的大作中提到】
: I don't know ar, if NBS go over 1buck, please alert me, I will start do FA.
: else, no interest.
| d*****i
发帖数: 346 | 20 the proposition to raise state tax for high incomes (prop30) is to be voted
in Nov. If it's approved, will apply retroactively to all income earned
since 2012/1/1. There are different buckets for the rise, 13.3% applies to
those with 1 M income or more
【在 j*****2 的大作中提到】
: biggest play this year is SVNT, 2nd is SRPT. Congs. for myself :D
: pending the EXEL & HEB play forward, go go go :D
: next year, TAX 13% at CA. damn it..
| K*******n
发帖数: 1466 | 21 Congratulations!
Tai Li Hai Le! |
|
