Sarepta (SRPT) announced Monday that results from a non-human primate study of AVI-7288, the company’s lead drug candidate for the treatment of Marburg virus infection, showed that the injection resulted in survival rates of up to 100% in treated subjects, a stark improvement over the 0% survival rate in subjects who received placebo. SRPT is a compelling holding for the long-haul based on lead candidate and Duchenne Muscular Dystrophy treatment eteplirsen, and Monday’s announcement is simply another reason to get involved. Investors should, however, expect near-term volatility based on the upcoming end-of-Phase II meeting with the FDA, for which SRPT will announce results and a plan for potentially submitting the drug for accelerated approval. Nevertheless, today’s news supports SRPT’s already strong chart. The stock’s break out through the $29.50 level (prior quadruple top) on February 27th, and then through the November 27th high of $31.87, demonstrated some compelling buying activity, particularly given the high volume accompanying the run. The trade lower the next day, the 28th, was on much lighter volume, and importantly, the stock did not make a lower low, suggesting that the uptrend remains intact. We note that a break out above the $31.87 level could see SRPT rising to $35 a share, with potential to trade up to the $40 level if momentum continues and the shares break through $35.
Marburg hemorrhagic fever is a rare, severe type of hemorrhagic fever and is highly fatal, caused by a virus from the same family as Ebola hemorrhagic fever. Bloomberg reported that outbreaks and sporadic cases have been reported in Angola, the Democratic Republic of Congo, Uganda and Kenya since the disease was identified in 1967. No vaccine or comprehensive treatment exists for Marburg, and fatalities occur within eight or nine days of symptoms. What’s important to note is that the Marburg virus is classified as a Category A bioterrorism agent (highest risk and highest priority) by the Centers for Disease Control and Prevention (CDC) and the Secretary of Homeland Security deemed it a material threat to national security in 2006. Research is being carried out under a U.S. Department of Defense (DoD) contract. Sarepta reported, “In the study, intramuscular injections of AVI-7288 were well tolerated. Efficacy results showed a high degree of survival between 83 and 100 percent in each of the three treatment groups. No subjects survived in the placebo-treated control group.” While the results were demonstrated in non-human primates, they’re incrementally beneficial to the SRPT story.