Sarepta Therapeutics shares soared Monday after the stock was upgraded to "outperform" at Oppenheimer.
The firm raised the price target on the company to $60 per share following further analysis of advisory committee discussions and historical precedence that supports Sarepta's case for seeking accelerated approval for eteplirsen, its Duchenne's muscular dystrophy (DMD) drug. The new price target indicates an upside of more than 322 percent from the stock's Friday close of $14.19.
Shares of Sarepta were up more than 26 percent Monday.
Last week the Food and Drug Administration's AdCom met to discuss whether or not there was sufficient clinical evidence of eteplirsen's efficacy to warrant accelerated approval. The committee ultimately chose to not approve the drug with seven members voting that there wasn't substantial evidence of the drug's effectiveness. Three committee members supported Sarepta's proposal and the remaining three abstained.
After reviewing the proceedings, analysts at Oppenheimer interpreted the FDA's request for independent review of the correlation between etepllirsen and the protein dystrophin, the lack of which is associated with Duchenne's. The firm also said that the FDA has previously overturned AdCom votes for drugs that treat diseases that currently have no approved products.
The FDA previously said that it needed more time to review eteplirsen's application and pushed back the Prescription Drug User Fee Act date to May 26. Oppenheimer sees the date as a potential catalyst for Sarepta shares and a chance for eteplirsen receiving accelerated approval, a decision the firm says accounts for more than $14 a share in its price target.
Oppenheimer also sees eteplirsen contributing $32 a share based on its revenue potential through 2030, assuming accelerated approval and a 2016 launch. The firm added that the pharmaceutical company's current valuation and the desirability of DMD treatments make Sarepta an attractive target for acquisition.
Analysts at Oppenheimer said that while approval risk remains and is higher post AdCom, its "discussions with other rare disease companies (potential acquirers), and industry contacts suggests to [them] interest in the DMD assets."
Shares of Sarepta are still down more than 53 percent this year.