Sarepta Therapeutics stock surged by 20 percent after the company brought in revenues much higher than expected in its second-quarter earnings report Wednesday.
Wall Street believes the biopharmaceutical company's focus on developing treatments for rare neuromuscular diseases is paying off, putting Sarepta in position to dominate its sector of the commercial drug market.
"We believe Sarepta is on track to become a [Duchenne Muscular Dystrophy]-focused powerhouse," a SunTrust analyst wrote in a note.
Sarepta announced quarterly revenue of $35 million, which was $13 million above what analysts surveyed by Thomson Reuters expected. Its primary product, Exondys 51, "continues to demonstrate strong momentum" in the U.S. market, SunTrust said, and is on the verge of expanding into the European Union market.
A patent dispute between Sarepta and BioMarin is coming to an end, and a new licensing agreement would see Sarepta pay out $35 million in exchange for the rights to develop further DMD drugs. As a result of the new agreement, Sarepta expects to "report modest EU sales" in the fourth quarter of this year, SunTrust said.
A strong balance sheet is also giving Sarepta a boost, as the company ended this past quarter with $301.7 million in total cash. SunTrust sees a new $100 million debt-financing agreement as providing the biopharma with low-cost capital it can use to capitalize upon the FDA's approval of Exondys 51.
The biotech lost $1.15 a share in the second quarter, which was a bigger loss than Wall Street expected.