FDA Expands Label for Sarepta’s Duchenne Gene Therapy

The FDA has broadened the label for Sarepta Therapeutics’ Elevidys - a gene therapy for Duchenne muscular dystrophy (DMD). The therapy is now approved for all DMD patients aged 4 and older after the therapy showed meaningful clinical benefits in secondary measures, despite the trial missing its primary endpoint.

This decision is expected to drive significant revenue growth for Sarepta, with projections of $3bn by 2025 and $5bn by 2027. The expansion is also good news for Catalent, who manufacture the treatment on Sarepta’s behalf from the CDMO’s Baltimore, Maryland, facility, with estimates that the drug is responsible for almost a quarter of Catalent’s EBITDA.

The following article originally appeared in MSN.

Catalent (NYSE:CTLT) rose 3.4% after Sarepeta's (SRPT) Duchenne muscular dystrophy treatment Elevidys received a label expansion. The gene therapy is now also approved for patients who are non-ambulatory.

"Most importantly, we believe this takes a binomial risk off the table (that Elevidys could be pulled from the market) and helps to firm up Catalent's downside valuation in the event that the Novo deal breaks," RBC analyst Sean Dodge wrote in a note on Thursday. "Given the relatively lower risk, we could see the current deal spread (as of today's close) tighten from ~16% closer to the $63.50 transaction price."

The Sarepta (SRPT) news is important to Catalent (CTLT) investors because Elevidys represents a "significant" portion of CTLT's EBITDA, which RBC estimates to be 23% of the FY24 total at the midpoint of guidance. Sarepta jumped 35% on Friday.

Based on the label expansion announced on Thursday, RBC assumes that SPRT contributes an incremental $20-$30 million EBITDA in FY25, or a total of $200-$220 million.

The Sarepta (SRPT) news comes after Catalent (CTLT) agreed to be acquired by Novo Holdings, the parent company of Danish drugmaker Novo Nordisk, for $16.5 billion in February.

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