Sarepta Therapeutics Inc. Stock Rose 22.5% in April. Here's Why.

By Cory

What happened

Continue Reading Below

Shares of Sarepta Therapeutics Inc. (NASDAQ: SRPT), a biopharma company in the middle of its first drug launch, rose 22.5% in April according to data from S&P Global Market Intelligence. Stronger-than-expected sales of its Duchenne muscular dystrophy (DMD) drug Exondys 51 and buyout rumors lifted the stock last month.

So what

Sarepta Therapeutics has been full of surprises lately. Last September, the Food and Drug Administration (FDA) granted Exondys 51 a highly controversial approval despite lacking direct evidence of its ability to slow progression of the muscle-wasting disease. Despite the regulatory green light, most analysts expected end payers to push back when asked to shell out around $300,000 annually for the unproven therapy.

More From

Image source: Getty Images.

Sarepta gave its investors a pleasant surprise in April when it announced $16.3 million in first-quarter Exondys 51 sales. That's a threefold increase over the previous quarter, which suggests insurance reimbursement denials aren't going to be as severe as feared.

The company's CEO Ed Kaye delivered another surprise last month by announcing his imminent departure. Sarepta's corresponding SEC filing states his resignation was planned, but the announcement still stoked buyout rumors.

Now what

Although you shouldn't put much faith in buyout rumors, it's interesting to note that aSanofi executive also stepped down from his position on Sarepta's board of directorsdue to a possible conflict of interest. In recent years, the big French pharma failed to bag a couple of big, high-profile acquisitions, and has since turned its attention to smaller biotechs.

While a buyout offer may loom on the horizon, investors will want to remain focused on Exondys 51's launch. Sarepta raised its expectations for the year from $80 million stated previously to $95 million when it reported first-quarter earnings. With Sarepta's recent market cap of about 1.8 billion, continued success for the therapy is already baked into the stock. Any hints the launch might not continue along its current trajectory will almost certainly lead to heavy losses from present levels.

10 stocks we like better than Sarepta TherapeuticsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Sarepta Therapeutics wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of May 1, 2017

Cory Renauer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.