With Sarepta being a clinical-stage biotech, few investors were expecting much from the company when it reported its fourth-quarter earnings results on Thursday. With no products currently approved by the FDA, shareholders were merely looking for confirmation that its Duchenne muscular dystrophy drug, Eteplirsen, was on track, and that its expenses were under control. What we got was a massively wider loss than expected and the projection for $85 million to $115 million in losses compared to expectations of just $45 million in losses.
Before you go jumping out of your first floor window, relax, because there’s a good explanation for everything. The majority of Sarepta’s $2.36 per-share loss came from a $51.8 million charge related to the value of stock warrants because of Sarepta’s monstrous rise last year. That’s hardly anything I’d be concerned about.
The cash situation isn’t a concern, either, even with higher expenses in the form of research and development costs. Sarepta ended the year with $187 million in cash – more than enough to get it through this year – and appears focused on gaining an accelerated review and approval for Eteplirsen. Based on its efficacy in trials, there really is no logical reason why the FDA shouldn’t streamline this application and why Eteplirsen won’t be helping DMD patients within perhaps the next year. For those of you biotech savvy investors who’ve stuck with Sarepta thus far, don’t be scared away one bit by this earnings report.
Sometimes an earnings beat or miss isn’t as cut-and-dried as it appears. I’ve given my two cents on what’s next for each of these companies — now it’s your turn to sound off. Share your thoughts in the comments section below and consider adding these stocks to your free and personalized Watchlist.
The article 3 Earnings Reports That Caught My Attention Last Week originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool owns shares of Sturm, Ruger.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.