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Understanding Sarepta Therapeutics’ Operational Performance

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Dec. 21 2018, Updated 2:03 p.m. ET

R&D expenses

Sarepta Therapeutics’ (SRPT) R&D (research and development) expenses rose YoY (year-over-year) to $86.58 million from $34.24 million due to higher clinical and manufacturing expenses resulting from increased patient enrolment in the Essence trial, increased up-front and license payments, and higher compensation expenses.

Sarepta’s R&D expenses are expected to be $310.49 million and $306.08 million, respectively, in 2018 and 2019 compared to $166.71 million in 2017.

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In comparison, peers Pfizer (PFE), Regeneron (REGN), and Vertex Pharmaceuticals (VRTX) are expected to incur 2018 R&D expenses of $7.86 billion, $2.03 billion, and $1.21 billion, respectively. In the third quarter, Sarepta’s total operating expenses rose YoY to $148.58 million from $91.86 million. Its operating income was -$70.1 million in the third quarter. Sarepta had an operating income of -$45.91 million in the comparable period in 2017.

Sarepta’s bottom line

In the third quarter, Sarepta Therapeutics’ net interest and other expenses totaled $6.97 million compared to its net interest and other income of $184,000 in the previous year’s period. Sarepta received an income tax benefit of $674,000 during the third quarter. In comparison, it incurred an income tax expense of $2.01 million in the previous year’s period.

The company’s net income was -$76.02 million in the third quarter. In the comparable period in 2017, Sarepta had a net income of -$47.71 million. Sarepta reported a net income per share of -$1.15 in the third quarter compared to -$0.78 in the previous year’s period. Its net losses are expected to be $274.73 million and $194.45 million, respectively, in 2018 and 2019 compared to $50.69 million in 2017.

Next, we’ll look at analysts’ views on Sarepta stock.

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