Sarepta Therapeutics Inc. (NASDAQ: SRPT)

Sarepta Therapeutics News

On Tuesday Sarepta Therapeutics ($SRPT) released surprising  data on its recently approved Duchenne muscular dystrophy drug, Exondys 51. The CEO Ed Kay stated that sales have surpassed expectations and have now reached $5.4 million in the fourth quarter while expectations were at $4.9 million. Stock prices soared over 20% following the news.

“We want to make sure that everybody knows the physicians and their patients are interested in Exondys. This [the $5.4 million in sales] is the proxy for that. It’s really not a bad number for a first quarter,” said Sarepta CEO Ed Kaye, in an interview Monday night at the J.P. Morgan Healthcare Conference.

As expected, there is a longer than average wait for reimbursements, but they expect it to decline as time goes on. Along with quicker reimbursements on the horizon, they are also looking at getting Exondys 51 approved in Europe and tapping into their market within the next year.

As long as they can maintain this course of action we should see plenty of upside from this drug that will benefit their bottom line, investors and more importantly the patients who it will help. Currently analysts have an average price target on SRPT of $63.12.

SRPT Technicals

Sarepta Therapeutics

Looking at the daily chart above you will see that shares of SRPT received a nice boost following the positive news and were able to reclaim the 50-day moving average (red line) on solid volume. Shares have been under some selling pressure following the huge spike up back in September when news was released that Exondys 51 was approved by the Food and Drug Administration (FDA). Shares have come all the way back down to test the 200-day moving average but were able to hold that level and make another push back up.

It has also be speculated that shares were propped up even higher due to a possible short-squeeze. According to Yahoo Finance, there is currently a 21% short interest in the stock and when unexpected positive news comes out and pushes prices higher, shorts can be forced to cover their position which results in further buying and higher stock prices.

What I really like about this daily chart is that we broke out of that slow-grinding down trend and have finally picked up steam to higher prices. Ideally we want to hold these higher prices with some consolidation before making another push up so if you’re looking to get long it may be best to wait for a decent pullback to the moving averages.

 

Sarepta Therapeutics

The 15-minute chart above shows how much traders and investors liked the news released by Sarepta Therapeutics. Shares skyrocketed on heavy volume from right around the $30 price level all the way up to $39 before cooling off and closing the day at $37.89. Typically after big days like this we will see some profit taking from longs resulting in a pullback and one thing we like to see in a pullback is lighter volume. This indicates that most longs are hanging around to see if we can get higher prices.

Looking forward over the next couple days we will want to see prices hold above the 50-day moving average currently at $34.26 before making an attempt back above Tuesday’s high of $39.36. Keep this stock on your radar as there is plenty of activity to create some great trading opportunities.

Looking Forward

Sarepta Therapeutics has been providing plenty of reason to like the company but as with anything in life, keep everything in perspective. Biotech’s are a volatile industry that can cause some serious losses in your portfolio if not managed properly. There is also a lot of uncertainty around the healthcare industry and how they will be implemented with the new administration, but what we do know is the company is providing great results with positive expectations moving into 2017.

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