Massachusetts Biotech's Flagship Gene Therapy Posts Fifth Straight Quarterly Decline as Muscular Dystrophy Data Loom
Research Report

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Disclosures for H.C. Wainwright & Co., Sarepta Therapeutics Inc., August 6, 2026

This material is confidential and intended for use by Institutional Accounts as defined in FINRA Rule 4512(c). It may also be privileged or otherwise protected by work product immunity or other legal rules. If you have received it by mistake, please let us know by e-mail reply to [email protected] and delete it from your system; you may not copy this message or disclose its contents to anyone. The integrity and security of this message cannot be guaranteed on the Internet. H.C. WAINWRIGHT & CO, LLC RATING SYSTEM: H.C. Wainwright employs a three tier rating system for evaluating both the potential return and risk associated with owning common equity shares of rated firms. The expected return of any given equity is measured on a RELATIVE basis of other companies in the same sector. The price objective is calculated to estimate the potential movements in price that a given equity could reach provided certain targets are met over a defined time horizon. Price objectives are subject to external factors including industry events and market volatility. RETURN ASSESSMENT Market Outperform (Buy): The common stock of the company is expected to outperform a passive index comprised of all the common stock of companies within the same sector. Market Perform (Neutral): The common stock of the company is expected to mimic the performance of a passive index comprised of all the common stock of companies within the same sector. Market Underperform (Sell): The common stock of the company is expected to underperform a passive index comprised of all the common stock of companies within the same sector.

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Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report. The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services. The Firm or its affiliates did not receive compensation from Sarepta Therapeutics, Inc. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report. The Firm does not make a market in Sarepta Therapeutics, Inc. as of the date of this research report. The securities of the company discussed in this report may be unsuitable for investors depending on their specific investment objectives and financial position. Past performance is no guarantee of future results. This report is offered for informational purposes only, and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such would be prohibited. This research report is not intended to provide tax advice or to be used to provide tax advice to any person. Electronic versions of H.C. Wainwright & Co., LLC research reports are made available to all clients simultaneously. No part of this report may be reproduced in any form without the expressed permission of H.C. Wainwright & Co., LLC. Additional information available upon request. H.C. Wainwright & Co., LLC does not provide individually tailored investment advice in research reports. This research report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person. Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this research report. H.C. Wainwright & Co., LLC’s and its affiliates’ salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies that reflect opinions that are contrary to the opinions expressed in this research report. H.C. Wainwright & Co., LLC and its affiliates, officers, directors, and employees, excluding its analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research report. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data on the company, industry or security discussed in the report. All opinions and estimates included in this report constitute the analyst’s judgment as of the date of this report and are subject to change without notice. Securities and other financial instruments discussed in this research report: may lose value; are not insured by the Federal Deposit Insurance Corporation; and are subject to investment risks, including possible loss of the principal amount invested.

On August 6, 2026, analysts Mitchell S. Kapoor, MBA, MS, and Raghuram Selvaraju, Ph.D., MBA, MS, of H.C. Wainwright & Co. reiterated a Sell rating and a US$5.00 per share price target on Sarepta Therapeutics Inc. (SRPT:NASDAQ), implying roughly 69% downside from the August 5, 2026, closing price of US$15.93, following second-quarter results that showed continued erosion across the company's marketed Duchenne muscular dystrophy (DMD) franchise alongside a share-price reaction the analysts characterized as dismissive of that decline.

Muted Market Reaction Implies Value Assigned to Early-Stage Programs

ELEVIDYS generated US$98.1 million in 2Q26, 2.3% below the US$100.4 million consensus and down 3.8% sequentially. Phosphorodiamidate morpholino oligomer (PMO) products generated US$230.6 million, 0.7% below the US$232.2 million consensus and up just 0.9% quarter over quarter after an 11.8% decline in 1Q26. Management narrowed 2026 product revenue guidance to US$1.2-1.3 billion, expects second-half product revenue below first-half levels, and guided 3Q26 ELEVIDYS revenue below 2Q26 levels. Despite that trajectory, shares rose only as much as approximately 2.5% after hours.

The analysts inferred that the market is assigning significant value to SRP-1001 and SRP-1003, "even though the evidence remains concentrated in delivery, exposure, early target engagement, and safety." They identified the 2H26 myotonic dystrophy type 1 (DM1) and facioscapulohumeral muscular dystrophy (FSHD) multiple ascending dose (MAD) updates as the next potential stock value inflection points, followed by ELEVIDYS Cohort 8 data in 1Q27.

Fifth Consecutive ELEVIDYS Decline, With a Sixth Guided

ELEVIDYS revenue fell to US$98.1 million from US$102.0 million in 1Q26, US$110.4 million in 4Q25, US$132.0 million in 3Q25, US$282.0 million in 2Q25, and US$375.0 million in 1Q25. Current 3Q26 consensus of US$101.8 million assumes approximately 3.8% sequential growth, which the analysts said needs to move lower given management's guidance for another decline. At the US$1.25 billion midpoint of guidance, 2H26 product revenue would be approximately US$591 million versus US$659 million in 1H26, a roughly 10% half-over-half decline.

Management cited record healthcare-provider engagement, a majority of 2Q26 enrollment forms linked to providers engaged within the preceding 90 days, and increased activity from new and returning sites. The company still applies a roughly six-month enrollment-form-to-infusion planning assumption and indicated that recent enrollment gains should contribute primarily to 2027. Management declined to provide 2027 sales guidance. The analysts noted their benchmark remains completed infusions and recognized revenue, adding that "enrollment forms are early-funnel activity and do not support higher estimates" absent evidence that patients progress through authorization, scheduling, and infusion.

PMO Franchise Stabilizes but Faces 2027 Pressure

The 2Q26 PMO revenue of US$230.6 million was approximately 11% below the US$259.2 million generated in 4Q25. EXONDYS generated US$119.8 million, AMONDYS generated US$76.7 million, and VYONDYS generated US$34.0 million. Management cited adherence above 90%, more than 1,800 treated patients, extensive real-world experience, and an established reimbursement infrastructure as support for durability, while acknowledging incoming exon-skipping competition with commercial effects expected to become more visible later in 2027. Current 3Q26 consensus of US$235.4 million assumes approximately 2.1% sequential growth; the analysts do not believe the franchise can return to sustained growth.

The February 28, 2027, FDA target date for the AMONDYS and VYONDYS traditional approval conversions could protect the PMO cash-flow floor, though the applications remain dependent on a failed randomized primary analysis. The ESSENCE study enrolled 225 patients with DMD amenable to exon 45 or exon 53 skipping and missed its Week 96 four-step ascend velocity primary endpoint, with a least-squares mean treatment difference of 0.06 steps/second and p=0.309. An analysis excluding 23 patients affected by COVID improved the difference to 0.12 steps/second with p=0.050. Management said the reviews are standard and the agency has not indicated plans for an advisory committee, though the analysts cautioned that filing acceptance establishes a review timetable without establishing the sufficiency of the efficacy package.

DM1 and FSHD Programs Show Delivery Advantage but Incomplete Translation

SRP-1003 previously showed muscle concentration of 12.2nM versus approximately 1.43nM for the del-desiran program of Novartis AG (NVS:NYSE)/Avidity Biosciences and approximately 1.86nM for z-basivarsen from Dyne Therapeutics Inc. (DYN:NASDAQ). Sarepta disclosed placebo-adjusted DMPK knockdown of just over 50% in Cohort 1 but lacked Cohort 2 and Cohort 3 results due to sample-availability and assay-transition issues. Lower muscle concentrations have already produced downstream and functional signals elsewhere: Novartis/Avidity reported approximately 47% DMPK reduction and roughly two- to three-second video hand-opening time (vHOT) improvement at one year, while Dyne reported approximately 26% knockdown and a 3.3-second vHOT improvement at six months sustained at one year. The 2H26 update is expected to include safety, serum and muscle pharmacokinetics, DMPK knockdown, CASI-22 splicing, and vHOT analyses.

SRP-1001 previously showed 28.4nM muscle concentration, approximately 90% placebo-adjusted suppression across pooled DUX4-regulated gene panels, and a 33% creatine kinase reduction — only modestly above the approximately 30% reduction previously reported by Avidity. The lower cohorts were pooled, and assay dropout limited interpretation. Management said the six-month MAD update is intended to establish the chain from muscle exposure to DUX4-related biomarkers and select a dose, but does not expect the dataset to definitively demonstrate functional benefit given slow FSHD progression and short follow-up. Meanwhile, the Novartis del-desiran Phase 3 HARBOR DM1 readout is expected in 2H26, Novartis/Avidity's del-brax has entered Phase 3 FSHD development after its FORTITUDE biomarker cohort met primary and key secondary endpoints, and Dyne has cleared an FSHD Investigational New Drug application. License economics also share success through future milestones, royalties reaching the low double digits, and a US$50 million annual collaboration fee included in 2026 non-GAAP expense guidance.

Cash Generation Funds Upcoming Readouts

Total revenue was US$401.3 million, including US$328.7 million of product revenue and US$72.6 million of collaboration and other revenue. Cash and investments rose to US$945 million from approximately US$748 million sequentially, an increase of US$197 million that included receipt of a US$40 million commercial milestone from Roche Holding AG (ROP.SW). Combined non-GAAP research and development and selling, general and administrative expenses were approximately US$165 million versus approximately US$224 million in 1Q26, and management tightened 2026 non-GAAP expense guidance to US$800-850 million from US$800-900 million. GAAP and non-GAAP operating income were US$13.3 million and US$86.5 million, respectively.

Valuation and Risks

The valuation is driven by a discounted cash flow assessment using a 12% discount rate and 2% terminal rate of decline. The analysts made no changes to estimates, probability of approval, rating, or price target, noting the quarter supports their expectation that marketed DMD revenue will continue to fall while the 2H26 DM1/FSHD updates remain the primary source of potential value beyond cash generation.

Risks to price target achievement include a faster ELEVIDYS demand recovery, PMO traditional approvals, and slower competitive erosion, Cohort 8 data supporting nonambulatory re-entry with payer adoption, a favorable sirolimus package enabling SRP-9003 Biologics License Application progress, and stronger-than-expected DM1/FSHD dose-response, biomarker, or functional data. Downside risks include continued ELEVIDYS underutilization, additional safety events, payer resistance, further PMO erosion, or placebo-controlled data that weaken confidence in ELEVIDYS efficacy.

Sarepta shares traded at US$15.93 as of the August 5, 2026, close, within a 52-week range of US$14.68 to US$25.32, with a market capitalization of approximately US$1.68 billion, an enterprise value of approximately US$1.58 billion, and 105.6 million shares outstanding. The US$5.00 price target implies approximately 69% downside from that level.