This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

A Rousing Rebuttal of the Sarepta Serial Short

Stocks in this article: SRPT GSK RNA

CAMBRIDGE, Mass. ( TheStreet) -- Wednesday was apparently "Let's Rehash the Sarepta Therapeutics Bear Thesis" Day at Seeking Alpha. Two contributors penned articles for the DIY investment web site raising questions and concerns about Sarepta's (SRPT) Duchenne muscular dystrophy drug eteplirsen.

Neither article said anything new about Sarepta or eteplirsen that hasn't been already debated endlessly by bulls and bears. Sarepta shares fell nonetheless, down 8% to $38.63. A downgrade of Sarepta by analyst Bill Tanner at his new sell-side shop FBR (he left Lazard recently) probably contributed as much or more to Sarepta's fall Wednesday.

It's a waste of time -- and impossible, quite frankly -- to rebut every article regurgitating the eteplirsen bear thesis. The eteplirsen data are what they are. Investors find the data convincing or not. Still, I feel compelled to address some of the poorly reasoned arguments and mis-statements made by yesterday's Seeking Alpha contributors. I don't expect to sway many minds.

EnhydrisPECorp, a pseudonym, insists the phase II study of eteplirsen failed. He knows this because he's apparently the only person who read the published study. Untrue. Moreover, he insists Sarepta knows eteplirsen doesn't work but is covering up the truth with with bio-statistical flimflam and really effective propaganda. EnhydrisPECorp is short Sarepta, according to his disclosure.

But on Sept. 26, EnhydrisPECorp was long Sarepta, according to the disclosure on this Seeking Alpha article. He wasn't exactly enthusiastic about eteplirsen in this article but enough to own Sarepta, apparently.

EnhydrisPECorp doesn't explain when or why he went from owning Sarepta to shorting the stock. Maybe he's just a daytrader.

What's interesting to me about the latest EnhydrisPECorp article is that it taps into the same conspiratorial thinking I hear from a small group of institutional investors who believe strongly Sarepta CEO Chris Garabedian is a liar. These people insist Garabedian has willfully mis-represented the eteplirsen data, and in doing so, they believe he has purposefully manipulated the emotions of DMD patients and their families. Of course, they're short the stock.

Sarepta bulls are often criticized for allowing emotion to sway their thinking. The "Garabedian is evil" people are the same except in the other direction. It is a trip to talk to them, however.

Next, Steven Breazzano makes two major arguments for why Sarepta is much more risky than investors realize and therefore the stock is over-valued. Breazzano has no position in Sarepta, according to his disclosure.

Breazzano's Sarepta bear argument No. 1 (I'm summarizing): Results from the phase II study of Prosensa's (RNA) drisapersen look very similar to the "positive" results of Sarepta's eteplirsen phase II study. The larger drisapersen phase III study failed, therefore, Sarepta's phase III study (not yet started) will inevitably fail, too.

Let's take a look at slides depicting results from the two, phase II studies:

Here is the Prosensa/ GlaxoSmithKline (GSK) drisapersen phase II study:

And here is the Sarepta eteplirsen phase II study:

The drisapersen and eteplirsen arms of the studies do look vaguely similar, except we have data on six-minute walk test performance for the eteplirsen patients out to 96 weeks, double the amount of data in the 48-week drisapersen study. That's a significant difference Breazzano fails to note.

He also argues performance on six-minute walk tests can be highly variable and skewed when patients know they're on drug or not. True, but again, the eteplirsen data are so compelling because patients continue to perform well over 96 weeks. That's a long time to fight against the muscle-wasting progression of DMD.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,859.42 +54.62 0.31%
S&P 500 2,073.22 +2.57 0.12%
NASDAQ 4,776.0770 +10.6970 0.22%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs