NEW YORK (TheStreet) -- Sarepta Therapeutics (SRPT) - Get Report stock is soaring by 16.21% to $21.43 in mid-morning trading on Wednesday, after the the FDA deferred a decision on whether to approve its Duchenne muscular dystrophy (DMD) drug eteplirsen past the Thursday deadline.
The delay is fueling hopes that the treatment could ultimately be cleared for sale.
"I'm speculating so I don't claim to have all the answers, but it's prudent to consider the possibility FDA is trying to conjure some type of 'middle of the road' scenario to satisfy hardliners who want more eteplirsen data and Duchenne patients who want the drug approved now," TheStreet's Adam Feuersteinreports.
DMD is a rare condition that typically emerges in boyhood and causes weakness in the arms and legs and eventually the lungs and heart. There is currently no other treatment on the market.
If the drug is approved, the stock will likely trade between $35 and $45, whereas if the drug fails to receive approval it could plummet to roughly $5, Janney Montgomery Scott analyst Debjit Chattopadhyay told Reuters.
Analysts believe the likelihood of approval is low, as the FDA similarly delayed a decision on BioMarin Pharmaceutical's (BMRN) DMD drug before rejecting it, Reuters notes.
Separately, TheStreet Ratings team rates the stock as a "sell" with a ratings score of D-.
Sarepta's weaknesses include its disappointing return on equity, weak operating cash flow and poor profit margins.
You can view the full analysis from the report here: SRPT
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.