Sarepta Stock Just Soared 40%. Here’s Why.

Sarepta will resume shipping Elevidys, it said late Monday. ((Dreamstime))

Sarepta Therapeutics stock jumped in premarket trading after the drugmaker said it would resume shipments of its gene therapy Elevidys that accounts for the majority of its revenue.

It will resume shipping Elevidys for treatment of ambulatory patients with Duchenne muscular dystrophy (DMD) imminently, Sarepta said after the bell Monday.

It comes after shipments of the medicine were paused by request by the Food and Drug Administration, following safety concerns. Two teenage boys with DMD advanced to the point that they could no longer walk died from acute liver failure earlier this year after receiving Elevidys. A man on a different gene therapy died from similar reasons.

Over the weekend, it was reported that a young boy on Elevidys had died as well, but his death was unrelated to the drug, Sarepta said.

Shares of Sarepta were up 35% to $18.75 before the market open. The stock was up as much as 48% earlier in the session. Coming into Tuesday trading, shares have fallen 90% over the past 12 months.

Elevidys’ return to market means the worst-case scenario is removed for now, said Cantor Fitzgerald analysts led by Kristen Kluska. However “safety concerns keep us on the sidelines,” the analysts added. Kluska has a Neutral rating on shares with a price target of $14.

BMO Capital Markets analyst Kostas Biliouris raised his price target on the stock to $50 from $25, saying that the potential risk versus reward is starting to look up. He maintained a Market Perform rating.

Analysts’ view on the stock has dramatically changed over the past few months. Currently, only 21% of the 29 analysts covering the stock rate shares Buy, according to FactSet. Most rate shares Hold, about 59%, while 21% rate it Sell.

As recently as April, 84% recommended the stock to their clients.

Write to Elsa Ohlen at elsa.ohlen@barrons.com