WBB Securities, LLC Steve Brozak, DMH • [email protected] • (908) 518-7610 Sarepta Therapeutics, Inc. (NasDaqGS: SRPT) UpDating Coverage Updating Coverage by Maintaining Strong Buy Rating and June 29, 2018 Increasing the 12-Month Price Target to $166.00 The Evolution of Sarepta To Big Biotech Sarepta Therapeutics, Inc. (SRPT) is a Current Price $133.75 commercial-stage Biopharmaceutical company 12 Month Target Price $166.00 focuseD on RNA targeteD therapeutics, gene 12 Month TraDing Range $32.80-$176.50 therapy anD other genetic meDicine approaches Market Capitalization (Mil) $8,765 for treating rare neuromuscular diseases. Shares OutstanDing (Mil) 65.53 Currently the company is primarily focused on drug candidates for Duchenne Muscular Dystrophy (DMD), Avg. Daily Volume 1,753,129 a rare, inherited disorder, primarily in young males L. T. Debt (Mil) 427.4 and defined by progressive muscular weakness. It is DiviDenD/YielD N/A caused by an absence of the protein dystrophin, Book Value P/S 12.18 which connects, strengthens and protects muscle NASDAQ Composite 7,503.68 fibers as muscles contract and relax. S&P 500 2,716.31 Historical Performance – Page 7 Price and Volume Chart – Page 8 We believe SRPT has taken strategically important Disclosure - Page 9 actions by enlisting leaders in the DMD space for advice and clinical trial participation. Further, with the recent collaboration agreements with Myonexus Therapeutics and confirmed interest in expanding into additional indications, we remain assured of growth for the company. With these actions, combined with a proven ability to navigate through regulatory hurdles in the development process of rare disease therapies, as shown so far with EXONDYS 51®, we see SRPT either driving through pursuit of their next- generation platform, or the possibility of a takeout. We therefore are updating our coverage of SRPT By maintaining our Strong Buy rating anD increasing our 12-month price target of $166.00. On June 19, 2018, SRPT management hosted the company’s first R&D Day where positive preliminary results were reported from the first three DMD children receiving AAVrh74.MHCK7 micro-dystrophin gene therapy in a Phase 1/2a trial. Micro-dystrophin is a shortened but functional gene for dystrophin that can be beneficial in any version of DMD (exon-skipping mutation or not). The micro-dystrophin gene, which is a shortened, single strand of RNA, is delivered to the cell inside the AAVrh74 virus in which the native DNA has been replaced with the micro-dystrophin gene. The trial is being conducted at Nationwide Children’s Hospital (Nationwide) in a strategic collaboration with SRPT. Preliminary data includes: • Mean gene expression of micro-dystrophin fibers was 76.2% and mean intensity of the fibers was 74.5% compared to normal control. Samples were taken from the gastrocnemius, a portion of the calf muscle. • Post-treatment biopsies evaluating micro-dystrophin levels, measured by Western blot analysis, (see image below) displayed a mean of 38.2% compared to normal, based on SRPT’s method, 53.7% when compared to normal according to Nationwide’s quantification of SRPT’s method that adjusts for fat and fibrotic tissue. • All patients showed significant decreases of serum creatine kinase (CK) levels, with a mean reduction of CK of over 87% at Day 60. CK is an enzyme related to muscle damage and patients with DMD consistently show high levels of CK. • No serious adverse events (SAEs) were observed in the study. Two patients had elevated gamma-glutamyl transferase (GGT) that resolved with increased steroids within a week and returned to baseline levels. Patients had transient nausea, generally during the first week of therapy coincident with increased steroid dosing. Source: Sarepta Therapeutics, Inc. Additionally, SRPT provided more updates to their pipeline on R&D Day, including an overview of Nationwide’s Phase 1/2 GALG2 trial, in Limb-Girdle Muscular Dystrophy, and the PPMO platform, the second generation PMO platform from which EXONDYS 51 was derived. In 2016, the FDA approved the company’s first commercial product, EXONDYS 51 (eteplirsen injection), a gene therapy for treating DMD patients with defective exon 51. EXONDYS 51 binds to exon 51 of dystrophin pre-messenger RNA, resulting in “skipping” of this exon, thereby producing a functional dystrophin protein. The company estimates that EXONDYS 51 can treat approximately 13% of all DMD patients. SRPT recently received a negative opinion on approval of EXONDYS 51 from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA). The company will request a re-examination of the opinion, which is expected to conclude by end of 2018. SRPT continues to develop other exon skipping products to treat DMD. The company plans to submit Golodirsen (SRP-4053) an exon 53 skipping therapy, to the FDA for approval by end of 2018. SRPT is seeking guidance for a confirmatory study of Casimersen (SRP-4045) an exon 45 skipping drug. In April 2018, SRPT received the equivalent of Fast Track Status in Japan while undergoing a Phase 1/2 trial of DS-5141b in boys with DMD. Up to six boys, ages 5 through 10 years old with a confirmed diagnosis of DMD, will receive the treatment for 12 weeks. _________________________________________________________________________________________________________________________ WBB SECURITIES, LLC 2 Valuation Rating Legend: Strong Buy – Should be aggressively purchased. Sell – Stock should be sold on market strength. Buy – Should be purchased on market weakness. Sell Short – Should be aggressively sold. HolD – Fairly valued. Speculative Buy – For aggressive accounts only. Core HolDing – Essential holding of a long-term account. SRPT is entering a new phase in the life of the enterprise. Last week during SRPT’s inaugural R&D day, they displayed their continued reach into the muscular dystrophy space with the strength of its clinical candidates and collaborative partnerships, as well as continuing to burnish the company’s reputation with investors. The early-stage data the company presented did not go unnoticed in the capital markets. We are therefore now valuing SRPT using a sum-of-the-parts analysis, applying discounted cash values per share to EXONDYS 51 amounting to $46, Golodirsen & Casimirsen together to $34, gene therapy candidates, partnerships (keeping in mind the possibility of full acquisition of Myonexus) to $78 and cash-equivalent assets to $8.00. We assume the DMD populations are located in the United States only. In completing this analysis, we do not rule out the possibility of SRPT being a takeover target for larger pharma or biotech, recognizing that this is a favorable environment for such an action. Ultimately, with a 65.53 million share count, we arrive at a value per share of $166.00. In addition to the risks normally anticipated in a commercial stage biotechnology company and previously outlined by SRPT in regulatory filings, we note the following specific risks in attaining our price target: Commercial Risk: SRPT is solely dependent on EXONDYS 51 for the majority of the company’s current revenue stream. As is common with many biotech companies, SRPT also experiences increasing competition even in the DMD space from companies such as Pfizer (PFE) or PTC Therapeutics (PTCT). Manufacturing Risk: Reliance on third-party manufacturers to comply with cGMP. Clinical Risk: Lack of current clinical candidates in addition to EXONDYS 51, given its reliance on sufficient positive data in its post-market clinical trial. Intellectual Property Risk: May utilize fiscal resources and effort to continue sufficient property protection and prevent infringement of other company’s rights. Regulatory Risk: FDA policy changes or regulatory delays, healthcare reform, reimbursement parameters, etc. Financial Risk: Sufficient cash runway until EOY 2018 (per 10-K). About DMD DMD is one of the most common fatal genetic disorders. It affects approximately one in every 3,500-5,000 male births worldwide. The condition is universally fatal, and death usually occurs before the age of 30 generally due to respiratory or cardiac failure. _________________________________________________________________________________________________________________________ WBB SECURITIES, LLC 3 DMD is a rare degenerative neuromuscular disorder causing severe progressive muscle loss due to lack of dystrophin, leading to premature death. Dystrophin is a protein found in muscle cells that is crucial for strengthening and protecting muscle fibers, even in extremely small amounts (about 0.002 percent of total muscle protein). DMD is associated with specific errors in the gene that codes for dystrophin. The disease manifests itself in progressive muscle weakness in the lower limbs, spreading to the arms, neck, heart and other areas of the body. SRPT Pipeline Source: Sarepta Therapeutics, Inc. There are four categories generally defining the SRPT pipeline: RNA Therapies derived from the company’s PMO platform, RNA therapies derived from the company’s PPMO platform, Gene Therapy and Gene Editing. Aspects of the company’s pipeline are being pursued both collaboratively and independently. All programs primarily focus on the DMD indication, with the exception of the recent expansion into Limb-Girdle Muscular Dystrophy introduced to SRPT through the collaboration agreement executed with Myonexus (June 13, 2018). Unlike the RNA-targeted technologies such as siRNAs and DNA gapmers, SRPT’s PMO-based compounds operate by steric blockade