Sarepta Therapeutics (SRPT) announced on Tuesday that one of its patients has died following treatment with Elevidys, its gene therapy for patients with Duchenne muscular dystrophy.
The patient, a 16-year-old boy, died of acute liver failure, the company stated. In light of the news, SRPT stock plummeted 27%. The company’s stock is down 39.5% this year and has lost 40.7% over the past year.
Duchenne muscular dystrophy is a rare genetic disorder that’s mostly found in boys and gradually weakens their muscles. Few of those diagnosed with it live past their 20s.
Sarepta’s Elevidys is the only gene therapy for Duchenne muscular dystrophy that’s been approved by the U.S. Food and Drug Administration (FDA).
Regulatory approval gave Sarepta a boost last year — but this year is different
When the FDA expanded the pool of patients with Duchenne muscular dystrophy who are eligible for its Elevidys drug, SRPT soared 30%.
The “controversial” decision by the FDA “went beyond Wall Street’s best-case scenario and all but guarantees a multibillion-dollar market for Sarepta, which is basically alone in treating the Duchenne market,” The Wall Street Journal reported at that time.
Kostas Biliouris, an analyst at BMO Capital Markets, has estimated that Sarepta will have about 13,000 patients for its drug, which could translate to more than $5 billion in annual sales.
However, the death of the patient using its gene therapy drug “could give some physicians further pause when considering whether to start a patient on Elevidys, especially given perceptions of relatively modest clinical benefits,” Brian Abrahams, an analyst at RBC Capital Markets, told The Wall Street Journal.
Sarepta’s problems don’t end there.
As Elon Musk continues to slash the federal workforce as part of his Department of Government Efficiency (DOGE) efforts, biotech analysts are worried whether the FDA “will have enough staffers left to review new drug applications,” as The Boston Globe reported.
And Robert F. Kennedy Jr. who is now serving as secretary of health and human services, which oversees the FDA and other medical and health agencies, is a vocal skeptic of vaccines and other prescription drugs.
With the biotech industry already struggling, the new regulatory environment could prove especially challenging for Sarepta and other gene therapy companies.
Many startups in the space are going through significant layoffs in order to preserve cash, according to industry media reports.
Cantor Fitzgerald analysts recently noted that roughly 38% of biotech stocks have declined by 20% or more since the beginning of the year, with an additional 15% plummeting by 40% or more.
However, Jared Holz, an analyst with Mizuho Securities, sees small-cap biotech stocks as possibly being a bright spot for investors.
“When I look at biotech, I just view it as a nichey, highly academic kind of component of small cap equities,” he said.
“If small cap stocks continue to trade well, biotech will probably do fine. And if not, then maybe there’s a point in which there’s a little bit of stagnation in terms of the index.”
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