Sarepta Stock Is Falling. How Its Crisis Went From Bad to Worse.

Sarepta stock is down nearly 90% since March amid questions about its experimental gene therapies. ((Dreamstime))

Sarepta Therapeutics was sinking again after the drugmaker refused a request from the Food and Drug Administration to stop shipments of its moneymaker gene therapy Elevidys over safety issues.

The FDA responded by halting clinical trials for its limb girdle muscular dystrophy (LDMD) program.

Sarepta stock was down another 4.5% to $13.44 in early trading Monday, following a 36% drop Friday. The stock is now trading at a fraction of what it was at the beginning of the year.

The past week has been damning for the company. Late Thursday, multiple media outlets revealed that a patient on Sarepta’s experimental gene therapy SRP-9004 had died following treatment for a condition called limb girdle muscular dystrophy. It came after two teenage boys had died earlier this year after being treated with a different gene therapy, Elevidys, for Duchenne muscular dystrophy.

The company, however, hadn’t disclosed that the death of the third patient in a Wednesday business update announcing a restructuring and pipeline reprioritization, even when asked about the risk profile of its gene therapies.

The FDA knew about the third patient death on July 3, according to Sarepta, but didn’t request the company to voluntarily halt shipments of Elevidys until July 18.

In a statement after the bell Friday, Sarepta said: “Based on our comprehensive scientific interpretation of the data, which shows no new or changed safety signals in the ambulant patient population, we will continue to ship ELEVIDYS to the ambulant population.”

The drug had already been halted for non-ambulatory patients, that is, patients unable to walk due to the progression of their condition. Sarepta did not immediately respond to a request for comment.

Both analysts and investors are now souring on the stock, amid serious questions about the company’s decision-making and credibility.

Created with Highcharts 9.0.1Sarepta Therapeutics Inc.Source: FactSet

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A full 85% of investors now rate management’s credibility at two or less on a scale of one to 10, according to a survey by BMO Capital Markets analysts led by Kostas Biliouris. The results are based on 21 respondents who were specifically asked about the leadership team’s credibility after Friday’s events.

Sarepta has “zero intrinsic value after Elevidys U.S. market removal,” H.C. Wainwright analyst Mitchell Kapoor write in a Monday research note, lowering the price target on shares to $0. A third death, Kapoor said, signals insurmountable safety problems for its entire gene-therapy pipeline.

While Elevidys and the LGMD program, including SRP-9004, treats different conditions, is administered using a different dose, and is manufactured using a different process, they both use the same viral vector, AAVrh74. A viral vector is a modified virus used to deliver genetic material into cells.

In the last reported quarter, Elevidys accounted for 50% of Sarepta’s total revenue, which would explain the company’s reluctance to adhere to the FDA’s request to pull the medicine from the market.

However, Sarepta’s refusal to withdraw Elevidys is a unique case for several reasons, said Biliouris. The timing of the voluntary request suggests it’s more about publicity rather than safety concerns, the analyst said.

Secondly, as also emphasized by Sarepta, there have been no deaths reported in ambulatory patients. Duchenne muscular dystrophy is also fatal without alternative treatments.

Nevertheless, investors seem to have had enough of it. Coming into Monday trading, shares are down nearly 90% from March 17, the day before the first death was reported. Sarepta was contacted for comment.

“War with the FDA is not a winnable fight,” Kapoor said, expecting Elevidys to be permanently removed from the market.

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