Sarepta tanks after death of second teen taking its gene therapy; outlook 'cloudy'

Quotes of Sarepta Therapeutics, a small-cap developer of precision genetic medicines to treat rare neuromuscular and central nervous system diseases, plummeted 42% yesterday, June 16, to hit a nine-year low. The company reported the death of the second teenager in three months who was taking its drug to treat muscular dystrophy. In addition, Sarepta has withdrawn its revenue guidance for 2025 as it may be forced to pull the drug from the market, analysts warn.

Sarepta sank 42% on the New York Stock Exchange yesterday to $20.94 per share. The close was the lowest in nine years. In premarket trading this morning, the stock managed to pare some of the losses, having gained as much as 4.8%, before doing a one-eighty. It is now trading slightly in the red as of this writing.

The reason for the losses was a company announcement that another patient who was taking the company's drug called Elevidys for Duchenne muscular dystrophy had died. Duchenne muscular dystrophy is a severe genetic disease where muscles progressively weaken, leading to a gradual loss of muscle strength, impacting mobility (walking, standing), and eventually respiratory function. The patient who died was 15 years old. He developed acute liver failure after taking the drug, reports Reuters, citing Sarepta's investor call. The company reported the first death of a patient taking the drug only three months ago, in March. He was 16 years old. Both teens died within 90 days of receiving the drug, Reuters added.

Sarepta has now suspended shipments of Elevidys for nonambulatory patients. It has also withdrawn its 2025 revenue guidance, as indicated during the investor call, writes Barron's. In 2025, 30% of patients taking Elevidys were nonambulatory, Sarepta CEO Douglas Ingram was quoted as saying. Another executive who spoke on the call (Barron's did not provide his name) said that even selling Elevidys only to ambulatory patients was projected to be enough to keep the company profitable.

The death of the second patient is «clouding the outlook for Sarepta, and for the gene therapy industry at large,» Barron's warns.

Before the company reported its first patient death in mid-March, analysts had expected Elevidys sales this year to exceed $2 billion and account for most of the company's overall revenue in 2025, which at the time was expected to be $3.1 billion, according to FactSet data cited by Barron's. 

Needham analyst Gil Blum has now more than halved his target price on Sarepta, from $125 to $50 per share, after downgrading his sales expectation for Elevidys to $969 million from $1.4 billion. «We think this safety event increases the potential of Elevidys getting pulled from the market; however, we still find this to be an unlikely scenario,» he said. «With that said, we do believe there is a possibility the [Food and Drug Administration] restricts Elevidys' label to include only ambulatory patients.» Nevertheless, Blum still has a «buy» recommendation on the stock. 

H.C. Wainwright & Co. analyst Mitchell Kapoor, as quoted in Barron's, argues that «An increasing number of patients and physicians will opt against treatment unless robust long-term safety data emerges – particularly demonstrating a near-zero risk of treatment-related mortality.»

Sarepta stock is now down 82.7% since the beginning of the year. The average target price for the stock is three times the current market price, at $69.68 per share, shows MarketWatch data. Of the 28 analysts who track Sarepta, 18 recommend clients to buy shares, versus eight «holds» and one «sell.» 

Elevidys is the first gene-based drug to be approved to treat Duchenne muscular dystrophy (DMD) in the U.S. It is injected intravenously just once, after which Elevidys helps the body to produce a shortened, but functional, version of the dystrophin protein, called micro-dystrophin. This is important because DMD is caused by a lack of dystrophin, leading to progressive muscle weakness and degeneration.

The drug received accelerated partial approval in 2023, despite doubts from some FDA members about its efficacy in treating DMD.

In June 2024, Peter Marks, then the director of the FDA's Center for Biologics Evaluation and Research, is said to have pushed for the drug to be approved to cover nearly all patients, regardless of age or wheelchair status, despite the fact that the drug failed a large, Phase 3 trial last year, overruling three panels of experts and senior staff, reported medical news media outlet Stat. Marks left the FDA in March. His successor Vinay Prasad has criticized the decision to expand approval of Elevidys.