From $172 to $20: Sarepta’s Spectacular Fall
Sarepta Therapeutics (NASDAQ: SRPT) shares plunged 42% on Monday, June 16, following reports of a second patient death associated with its Duchenne muscular dystrophy gene therapy, Elevidys. In response, the biotechnology firm and its global partner Roche immediately suspended both commercial and clinical use of the treatment in non-ambulatory patients pending a thorough safety review.
This action followed Roche’s reassessment of Elevidys’ safety profile, which identified troubling trends after the reported fatalities. Commercial distribution was halted right away, and enrollment in clinical trials paused until new safety protocols are added.
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Elevidys marked a major milestone in gene therapy for Duchenne Muscular Dystrophy, a severe genetic condition that leads to progressive muscle weakening. The FDA granted accelerated approval in June 2023 for ambulatory patients aged 4-5, with expanded approval later covering all ambulatory patients aged 4 and older. However, full approval for non-ambulatory patients remained conditional upon confirmatory trial outcomes.
The financial stakes for Sarepta are significant. Elevidys accounted for 43% of the company’s revenue last year, establishing it as Sarepta’s lead commercial product. Analysts had forecast peak sales exceeding $3 billion for the therapy, projections that are now in doubt due to the narrowed patient pool.
Even before this incident, Sarepta’s financials posed challenges. Despite a three-year average revenue growth exceeding 40%, the company remains in the red with an operating cash flow margin of negative 25% and a net income margin of negative 11%. The company holds $1.3 billion in debt, while its market capitalization stands at $2.06 billion, resulting in a high debt-to-equity ratio of 63%.
The stock’s sharp decline—from a 52-week high near $172 to about $20—highlights the volatility often seen in biotech firms reliant on a limited number of revenue-generating drugs.
Although Sarepta’s depressed valuation could appeal to contrarian investors, the stock remains highly speculative. The risks tied to safety concerns, heavy reliance on one product, negative cash flows, and severe price fluctuations make this a suitable play only for investors with a strong risk appetite.
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