Sarepta stock tumbled Thursday after European officials put all studies of the company's gene therapy, Elevidys, on hold after a U.S. teenager died following treatment.
Elevidys treats Duchenne muscular dystrophy, a muscle-wasting genetic disease. Last month, a young man died due to acute liver injury. It was the first death following treatment with Elevidys, Sarepta Therapeutics said, noting it has treated more than 800 patients.
The clinical holds are temporary while the patient's death is under investigation and affect enrollment in at least three studies, RBC Capital Markets analyst Brian Abrahams said in a client note.
"We had anticipated the EU path could have a higher risk following the (patient) death, and though the investigation is still ongoing, our recent doc feedback has suggested the acute liver failure was likely a result of a confluence of factors," he said.
Still, Sarepta stock skidded 6.2% to 58.61. Shares tumbled more than 27% on March 18 following initial reports of the patient's death. Since then, Sarepta stock has continued its downward trajectory, largely in line with the broader market.
Benefits In Non-Ambulatory Patients?
It's important to know Elevidys uses an adeno-associated virus, or AAV, to deliver genetic instructions to the body. These are non-harmful viruses. But they are often associated with side effects in the liver.
The 16-year-old patient who died was older than most Elevidys recipients and could no longer walk. Analysts have noted older and non-ambulatory patients tend to weigh more, meaning they require a larger dose of Elevidys. They also tend to be sicker.
In this case, the patient also had a cytomegalovirus, of CMV, infection. CMV is related to the viruses that cause chickenpox, herpes and mononucleosis. Among numerous complications, it can injure the liver.
The paused studies involve children under the age of 4, ages 8 to 18 and non-ambulatory patients. The latter is an important study for Sarepta Therapeutics. With Elevidys already commercially available in the U.S., clinically proving Elevidys' merit in non-ambulatory patients will require studies abroad. That study is currently expected to read out in 2027.
"While the pause may push out timelines, it should not disrupt the overall integrity of the studies, given the one-and-done nature of the treatment," RBC Capital's Abrahams said.
He kept his sector perform rating and 87 price target on Sarepta stock.
'Another Unfortunate Development'
Leerink Partners analyst Joseph Schwartz notes Sarepta Therapeutics is partnered with Roche on Elevidys outside the U.S. This market represents about $10 per share of Sarepta stock, he said in a client note.
"This is yet another unfortunate development for a story that cannot seem to catch a break," he said.
He sees Sarepta stock as "grossly undersold" and says Elevidys still has a 60% chance of approval in the EU and rest of the world. And, even if that happens, outside-U.S. sales of Elevidys are not a major driver of his valuation on Sarepta Therapeutics.
"We acknowledge that Elevidys has taken a reputational hit as of late; however, the pendulum seems to have swung too far," he said. "At $60/share, we remain constructive."
He reiterated his outperform rating on Sarepta stock.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
