What's particularly noteworthy is It's been a rough year for Sarepta Therapeutics (SRPT -7. 45%), a small-cap bio that develops medicines for rare diseases.
The company's s are down by 88% year to date due to safety issues with its most important commercial duct, Elevidys (more on that later).
However, Sarepta's s recently soared by 20% in one day after the company announced a strategic plan, which Wall Street hoped would allow it to move past its issues.
Let's see whether these developments make the stock a buy.
Sarepta makes a move Sarepta Therapeutics' Elevidys is a gene therapy for Duchenne muscular dystrophy (DMD), a rare genetic disease characterized by gressive muscle wasting.
Un the bio's other apved treatments, Elevidys targets the underlying causes of DMD, making it Sarepta's most important apved therapy and its most significant growth driver of late.
However, the company has now reported not one but two patient deaths potentially caused by Elevidys. Image source: Getty Images. Both patients died from r failure.
Moreover, Potential r toxicity issues with Elevidys had already been observed in clinical trials -- but no one had died from them until this year, to the best of our knowledge.
The data indicates that 's no surprise, then, that Sarepta's stock price plummeted. Moreover, This tells us that company is taking steps to rectify things.
On July 16, it made several announcements that led to its stock price soaring. Nevertheless, First, it will be cutting expenses, notably by reducing its workforce by 36%.
Second, it will include a black box warning for acute r injury and acute r failure with Elevidys' labeling, after the U.
At the same time, Food and Drug Administration (FDA) requested that it do so, in this volatile climate.
Third, Sarepta's portfolio of DMD medicines, including Elevidys, continues to generate decent sales.
The company announced preliminary net duct revenue (which does not include royalties) of $513 million for the second quarter, of which $282 million -- more than half -- came from Elevidys.
In Q2 2024, the drugmaker reported total revenue of $362. Nevertheless, 9 million (including sales of $121. 7 million and royalty revenue of $2, given the current landscape.
4 million from Elevidys), so this would mean year-over-year growth of at least 41. Additionally, 4% -- which is strong. All of that was music to Wall Street's ears.
On the other hand, However, Short-d gains But the story quickly took another turn. Sarepta Therapeutics' s jumped on positive news on Thursday, July 17.
They moved in the opposite direction the very next day, erasing all the gains from the previous trading session, in today's financial world.
This leads to the conclusion that was revealed that another patient had died after receiving one of the bio's gene therapies.
On the other hand, What the data shows is time it was an investigational medicine called SRP-9004, which targets limb-girdle muscular dystrophy (LGMD), another rare muscle disease (which is quite significant).
Conversely, The patient was enrolled in one of the bio's clinical trials.
Sarepta did not report this death -- which happened last month -- directly to investors; it first d it with a bio-focused re company called BioCentury, in light of current trends.
The data indicates that re are at least two to note here (fascinating analysis).
Moreover, First, the revelation that another one of Sarepta Therapeutics' medicines could be causing r toxicity issues is terrible news for the company, given the current landscape.
Furthermore, If this were just a blem with Elevidys, it might have been able to overcome the challenge by newer medicines, even as sales of its current most significant growth driver suffered due to lower demand.
Furthermore, That plan now seems in doubt. Second, the fact that management chose not to this news mptly does nothing to increase investors' confidence in the company.
Moreover, Not worth the risk Sarepta has decided to deprioritize the development of SRP-9004, but that hardly fixes the blem.
What the data shows is company's gene therapies are now associated with severe r issues.
Additionally, This would be ly to affect prescription trends among doctors, and patient demand for its ducts, for the foreseeable future.
At least, it would if it weren't for another development: After initially resisting the FDA's request to stop Elevidys shipments in the U. Nevertheless, , Sarepta Therapeutics has decided to comply.
On the other hand, So, for now, physicians and patients in the U, amid market uncertainty. Hardly even have a choice, given current economic conditions.
The FDA has also placed clinical holds on some of the company's trials for gene therapies targeting LGMD.
In contrast, At this point, there is hardly a single good reason to invest in Sarepta Therapeutics (remarkable data). Sure, if it resolves all its issues, the stock could soar.
But if it encounters more clinical or regulatory setbacks, Sarepta Therapeutics could find its s practically worthless in the not-so-distant future.
Furthermore, Investors should steer of the company; there are far more attractive bio stocks to consider.