What Happened?

Shares of biotech company Sarepta Therapeutics (NASDAQ:SRPT) fell 10.8% in the afternoon session after RBC analyst Brian Abrahams downgraded the stock from a Buy to a Hold rating and slashed the price target by nearly 50% to $87. The downgrade was driven by weaker-than-anticipated feedback from physicians regarding ELEVIDYS, suggesting that market reception for the treatment had fallen short. Notably, ELEVIDYS had been a big piece of Sarepta's growth story as it contributed more than 50% of sales in the Q4'2024 quarter.

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What The Market Is Telling Us

Sarepta Therapeutics’s shares are quite volatile and have had 16 moves greater than 5% over the last year. But moves this big are rare even for Sarepta Therapeutics and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 13 days ago when the stock dropped 24.9% on the news that the company reported the death of a Duchenne muscular dystrophy patient following treatment with its gene therapy, ELEVIDYS. The patient reportedly suffered acute liver failure, a known risk of AAV-mediated gene therapies. However, Sarepta suggested that a recent cytomegalovirus (CMV) infection might have worsened the condition. Despite this, the company maintained that ELEVIDYS still had a favorable benefit-risk profile. It planned to update the prescribing information and inform regulators, clinical investigators, and prescribing physicians of the incident. 

Markets were likely reacting negatively due to concerns that the event could increase regulatory scrutiny, make doctors more hesitant to prescribe the therapy, or slow adoption overall. 

Sarepta Therapeutics is down 49.2% since the beginning of the year, and at $62.99 per share, it is trading 61.6% below its 52-week high of $163.85 from June 2024. Investors who bought $1,000 worth of Sarepta Therapeutics’s shares 5 years ago would now be looking at an investment worth $643.94.

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