Shares of Rocket Pharmaceuticals (NASDAQ:RCKT) sank nearly 60% on Tuesday morning after the company disclosed that the US Food and Drug Administration had placed a clinical hold on its pivotal Phase II trial for Danon disease, a rare genetic heart disorder, following the death of a patient in the study.
The patient experienced a serious adverse event (SAE) of capillary leak syndrome and subsequently died due to an acute systemic infection, according to reports.
The regulatory setback raises serious questions about the future of Rocket’s gene therapy program, which the firm had identified as its core value driver, analysts at Jefferies noted.
Jefferies said the hold could take weeks or months to resolve and significantly clouds the outlook for two key catalysts: a mid-2025 company update and a Phase II data readout previously anticipated in mid-2026.
“The SAE hurts the benefit/risk profile of the Danon program and supports the notion that serious safety events remain unpredictable in gene therapy,” analysts wrote, adding that the incident will likely reinforce broader investor caution following recent gene therapy setbacks in the sector.
Rocket said it is working with the FDA, its data safety monitoring committee, and external experts to determine a path forward. The company intends to revise its immunosuppressive regimen to address the complement-mediated activation believed to have contributed to the SAE. The agent involved is specific to the Danon program and is not used in Rocket’s other studies, including its PKP2-ACM trial.
Still, the clinical hold delays a potential $1 billion market opportunity for Rocket’s RP-A501 program, and analysts warned that the stock could trade below the company’s cash value given rising platform uncertainty. Rocket had $318 million in cash as of its latest quarterly update, enough to fund operations into 2027, though it has been burning about $40 million to $50 million per quarter.
Jefferies also flagged growing regulatory scrutiny of gene therapy products, citing a fatal liver failure associated with another gene therapy in March and the recent appointment of Dr. Vinay Prasad to a leadership role at the FDA's Center for Biologics Evaluation and Research (CBER). These developments, analysts wrote, may lead to “more uncertainty” for Rocket’s broader platform.
Rocket’s Danon program had previously encountered safety issues. In a Phase I study, a patient in the high-dose cohort developed complement-mediated thrombotic microangiopathy, which required hemodialysis. That patient eventually underwent a heart transplant five months after gene therapy infusion.