Sarepta Therapeutics Inc (NASDAQ:SRPT) shares pulled back after Thursday’s gains on the announcement of a third patient death linked to the company’s experimental gene therapies.
The patient, who was participating in a Phase 1 trial for Sarepta’s approved AAVrh74-based gene therapy targeting limb-girdle muscular dystrophy, died from acute liver failure.
This follows two earlier deaths involving teenage patients treated with the company’s approved Duchenne muscular dystrophy gene therapy, Elevidys.
“While we do everything possible to ensure patient safety, there is inherent risk in clinical trials,” a Sarepta spokesperson said. “Our deepest condolences go to the family and all those involved in his care.”
Shares of Sarepta fell 17.6% to about $18 in early trade on Friday.
The stock had surged as much as 30% a day earlier when Sarepta announced a major restructuring plan aimed at cutting costs by approximately $400 million annually.
Analysts at Jefferies expect continued stock volatility for Sarepta following the third patient death.
“Seeing a third Sarepta-related death occur within a span of four months will raise questions about Sarepta's gene therapy platform,” they wrote.
While liver injury is a known but rare complication of adeno-associated virus (AAV)-based gene therapies, the analysts warned that the clustering of fatalities across multiple programs using the same AAVrh74 vector could signal deeper issues.
“The rate of fatal acute liver failure liver tox is creeping up, but this time, a death occurred in another Sarepta program (outside of Elevidys), potentially creating a perceived platform risk,” they wrote.
The unpredictability of severe adverse events poses a major challenge for investors evaluating the risk-reward tradeoff in gene therapy, they added.
“A third Sarepta patient death will again strengthen the notion that a negative safety event is simply unpredictable with gene therapies, making it challenging to invest in this space,” Jefferies wrote.
Sarepta’s management now faces heightened execution risk and a need to pivot strategically, the analysts believe. To stabilize its pipeline, Sarepta may need to shift focus beyond gene therapy.
“For Sarepta, diversification away from gene therapy becomes more important,” Jefferies wrote.
The analysts pointed to upcoming clinical readouts in the second half of 2025 from RNA interference (siRNA) programs for myotonic dystrophy type 1 and facioscapulohumeral muscular dystrophy, partnered with Arrowhead Pharmaceuticals. Each program could represent a $1 billion-plus opportunity.
In the near term, the firm warned that the weight of three fatalities, uncertainty around regulatory response, and limited visibility on managing toxicity risk may push Sarepta’s stock into a period of stagnation.
“Serious downside risks (i.e. deaths) have been challenging to handicap, which could cause near-term stock exhaustion,” they concluded.