(Bloomberg) -- Shares in Sarepta Therapeutics Inc., a biotech focused on rare diseases, lost 50% of their on Friday and erased $6.75 billion in the company’s market capitalization, after a key study on a gene-therapy didn’t meet investor expectations.
The stock plummeted the most in five years to trade at a low of $82.25 as results from Sarepta’s highly-anticipated trial for its gene therapy as a one-time treatment for the rare disorder Duchenne muscular dystrophy (DMD) failed to show benefits compared with a placebo.
“While we believe there is still a potential path to approval for SRP-9001 and only modestly lower our probability of success from 50% to 40%, we believe these results represent a 1.5-2 year delay to market,” Morgan Stanley analysts led by Matthew Harrison said in a report, downgrading Sarepta’s stock to the equivalent of a hold rating and slashing their share price target by 48% to $95.
Read more: What analysts have to say about Sarepta’s key study
Prior to the release of the study, analysts had expressed optimism about Sarepta’s gene therapy platform. As late as Thursday morning, Baird analyst Brian Skorney added the stock to the bank’s “Fresh Pick” list and said the data were among the most binary single-stock events of the first three months of 2021.
Rival companies working on similar therapies also slumped. Solid Biosciences Inc., which is studying a competing DMD gene therapy, fell as much as 19% for its biggest drop since March.
Sarepta’s primary endpoint miss is “clearly a disappointment, adding risk, prolonging timelines, and reducing any potential first-mover advantage for future market share,” RBC Capital Markets analysts led by Brian Abrahams said in a report.
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