Biotech stocks are known for two things: either being graveyards for shareholders’ money or generating outsized returns – especially if they become multi-baggers (assuming one is positioned before the retail crowd discovers such ideas). While not every biotech stock turns out to be a do-or-die binary bet, it is safe to say that those stocks with big moves catch much attention – no matter the direction. Sarepta Therapeutics is such a case. It has even offered its shareholders both, an astronomical rise and a fall from grace despite generating billion-USD sales. A case study worth to have heard of.
Summary and key takeaways from today’s Weekly
– The case of Sarepta Therapeutics is a truly spectacular drama with an unknown end to the story.
– Sarepta’s stock first was a ten-bagger, but then came crashing down, accelerated through the death of three patients after having received Sarepta’s lead drug.
– The stock has become a binary bet – I explain what I am looking for instead.
Last week, I also had a headline with (un)safety.
But rest assured, this time, we’re not cutting dividends. We are going straight to the meat and cut through an entire stock. Sarepta Therapeutics (ISIN: US8036071004, Ticker: SRPT) is a biotech company that first was more than a ten-bagger between 2016 and late-2020, where the stock hit its all-time high.
Sarepta then saw a strong correction of more than 60%, but rebounded sharply.
It almost reached the old high again a year ago in summer 2024 when the company received the full approval for a drug (for a certain group of patients). However, since then, it has become what I jokingly like to call a “ten-bagger to the downside” or “ten-bagger in reverse”, meaning a stock that cratered by 90%.
(it would need to 10x to come back, if that makes sense 🙂 )
Unfortunately, the circumstances are absolutely not funny or anything to smile, as it included the death of human life. As I have published exclusive reports about one or the other biotech stock for my members myself, and because I find the case of Sarepta so interesting, this is good material for us all to learn something new.
Let’s get into it.
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both as per 23 July 2025 market close – since August 2022
Drug safety or efficacy – an ethically tough choice
The stock chart of Sarepta, even without knowing what the company is exactly doing, immediately tells the viewer the stock is anything but boring.
And that first something went right, but then something terrible must have happened.
The time from the beginning of the chart up until 2016 is of minor relevance for us. But starting in 2016, the stock exploded and 10x-ed in less than three years.
The reason is that in 2016, 2019 and 2021 three drug candidates received a so-called accelerated approval. In a nutshell, an accelerated approval is not a full and final approval, but the FDA, the responsible agency, has some wiggle room to let certain drugs to the market that target rare diseases, respectively such with high unmet medical need.
In other words, when the need is there, but no medication (or not enough), sometimes a drug can enter the market earlier. But post-marketing approvals are still needed to finish the process, there’s no escaping or short-cutting. Companies must conduct confirmatory trials after accelerated approval to secure full approval.
It is needed to go through the full approval in parallel to real-world use so to speak.
Speaking of in parallel, at the same time in 2023 Sarapta received another accelerated approval which a year later in summer 2024 turned into a full approval for a part of its patient population. This coincided with the last peak of the stock (though no new all-time high). Since then, the stock fell into the basement, despite the company generating sales of more than a billion USD. How can this be?
And honestly, the chart looks like the stock was going to zero – or could it?
First of all, let’s start with what Sarepta is actually doing.
Sarepta is a biotech company specialized in treating muscle-degenerative diseases. All four market-approved drugs target DMD (Duchenne Muscular Dystrophy), a rare genetic disorder causing muscle degeneration due to dystrophin deficiency. Dystrophin is a critical muscle-supporting protein. Bodybuilders will know hypertrophy which is growing muscles. Dystrophy is the opposite.
Sarepta has more in the pipeline, but these are the approved drugs.
The muscle degeneration happens due to a genetic defect, and mainly affects boys at a younger age. The disease is not curable and if untreated (to slow down progression), it is deadly. The reason is that muscle dystrophy first leads to immobility like not being able to climb stairs, and later even having issues with walking (leading to a life in a wheelchair), but at a later stage it also affects breathing and heart functionality.
The standard of care is giving corticosteroids like prednisone to reduce inflammation, and stimulate muscle growth.
However, this is not without side effects. Besides minor issues like stronger hair growth, patients can develop psychological effects like behavioral changes and mood swings, a cushingoid appearance (e.g., weight gain, rounded face), and skeletal problems like bone fragility, just to name a few.
At some point the side effects can become too burdensome so that therapies are quit prematurely. Steroids prolong the life by slowing down DMD’s progression, but they are not able to cure it. After dropping out from the treatment, the disease progresses again at a normal pace.
All four of Sarepta’s marketed drugs (Exondys 51, Vyondys 53, Amondys 45, Elevidys) target DMD. The first three with numbers at the end are so-called “exon-skipping” treatments. Elevidys is a gene therapy, delivering a micro-dystrophin gene via a vector called AAV9 (adeno-associated virus 9). A vector is a vehicle, in this case the virus AAV9, modified to deliver genetic material into cells.
An exon is a segment of a gene that contains instructions for building a protein, like a chapter in a recipe book. In DMD, some exons have errors that mess up the dystrophin protein. Exon-skipping uses drugs to make the body skip over these faulty exons during protein production, creating a shorter but still functional dystrophin to help muscles work better. It is like a shortcut or patch, not an entire repair.
This can slow muscle damage and help patients maintain strength longer. Think of it like editing a recipe to skip a bad ingredient so the dish still turns out okay.
Accelerated approval for Exondys 51, Vyondys 53, and Amondys 45 was granted because they target a serious condition (DMD) with unmet medical needs, using a surrogate (short-term available, indirect substitute) – dystrophin production – to predict clinical benefit.
The FDA allows this faster track to get treatments to patients sooner, but full approval requires confirmatory trials proving actual clinical improvement (better muscle function, survival). These trials are complex, take time, and have not yet provided sufficient data for full approval, so the drugs remain under accelerated status pending further evidence.
The gene therapy Elevidys is fully approved for ambulatory DMD patients aged 4+ years, but it has only accelerated approval for non-ambulatory patients.
Before we discuss the latest issues, here’s a chart showing Sarepta is on an impressive sales growth dynamic. From 2016 until 2024, sales grew from practically nothing to 1.9 bn. USD per year-end 2024, and even 2.2 bn. USD per last count (Q1 2025).
Not too long ago, it looked like a brilliant biotech idea to tuck away for years to come. It was seen as a 4 bn. USD and more muscular dystrophy franchise. At the top, the market cap crossed even 15 bn. USD.
More upgrades and positive notes followed.
From the latest quarterly report, we can see that Elevidys, the gene therapy, saw its sales almost tripling, and constituting more than half of Sarepta’s revenues. PMO Products are the exon-skipping therapies.
The main issue now is – Elevidys.
In March 2025, the death of a patient linked to Elevidys was announced. A 16-year-old boy with DMD died of acute liver failure after having received Elevidys.
While sad and tragic, it was seen as an unfortunate one-off event.
A few analyst downgrades were announced, but it didn’t take long until the tragedy was forgotten and the bulls were left out of the cage again.
You will likely have already guessed it from my tone that something would follow.
Both individuals were teenagers and both were non-ambulatory, or unable to walk due of advanced stages of DMD. Non-ambulatory DMD patients generally have higher disease progression, as loss of ambulation typically indicates advanced muscle degeneration and a faster decline in respiratory and cardiac function.
As a result, Sarepta had halted an ongoing clinical trial and temporarily suspended distribution of Elevidys for patients who are no longer able to walk, i.e. non-ambulatory.
I spare you the screenshot showing a downgrade of the stock (see here).
If you thought the drama has ended here, fasten your seatbelt. On 16 July, a week ago, a big hope emerged as Sarepta announced a major restructuring program, including the firing of approximately a third of its staff as well as the reprioritization of its ongoing clinical trials.
The bottom line was, Sarepta intended to preserve as much cash as possible.
Sarepta is still burning cash, despite its huge sales growth, and the company is facing a big debt maturity.
Sarepta has a 1.15 bn. USD convertible bond outstanding, due 2027.
Following the second unfortunate death of a teenage boy, Sarepta said in the same presser announcing the restructuring (see here) that the U.S. FDA had requested that Sarepta add a black box warning to the Elevidys label. Sarepta agreed to address significant concerns for acute liver injury (ALI) and acute liver failure (ALF), hoping to resolve any material issues with its ambulant population that was unaffected.
By the way, Elevidys is the first and only approved gene therapy for the treatment of DMD.
The risk was obvious, the growth story would likely see a massive dent. However, the stock reacted positively, seeing the restructuring as a bullish driver. Sarepta’s stock climbed from 18 USD to 21–22 USD, following the restructuring announcement.
If you thought this was the doom-laden message – the second death and the black box warning – I have another one.
Less than a week ago, a third patient, this time a 51-year old man, died. Again, it was an acute liver failure, though in a trial for a slightly different disease, not DMD. But it was part of Sarepta’s pipeline hopes…
It might not be difficult to guess which direction the stock took.
Sarepta’s stock fell from a bit above 20 USD to 12–13 USD.
In essence, in only four months, shares lost almost 90%. It would be tempting to think that this was now the final chapter.
I have another one – this is a real drama. This time luckily not a patient death.
I have never heard of a case where the FDA suggested to withdraw a drug until at least some investigations have been done, but the drug maker just leaves its medication on the market. Technically, it reads like a suggestion, not a firm order. But, wow, one likely needs to have balls to make such a move.
On the other hand, and not having the intention of bashing the company, Elevidys has been given to more than thousand patients, and proven its efficacy. There are multiple success stories that shall not fall under the carpet (see here, here, and here).
However, it would have been a gigantic surprise, if the FDA had not reacted to this.
The refusal alone had sent the stock down again, although not in the same proportions like before. But the FDA did react, enforcing a hold on Sarepta’s investigational gene therapies for a different disease of the name limb girdle muscular distrophy (LGMD) – the one where the third death occured.
The latest news as of writing freshly from today (Tuesday, 22 July 2025) is now that Sarepta finally did as requested and paused shipments of Elevidys in the US.
A day later, Roche (ISIN: CH0012032048, Ticker: ROG), Sarepta’s partner for international markets, announced to stop its shipments.
What a drama.
Once a promising growth story, it suddenly turned out to be no less than a bankruptcy (or takeover?) candidate, despite positive reports from patients and their relatives that Elevidys has been a game changer for them so far.
It was further reported that voices inside the FDA see the bar for a re-approval of Elevidys as very high after the recent incidents.
It seems very unlikely Sarepta will be able to repay or refinance the convertible bond if Elevidys remains sidelined. Cash on hand per last count was 522 mn. USD, less than half of the bond principal. With ongoing cash-burn and despite the cost-saving efforts, with Elevidys now withdrawn, only a miracle can save the company.
Sure, they could raise equity. But you can imagine what the stock does then, as potentially the entire current market cap would need to be raised.
The gene therapy, priced at 3.2 mn. USD a dose, remains one of the most expensive therapies available, and obviously the most important product in Sarepta’s portfolio.
Personally, I don’t know how this will end. I am hoping for the best, especially for the suffering patients. But from an investment perspective, despite the gigantic upside, should the case be resolved in favor of Sarepta, the downside risk is considerable, despite the stock having lost 90%. At the moment of writing, it is a binary bet, with the risk to be a zero.
What can we learn from this case?
First of all, there is likely no right-or-wrong answer to this dilemma.
Shall severely sick and suffering patients not be given drugs until final approval is obtained or is it better to give it a try like here, risking negative consequences, but helping many, many more?
Personally, I have no answer for that, morally or ethically. This is beyond my capabilities and my position to make a judgement.
But I can contribute to the investment perspective.
My Premium members have two, and my Premium PLUS members an additional three active biotech cases on their table. They differ in therapeutic areas, stages of the drugs, and potential stock gains.
Where they don’t differ, though, are their strong setups due to excellent safety profiles.
I selected companies with safe drugs. Either they are long-established with proven safety profiles, or the clinical trials have shown improvements compared to standard of care treatments on the safety, but also the efficacy side.
I have not revealed these cases publicly, yet, for obvious reasons.
What I can say is that:
- the first case pictured above has an approved therapy in DMD, today’s topic, and the drug has a beneficial safety profile compared to the standard of care. The roll-out has been a phenomenal success story so far. In its lead-market, the drug from the get-go obtained a market share of 30% in its first year!
- my second idea has just submitted its new drug application (NDA) to the FDA. The drug candidate, if approved, will be the first new treatment of its kind since twenty years. Not only is the competition off-patent, but this drug has proven higher safety AND efficacy in its trials. Blockbuster potential.
- my latest idea still has to go through its phase III trial which just started. But the company is backed by a privately-held world-leader in its niche, and the drug with at least two potential blockbuster applications each (!) has shown to be safe and long-term effective. It could even disrupt the entire current treatment landscape, if approved.
There should be something for everybody interested in biotechs in my line-up.
All my ideas have shown superior safety and tolerability profiles. Two of these three further have shown to have advantageous efficacy, including long-term treatments.
This is what I am looking for when searching for promising biotech ideas.
It’s up to you to either chase the headline-driven narratives with stocks everyone knows, or to look where others don’t dare to look. All these three names are not mainstream, yet.
When the crowd start discussing them, the stocks will likely be significantly higher by then (or bought out by Big Pharma).
Conclusion
The case of Sarepta Therapeutics is a truly spectacular drama with an unknown end to the story.
Sarepta’s stock first was a ten-bagger, but then came crashing down, accelerated through the death of three patients after having received Sarepta’s lead drug.
The stock has become a binary bet – I explain what I am looking for instead.
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