What Happened?
Shares of biotech company Sarepta Therapeutics (NASDAQ: SRPT) fell 20.5% in the afternoon session after the company reported weak first quarter 2025 results which featured drastically lowered full-year 2025 product revenue guidance and a major increase in operating expenses.
The real story was the $600 million downward revision to product revenue guidance and an increase in projected operating expenses, both of which signal a material reset to near-term profitability expectations. Despite product revenue up 70% year-over-year, thanks largely to ELEVIDYS, the profit picture deteriorated swiftly: adjusted EPS swung from a profit to a loss, driven by surging R&D tied to a costly Arrowhead collaboration. This means that profit estimates need to come down massively. Overall, this was a disappointing quarter.
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What The Market Is Telling Us
Sarepta Therapeutics’s shares are very volatile and have had 24 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 biggest move we wrote about over the last year was about 2 months 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. ELEVIDYS had been a big piece of Sarepta's growth story as it contributed more than 50% of sales in the Q4'2024 quarter. Any threat to its continued adoption could put pressure on the stock.
Sarepta Therapeutics is down 70.1% since the beginning of the year, and at $37.15 per share, it is trading 77.3% 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 $300.50.
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