TLDR
- Sarepta Therapeutics stock jumped 30% after announcing layoffs of 500 employees (36% of workforce) and restructuring plans
- The company will add a black-box warning to its gene therapy Elevidys following two patient deaths from liver failure
- Restructuring is expected to save $400 million annually through workforce cuts and pausing drug development programs
- Analysts view the black-box warning as positive since it reduces fears of complete drug withdrawal
- Second quarter preliminary revenue was $513 million, with $282 million from Elevidys sales
Sarepta Therapeutics stock surged over 30% in premarket trading Thursday after the biotech company announced sweeping changes to its operations. The moves come as the drugmaker faces pressure from safety concerns about its key product.
The company will cut 36% of its workforce, affecting roughly 500 employees. This represents one of the largest layoffs in the biotech sector this year.
Sarepta also announced it will add a black-box warning to its gene therapy Elevidys. The warning covers acute liver injury and acute liver failure risks.
The Food and Drug Administration requested the black-box warning after two patients died from liver failure while taking Elevidys. These deaths have created uncertainty around the drug’s future.
Elevidys treats Duchenne muscular dystrophy, a rare genetic disorder that affects muscle function. The therapy received FDA approval despite mixed clinical trial results.
BMO Capital Markets analyst Kostas Biliouris called the Elevidys updates “positive.” He said the black-box warning reduces concerns about potential withdrawal of the drug’s approval.
The analyst noted that given Sarepta’s current valuation, the main risk going forward would be a third patient death. Shares had fallen 85% from the start of the year through Wednesday’s close.
Financial Impact of Restructuring
The restructuring plan aims to generate $400 million in annual cost savings. About $100 million will come from workforce reductions starting in 2026.
The remaining $300 million in savings will result from pausing several programs in the drug development pipeline. This represents a shift toward focusing resources on key assets.
Sarepta expects to make a loss in 2025 according to analysts polled by FactSet. The cost-cutting measures are designed to improve the company’s financial position.
The company reported preliminary second quarter net product revenue of $513 million. Elevidys contributed $282 million to this total.
Market Response and Analyst Views
Shares traded at $24.70 in premarket trading, up 34% from Wednesday’s close. The stock movement came after the company released its restructuring announcement after market hours.
Nasdaq 100 futures edged up 0.1% in early trading. The broader market showed little reaction to Sarepta’s news.
Biliouris from BMO Capital Markets said the cost-cutting measures would contribute to the company’s financial health. He emphasized that prioritizing the pipeline was a smart strategic move.
The analyst’s comments reflect broader investor sentiment that Sarepta needed to take decisive action. The company had been under pressure to address both safety concerns and financial performance.
Gene therapy treatments like Elevidys represent a growing area of medicine. However, they also carry higher risks and development costs compared to traditional drugs.
The black-box warning is the most serious type of warning the FDA can require for a medication. Despite this, investors appear relieved that the drug remains on the market.
Sarepta plans to release its full second quarter results in early August. The preliminary revenue figures suggest Elevidys sales remain strong despite safety concerns.
The company’s restructuring reflects the challenges facing biotech firms with single-product focus. Diversification becomes difficult when resources are limited and safety issues arise.
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