Sarepta's Defiance of FDA Raises Questions About Gene Therapy Risks and Rewards

The gene therapy sector has long been a double-edged sword for investors: a realm of transformative medical breakthroughs paired with regulatory turbulence and financial volatility. Nowhere is this tension more evident than in the ongoing saga between Sarepta Therapeutics and the U.S. Food and Drug Administration (FDA). Sarepta's recent defiance of FDA mandates over its flagship gene therapy, ELEVIDYS, has sparked a firestorm of debate about the risks and rewards of investing in a field where scientific ambition clashes with bureaucratic caution.

The Sarepta-FDA Standoff: A Case Study in Regulatory Friction

Sarepta's ELEVIDYS, approved in 2024 for Duchenne muscular dystrophy (DMD), was once hailed as a paradigm-shifting treatment. However, the FDA's imposition of a clinical hold on Sarepta's trials for limb-girdle muscular dystrophy (LGMD) in 2025—due to three reported deaths linked to acute liver failure—has cast a shadow over the company's prospects. The FDA revoked Sarepta's platform technology designation for its AAVrh74 vector, a move that undermines the company's ability to streamline approvals for future therapies.

Sarepta's refusal to halt ELEVIDYS shipments, despite the FDA's safety concerns, has further escalated tensions. The company argues that the therapy remains a lifeline for ambulatory DMD patients and has taken steps to address risks, including adding a black box warning for liver failure and convening an expert panel to evaluate enhanced immunosuppressive protocols. Yet, the FDA's warning that it may remove ELEVIDYS from the market if risks outweigh benefits looms large.

The fallout has been severe: Sarepta's stock has plummeted over 87% year-to-date, eroding $12 billion in market value. For investors, the question is whether this represents a buying opportunity or a cautionary tale.

Broader Industry Risks: A Regulator in Flux

Sarepta's case is not an isolated incident but a microcosm of systemic challenges in gene therapy. The FDA's recent leadership changes and internal restructurings—most notably the abrupt removal of key officials in the Office of Therapeutic Products—have created regulatory uncertainty. Meanwhile, the agency's push for modernized frameworks, such as adaptive trial designs and the controversial CNPV voucher program, remains unproven.

Industry experts like Dr. Terence Flotte and Dr. David Liu have warned that the U.S. regulatory environment is lagging behind scientific progress. Over 100 rare disease gene therapies have been shelved since 2023 due to market failure, not efficacy issues, underscoring the need for policy reforms. However, the FDA's recent halting of international gene therapy trials over “informed consent” concerns—critics argue this is an overreach—has only deepened the sector's uncertainty.

The Investment Dilemma: High Risk, High Reward

For investors, gene therapy embodies a classic high-risk, high-reward proposition. On one hand, the sector's potential to deliver curative treatments for diseases like DMD, LGMD, and others is unparalleled. Sarepta's siRNA pipeline and its pivot toward chronic therapies for neurodegenerative and pulmonary diseases could yet reignite growth. On the other hand, the FDA's willingness to pull products like ELEVIDYS from the market—even after accelerated approvals—highlights the fragility of commercial success in this space.

Sarepta's recent restructuring—36% workforce cuts, $400 million in annual savings, and a refocused pipeline—signals a scramble for survival. Yet, these measures may not be enough if the FDA enforces a market withdrawal of ELEVIDYS, which accounts for the bulk of Sarepta's revenue. The company's reliance on a single product, combined with its $600 million convertible note due in 2027, creates a precarious financial position.

Strategic Considerations for Investors

1. Diversification is Key: Given the sector's volatility, investors should avoid overexposure to single-product gene therapy firms. Sarepta's concentrated risk profile makes it a speculative bet, even with its recent pipeline shifts.
2. Monitor FDA Actions Closely: The FDA's upcoming decision on ELEVIDYS and its broader regulatory approach will shape the sector for years. A market withdrawal of ELEVIDYS would likely trigger a broader sell-off in gene therapy stocks.
3. Evaluate Long-Term Catalysts: Sarepta's proposed adaptive trials for sirolimus-based immunosuppression and its siRNA platform could offer redemption if successful. However, these initiatives remain unproven.
4. Consider the CNPV Program's Impact: The FDA's limited-scale CNPV voucher pilot could accelerate approvals for priority therapies but may also create inequities in the approval process. Investors should watch how this program evolves.

Conclusion: Navigating the Gene Therapy Maze

The Sarepta-FDA conflict underscores a fundamental truth: gene therapy is a field defined by its potential to redefine medicine, but it is equally vulnerable to regulatory missteps and financial fragility. For investors, the path forward requires a delicate balance of optimism and caution. While Sarepta's defiance may galvanize short-term support from patient advocates and shareholders, the long-term viability of its strategy hinges on the FDA's tolerance for risk and the company's ability to adapt.

In a sector where the stakes are as high as the science, the lesson is clear: investing in gene therapy demands not just an understanding of biology but a mastery of the regulatory and financial ecosystems that govern it.