Sarepta Skyrockets 14.4%—Is This a Regulatory Rebound or a Death Knell for Gene Therapy?

Summary
• FDA probes death of 8-year-old linked to Sarepta’s Elevidys
• SRPT surges from $11.68 to $14.04 intraday
• Three patient deaths reported in AAVrh74 gene therapy trials
• Options volatility spikes to 122% as traders bet on regulatory fallout

At 7:29 PM ET, Sarepta Therapeutics (SRPT) defied gravity, surging 14.4% to $13.65 from a premarket low of $11.77. This dramatic reversal follows a week of turmoil: an FDA investigation into a child’s death linked to Elevidys, a negative EMA opinion, and three fatalities from acute liver failure. With Bollinger Bands compressing and RSI at 36, the stock’s volatility now hinges on regulatory outcomes and market sentiment toward gene therapy risks.

FDA Probe and Contradictory Statements Spark Volatility
The FDA’s investigation into an 8-year-old’s death after receiving Elevidys—despite Sarepta and Roche asserting the death was unrelated—triggered a sharp premarket decline. However, the stock reversed as traders interpreted the FDA’s delayed investigation (initiated over a month after reporting) as a lack of urgency. Meanwhile, Brazil’s attribution of the death to flu-related complications exacerbated by immunosuppression added ambiguity. Sarepta’s 52-week high of $145 versus its current $13.65 suggests short-term speculative positioning, though three gene-therapy-related deaths since 2025 underscore systemic risks.

Biotech Sector Weak as AMGN Dips 1.5%
The broader biotech sector remains under pressure, with Amgen (AMGN) down 1.5% as investors rotate out of high-risk gene therapy plays. Sanofi’s $1.6B vaccine acquisition and GSK’s $12B COPD deal highlight sectoral shifts toward more predictable revenue streams. Sarepta’s 14.4% intraday rebound contrasts with peers but lacks a clear catalyst beyond regulatory ambiguity.

Options Volatility and ETFs Signal High-Risk, High-Reward Play
• MACD: -3.92 (bearish), Signal Line: -4.06 (bearish), Histogram: 0.13 (bullish divergence)
• RSI: 36.33 (oversold), Bollinger Bands: $11.45–$22.37 (tight range)
• 200-day MA: $83.12 (far above), 30-day MA: $18.92 (below price)

SRPT’s price action suggests a short-term rebound within a long-term bearish trend. Key levels to watch: the $14.04 intraday high and the 200-day MA at $83.12. With implied volatility at 122%, the stock remains a high-risk, high-reward scenario. No leveraged ETF data is available, but sector outflows (AMGN -1.5%) hint at risk-off sentiment.

Top Option 1: SRPT20250801C13.5
• Code: SRPT20250801C13.5, Type: Call, Strike: $13.5, Expiry: 2025-08-01
• IV: 122.58% (high volatility), Delta: 0.5926 (moderate sensitivity), Theta: -0.1406 (rapid decay), Gamma: 0.1959 (high sensitivity), Turnover: $90,182 (liquid)
• This call option offers a 229% price change ratio, leveraging the stock’s sharp move above $13.5. The high delta and gamma suggest it could capitalize on further rallies if the FDA’s probe is deemed inconclusive.
Payoff Calculation: At a 5% upside (ST = $14.33), payoff = max(0, 14.33 - 13.5) = $0.83. With leverage at 14.54%, this could amplify gains if the stock breaks $14.

Top Option 2: SRPT20250801C14
• Code: SRPT20250801C14, Type: Call, Strike: $14, Expiry: 2025-08-01
• IV: 127.63% (high volatility), Delta: 0.4949 (moderate sensitivity), Theta: -0.1359 (rapid decay), Gamma: 0.1934 (high sensitivity), Turnover: $124,463 (liquid)
• This call’s 236% price change ratio and high turnover make it a liquid, leveraged play on a potential rebound. The strike price aligns with the intraday high, offering a binary outcome if the FDA’s investigation stalls.
Payoff Calculation: At a 5% upside (ST = $14.33), payoff = max(0, 14.33 - 14) = $0.33. With 18.66% leverage, this could yield 13.5% returns if the stock holds above $14.

Action Insight: Aggressive bulls may consider SRPT20250801C13.5 into a break above $14.04, while cautious traders should watch the FDA’s next move.

Backtest Sarepta Stock Performance
The backtest of SRPT's performance after an intraday surge of 14% shows poor short-term results, with the 3-day win rate at 50.26%, the 10-day win rate at 49.21%, and the 30-day win rate at 45.15%. The strategy underperformed, with a maximum return of only -0.12% over 30 days, indicating that such a surge led to negative returns in the subsequent days.

Regulatory Cliffhanger: Buy the Rumor or Sell the News?
Sarepta’s 14.4% intraday surge reflects a fragile balance between regulatory uncertainty and speculative hope. With three gene-therapy-related deaths and a negative EMA opinion, the stock’s long-term prospects remain murky. However, the options market’s 122% implied volatility and AMGN’s -1.5% decline signal sector-wide risk aversion. Traders must now choose: bet on a regulatory rebound or hedge against another crash. Watch for a breakdown below $11.45 or a regulatory update by August 1.