Sarepta Therapeutics Plunges 9.25% Amid Legal Storm—Is the Biotech Giant Facing a Reckoning?

Summary
• Sarepta (SRPT) slumps 9.25% intraday, trading at $18.35 after opening at $20.35
• Class-action lawsuits allege concealed safety risks in ELEVIDYS gene therapy
• Options volatility surges, with 90%+ implied volatility on key puts and calls
• Analysts debate whether $23.76 fair value justifies the plunge or signals deeper trouble

Today’s collapse in Sarepta’s stock price reflects a perfect storm of legal, regulatory, and market sentiment headwinds. The biotech giant’s shares have cratered amid mounting lawsuits over its flagship gene therapy, ELEVIDYS, which now faces scrutiny for undisclosed patient deaths and halted trials. With the stock down nearly 9% in a single session and trading near its 52-week low of $10.415, investors are scrambling to assess whether this is a buying opportunity or a warning shot in a broader crisis.

Safety Allegations and Legal Fallout Trigger Sell-Off
The 9.25% intraday plunge in Sarepta’s stock is directly tied to a deluge of legal and regulatory developments. Multiple law firms have filed class-action lawsuits alleging that Sarepta misrepresented or concealed serious safety risks tied to ELEVIDYS, including patient deaths and halted clinical trials. These claims have intensified scrutiny from the FDA and eroded investor confidence. The lawsuits, which span from June 2023 to June 2025, accuse the company of misleading shareholders about the therapy’s risks, leading to a sharp repricing of its future cash flows. Compounding the issue, Sarepta’s recent financial maneuvers—such as refinancing convertible notes and a $20 million private placement—have failed to restore momentum, leaving the stock vulnerable to a bearish cascade.

Biotech Sector Under Pressure as AMGN Drags
The broader biotech sector is under strain, with Amgen (AMGN), the sector’s leader, down 2.00% intraday. While Sarepta’s decline is more acute, the sector-wide weakness underscores a risk-off environment driven by regulatory uncertainty and profit-taking. AMGN’s struggles reflect broader concerns about pricing pressures and R&D pipelines, but Sarepta’s situation is uniquely dire due to its legal exposure and product-specific risks. The divergence highlights how sector-wide trends can amplify company-specific crises, particularly in high-beta biotech stocks.

Options and ETF Plays for a Volatile Biotech Landscape
• MACD: 0.448 (bullish divergence), Signal Line: -0.0695 (bearish crossover), RSI: 65.79 (neutral), 200D MA: $72.38 (far above price)
• Bollinger Bands: Current price ($18.35) near lower band ($13.98), suggesting oversold conditions
• Support/Resistance: 30D support at $20.16–$20.36; 200D support at $16.97–$19.49

Given the stock’s volatility and legal risks, traders should focus on short-term options with high leverage and gamma to capitalize on directional moves. Two top options from the chain are:

• SRPT20250829P18 (Put):
- Strike: $18, Expiry: 2025-08-29
- IV: 90.52% (high volatility), Delta: -0.364 (moderate bearishness), Theta: -0.0118 (slow time decay), Gamma: 0.191 (high sensitivity), Turnover: $54,077
- Payoff at 5% downside (ST = $17.43): $0.57 per contract
- This put offers asymmetric upside in a bearish scenario, with high liquidity and gamma to amplify gains as the stock drops.

• SRPT20250829C19.5 (Call):
- Strike: $19.5, Expiry: 2025-08-29
- IV: 87.61% (moderate volatility), Delta: 0.335 (moderate bullishness), Theta: -0.119 (rapid time decay), Gamma: 0.1915 (high sensitivity), Turnover: $12,763
- Payoff at 5% downside (ST = $17.43): $0
- While the call is a long shot in a bearish move, its high gamma could benefit from a rebound above $19.50, though theta decay is steep.

Aggressive bears should prioritize SRPT20250829P18 for its leverage and liquidity.

Backtest Sarepta Stock Performance
The backtest of SRPT's performance after a -9% intraday plunge shows mixed results. While the 3-day win rate is 47.97%, the 10-day win rate is 51.05%, and the 30-day win rate is 49.11%, indicating a higher probability of positive returns in the short term, the actual returns over these periods are negative, with a maximum return of -0.04% over 30 days. This suggests that while there is a decent chance of a bounce-back, the downside risk is still significant.

A Crucible for Sarepta—Act Now or Watch the Floor Fall Out
Sarepta’s 9.25% drop is a warning shot, not a bottom. With lawsuits mounting, regulatory scrutiny intensifying, and technical indicators pointing to oversold conditions, the stock remains a high-risk proposition. Key levels to watch include the 200D MA ($72.38) as a long-term benchmark and the 30D support ($20.16) for near-term stability. Meanwhile, Amgen’s 2.00% decline as the sector leader underscores broader biotech fragility. Investors should prioritize short-term options like SRPT20250829P18 for bearish exposure but remain cautious—this is a stock in crisis, not a bargain. Watch for a breakdown below $16.97 or a regulatory catalyst to dictate next steps.