Sarepta Therapeutics (SRPT): Navigating a Perfect Storm of Regulatory, Legal, and Market Risks in 2025

In 2025, Sarepta Therapeutics (NASDAQ: SRPT) finds itself at the center of a biomedical and regulatory firestorm. Once hailed as a pioneer in gene therapy for rare diseases, the company now faces a cascade of crises stemming from patient deaths linked to its flagship product, Elevidys—a $821 million-a-year gene therapy for Duchenne muscular dystrophy (DMD). This article evaluates the long-term investment risks posed by Sarepta's delayed disclosure of safety issues, the FDA's aggressive regulatory scrutiny, and the eroding trust of investors and patients alike.

The Crisis Unfolds: From Accelerated Approval to Safety Scandals

Elevidys was fast-tracked to market in 2023 under the FDA's accelerated approval pathway, a decision that became contentious even before the first death. By 2024, the drug had expanded to non-ambulatory patients, with Sarepta touting its transformative potential. However, the first fatality emerged in March 2024, followed by a second in June 2024. Both were teenage boys who developed acute liver failure after treatment. A third death in June 2025—a 51-year-old patient in an investigational trial—triggered a regulatory and public relations catastrophe.

The FDA's response was swift and severe. It revoked Sarepta's platform technology designation for the AAVrh74 vector, placed clinical trials on hold, and issued a black box warning for Elevidys. Sarepta's refusal to voluntarily halt shipments of the drug for ambulatory patients, despite these actions, has painted the company as defiant and opaque.

Delayed Disclosure and Legal Reckoning

The most damning aspect of Sarepta's crisis is its handling of information. The company delayed disclosing the third patient death until July 2025, during a restructuring call. This selective transparency has led to a class-action lawsuit (Dolgicer v. Sarepta Therapeutics, Inc., No. 25-cv-05317) alleging securities fraud. The case claims Sarepta misled investors by downplaying the risk of acute liver failure, causing the stock to plummet by over 40% in a single day.

While no settlement has been announced, historical pharmaceutical litigation trends suggest potential liabilities could range from $100 million to $400 million. Sarepta's cash reserves of $647 million as of June 2025 provide some buffer, but legal costs and settlements could strain its liquidity.

FDA Scrutiny and the Threat of Market Withdrawal

The FDA's actions have escalated from warnings to existential threats. In July 2025, the agency signaled it is “taking a hard look at pulling” Elevidys from the market. This would be catastrophic for Sarepta, as the drug accounts for 80% of its revenue. The agency is also reevaluating its accelerated approval pathways, a move that could ripple across the biotech industry.

Sarepta's proposed mitigation strategy—using the immunosuppressant sirolimus—has been met with skepticism. The FDA has not yet approved this approach, and even if it does, the drug's safety profile remains in question. For investors, the risk of a market withdrawal is no longer speculative but imminent.

Eroding Market Confidence and Strategic Retreat

Sarepta's stock price has fallen from a peak of $120 in early 2025 to below $20 by July 2025, a loss of over 80% of its market cap. The broader biotech sector, as measured by the XBI index, has also declined by 1.9%, reflecting spillover risk. The company's recent restructuring—laying off 500 employees and cutting $400 million in annual costs—signals a retreat from its ambitious gene therapy pipeline.

While Sarepta is pivoting to siRNA technology, this shift lacks the immediate revenue potential of Elevidys. The company's 2025 revenue projections, initially forecast at $2.3–$2.6 billion, now appear optimistic at best.

Investment Implications: A High-Risk Scenario

For investors, Sarepta's story is a cautionary tale of hubris and regulatory overreach. The company's long-term viability hinges on three factors:
1. FDA Decisions: Will Elevidys survive with a revised label, or will it be withdrawn entirely?
2. Legal Outcomes: How will the class-action lawsuit resolve? Even a modest settlement could erode shareholder value.
3. Market Rebuilding: Can Sarepta regain trust among patients, physicians, and investors?

Given the current trajectory, Sarepta remains a high-risk investment. While its balance sheet offers some resilience, the reputational damage and regulatory uncertainty are profound. The company's pivot to siRNA is promising but unproven.

Conclusion: A Crossroads for Sarepta and the Gene Therapy Industry

Sarepta's crisis underscores the delicate balance between innovation and safety in gene therapy. For investors, the key takeaway is that accelerated approvals come with amplified risks. The FDA's scrutiny of Elevidys may set a precedent for stricter oversight of high-cost, high-risk therapies.

In the short term, Sarepta's stock is likely to remain volatile. Long-term, the company's ability to navigate this storm will depend on its transparency, regulatory cooperation, and the success of its new strategic direction. For now, investors are advised to proceed with caution and closely monitor the FDA's next moves.