Scholar Rock Plunges 8.6%—What's Fueling the Biotech's Freefall?

Summary
• Scholar Rock’s stock nosedives to $30.73, a 9.37% drop from its $34.615 previous close.
• BMO Capital slashes price target to $45 from $57, citing delays in apitegromab’s PDUFA date due to Novo Catalent facility issues.
• Q2 earnings miss (-$0.98 EPS vs. -$0.66 expected) sparks investor jitters.

Scholar Rock Holding (SRRK) has plunged nearly 9% intraday, trading at $31.63 as of 7:40 PM ET. The stock’s freefall follows a Q2 earnings miss, regulatory delays for its flagship drug candidate, and a sharp downgrade from BMO Capital. With the stock trading near its 52-week low of $6.76 and a dynamic PE of -8.16, the market is pricing in worst-case scenarios for its flagship drug candidate. The PDUFA date on September 22nd looms as a critical inflection point.

Regulatory Delays and Earnings Shock Trigger Sell-Off
The collapse in SRRK’s stock stems from two compounding factors: BMO Capital’s revised price target and a Q2 earnings miss. Analyst Etzer Darout highlighted risks to apitegromab’s regulatory timeline, citing FDA scrutiny of Novo Catalent facilities where the drug is produced. This echoes Regeneron’s recent CRL for odronextamab, amplifying sector-wide fears. Meanwhile, SRRK’s Q2 EPS of -$0.98—48% worse than expected—exacerbated investor anxiety. The stock’s 9.37% drop to $30.73 reflects a loss of confidence in both near-term execution and long-term drug approval prospects.

Biotech Sector Stable as SRRK Dives
While SRRK’s stock implodes, the broader biotech sector remains resilient. Amgen (AMGN), the sector’s leader, trades flat with a 0.02% intraday gain, underscoring the stock’s unique vulnerability. SRRK’s regulatory exposure and narrow pipeline focus contrast sharply with AMGN’s diversified therapeutics portfolio. This divergence highlights SRRK’s elevated risk profile, particularly as its apitegromab timeline remains in flux.

Options Playbook: Capitalizing on Volatility and Technical Breakdowns
• 200-day average: 35.31 (below current price)
• RSI: 15.02 (oversold)
• MACD: -0.645 (bearish divergence)
• Bollinger Bands: Price at 34.5956 (lower band)

SRRK’s technicals scream oversold conditions, with RSI at 15.02 and price near its 52-week low. The 200-day MA at 35.31 acts as a critical resistance level. A break below 30.73 (intraday low) could trigger further panic. For options traders, the high implied volatility (IV) and leverage ratios in the chain offer asymmetric opportunities.

Top Option 1: SRRK20250919P35
• Contract Code: SRRK20250919P35
• Type: Put
• Strike Price: $35
• Expiration: 2025-09-19
• IV: 57.60% (moderate)
• Leverage Ratio: 6.86%
• Delta: -0.6536 (deep in-the-money)
• Theta: -0.002263 (slow decay)
• Gamma: 0.0585 (moderate sensitivity)
• Turnover: 19,583

This put option offers downside protection if SRRK continues its freefall. A 5% downside to $29.80 would yield a payoff of $5.20 per contract, leveraging the deep in-the-money position and high gamma for price sensitivity.

Top Option 2: SRRK20251017P30
• Contract Code: SRRK20251017P30
• Type: Put
• Strike Price: $30
• Expiration: 2025-10-17
• IV: 74.60% (elevated)
• Leverage Ratio: 9.86%
• Delta: -0.3662 (moderate)
• Theta: -0.018664 (moderate decay)
• Gamma: 0.0360 (moderate sensitivity)
• Turnover: 12,966

This put balances leverage and liquidity, ideal for a mid-term bearish play. A 5% drop to $29.80 would generate a $0.20 payoff, capitalizing on the high IV and moderate delta for controlled risk.

Aggressive bulls may consider SRRK20250919C35 into a bounce above $35.

Backtest Scholar Rock Holding Stock Performance
The backtest of SRRK's performance after a -9% intraday plunge shows favorable results. The 3-Day win rate is 51.17%, the 10-Day win rate is 49.33%, and the 30-Day win rate is 51.67%. Additionally, the maximum return during the backtest period was 13.84%, indicating that the stock had a good chance of rebounding after the initial plunge.

PDUFA Date Looms: Position for Volatility or Exit the Sinking Ship
SRRK’s freefall is unsustainable without a regulatory breakthrough. The PDUFA date on September 22nd will either validate the stock’s long-term potential or deepen the selloff. Investors should monitor the 30.73 support level and 35.31 200-day MA as critical inflection points. Meanwhile, Amgen’s 0.02% gain highlights the sector’s stability, contrasting SRRK’s fragility. For those with conviction, the SRRK20250919P35 put offers a high-leverage bet on continued deterioration. Exit positions if the PDUFA date passes without positive news.