Scholar Rock (SRRK) Shares Plunge 13.14% on FDA's Complete Response Letter for Apitegromab

Scholar Rock Holding (SRRK) shares plunged 13.14% on Monday, marking a two-day drop of 16.38% and a 26.51% intraday decline, with the stock hitting its lowest level since June 2025. The selloff reflects mounting pressures on the biotech firm, driven by regulatory setbacks and financial vulnerabilities.

The FDA’s recent Complete Response Letter for SRRK’s biologics license application for apitegromab, a spinal muscular atrophy treatment, has compounded investor concerns. The rejection, tied to unresolved manufacturing issues at a Novo Nordisk-owned facility (Catalent Indiana), has stalled regulatory progress. The facility’s “Official Action Indicated” status—signaling severe non-compliance—risks prolonged delays, as SRRK must resolve these issues before resubmitting its application. This dependency on a third-party site amplifies operational risks, particularly with no clarity on resolution timelines.

Financial metrics further weigh on sentiment. SRRK trades at a 15.4x price-to-book ratio, starkly above the biotech industry average of 2.5x, despite lacking revenue and reporting consistent net losses. A Piotroski F-Score of 3 underscores weak operational performance, while a discounted cash flow model’s $217.79 fair value estimate appears disconnected from current realities. Analysts highlight speculative optimism but caution against overvaluing a company with no near-term revenue prospects.

Insider activity reveals mixed signals. Director Srinivas Akkaraju’s $18.8 million share purchase over three months signals confidence, yet executives including the Chief Scientific Officer sold $5 million in stakes. Institutional holdings also diverge: Paradigm Biocapital and Pictet Asset Management added positions, while Octagon Capital and Norges Bank reduced holdings. These contrasting actions reflect uncertainty about SRRK’s ability to navigate regulatory hurdles and sustain long-term growth.

Upcoming developments will be critical. A scheduled FDA meeting and third-quarter earnings report may clarify next steps for apitegromab, but delays or further setbacks could deepen investor skepticism. For now, SRRK’s stock remains vulnerable to prolonged volatility as it balances high valuation expectations with operational and regulatory challenges.