Scholar Rock Surges 12% as FDA Drug Setback Deemed Temporary
Investors look past the FDA's rejection of apitegromab, focusing on a third-party manufacturing snag rather than issues with the drug's safety or efficacy.
Shares of Scholar Rock (NASDAQ: SRRK) surged more than 12% on Friday, executing a sharp reversal after an initial stock drop. The rally followed the U.S. Food and Drug Administration's (FDA) decision to decline approval for the company's spinal muscular atrophy (SMA) drug, apitegromab, due to issues at a third-party manufacturing facility.
Investors quickly brushed off the negative headline after the company clarified the nature of the rejection. The FDA issued a Complete Response Letter (CRL) that did not cite any concerns regarding the drug's safety or the clinical trial data. Instead, the delay is run by Catalent, which was recently acquired by Novo Nordisk. This signaled to the market that the hurdle is logistical and temporary, rather than a fundamental flaw with the promising new therapy.
This sentiment was echoed by Wall Street analysts, who viewed the setback as a transient issue. Piper Sandler, while slightly reducing its price target, on the stock, calling the FDA's letter a 'temporary regulatory setback.' Similarly, analysts at Truist Securities reiterated their 'Buy' rating, framing the initial share price weakness as a buying opportunity.
Scholar Rock has affirmed it is working with the contract manufacturer to resolve the issues and plans to resubmit its application to the agency. The company expressed confidence in a potentially expeditious review following the resubmission. The apitegromab application is supported by positive results from its pivotal Phase 3 SAPPHIRE trial, and the therapy has already received multiple special designations from the FDA, including Priority Review and Fast Track.
While the U.S. launch is delayed, Scholar Rock is progressing with international approvals. The European Medicines Agency is currently reviewing apitegromab's marketing application, with a decision anticipated by mid-2026. The company stated it has to fund its operations through the revised approval timeline, reassuring investors of its financial stability during this delay.