Sarepta's Upbeat 2025 Report Masks Deepening Regulatory and Operational Risks

What happened

Sarepta announced Q4 and full-year 2025 financial results, portraying a strong position with robust cash and revenue, but this glosses over significant underlying vulnerabilities. The FDA's boxed warning and narrowed label for ELEVIDYS remain unresolved, with non-ambulatory shipments still suspended and further regulatory actions uncertain. PMO products face accelerated-approval withdrawal risk after the ESSENCE trial failed to meet statistical significance, per filings. ELEVIDYS revenue volatility persists due to infusion throughput bottlenecks and rescheduling issues, highlighted by a weak Q4. Despite management's optimistic framing, liquidity has tightened with cash declining and fixed obligations like Arrowhead payments commencing in February 2026.

Implication

The WAIT rating is reinforced, requiring Q1’26 results to confirm ELEVIDYS catch-up infusions and improved throughput before any investment shift. Any incremental FDA action on ELEVIDYS or PMOs could trigger significant downside, aligning with the bear case scenario. Management's lack of detailed guidance and unreported KPIs on infusion metrics undermines confidence in near-term execution. Fixed cash obligations and declining liquidity heighten dilution or restructuring risks if revenue volatility continues. Competitive pressures from upcoming gene therapy data in 2026 add urgency for Sarepta to stabilize its commercial cadence without further setbacks.

Thesis delta

The financial results offer no material shift in the investment thesis, which remains anchored to FDA and operational overhangs. Investors must still see evidence of Q1’26 ELEVIDYS catch-up and stable FDA engagement to justify moving from a WAIT stance, as risks persist unchanged.