Shares of Scholar Rock reversed steep losses and closed in the green Tuesday after the Food and Drug Administration rejected the company's spinal muscular atrophy drug, citing concerns at the Catalent fill-finish facility in Indiana.
Fill finish is the final manufacturing step for some drugs, involving filling drug substances into final containers, like vials and syringes. FDA inspectors found some problems during a regular inspection of the Catalent facility, which Novo Nordisk owns, in December 2024.
Wedbush analyst David Nierengarten said Catalent responded to the FDA in August. The rejection likely sets Scholar Rock's apitegromab back by four quarters, he said in a report.
"While we acknowledge that the delay introduces some balance sheet risk, anticipated dilution is minimal, and we would be buyers of shares on an anticipated pull back, given apitegromab's strong future market positioning with limited/no competition from Talfa," he said.
Talfa, or taldefgrobep alfa, is a spinal muscular atrophy drug from Biohaven that failed final-phase testing last year.
On today's stock market, Scholar Rock stock rose 3.6%, closing at 33.75 and paring steeper double-digit losses in premarket action. Shares have a strong IBD Digital Relative Strength Rating of 90 out of a best-possible 99. This puts the stock's 12-month performance in the leading 10% of all stocks.
Delayed, But Probably Not Denied
Apitegromab is unique in the spinal muscular atrophy, or SMA, space. It blocks the ability of a protein called myostatin to limit muscle growth. This allows for increased muscle mass and strength.
Anti-myostatin drugs are now being tested in the weight-loss arena. But Nierengarten noted investors likely under-appreciate the potential move into other neuromuscular conditions like Duchenne muscular dystrophy, facioscapulohumeral muscular dystrophy or amyotrophic lateral sclerosis.
He lowered his price target on Scholar Rock to 43 from 50, saying apitegromab has been delayed, but probably won't ultimately be denied. He now expects $7.9 million in 2026 sales, growing to $204 million and $511 million in 2027 and 2028, respectively.
Leerink Partners analyst Mani Foroohar noted the delay is disappointing as many investors expected "a launch that was set to be widely owned exiting 2025." It also could hurt Scholar Rock's balance sheet, he said in a client note.
Still, Foroohar reiterated his outperform rating on Scholar Rock stock.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
