What happened

Shares of Solid Biosciences (NASDAQ:SLDB) fell over 71% today after the company reported that a clinical trial evaluating its lead drug candidate, SGT-001, had been placed on clinical hold by the U.S. Food and Drug Administration (FDA). This is the third time that development of the experimental drug, a gene therapy aimed at Duchenne muscular dystrophy (DMD), has been halted by regulators.

This time, the third patient dosed in the high-dose cohort of the IGNITE DMD study experienced a serious adverse event related to treatment. The patient experienced kidney damage, a decrease in red blood cell count, and cardiopulmonary insufficiency. He is now in recovery. 

As of 11:38 a.m. EST, the pharma stock had settled to a 69.4% loss.

A declining chart on a chalkboard.

Image source: Getty Images.

So what

It's not difficult to see why investors are reacting so strongly to today's news. Simply put, Solid Biosciences has struggled to instill confidence in either investors or the medical community about the safety or efficacy of SGT-001. 

The company previously reported that the low dose of the drug candidate failed to show signs of activity, which led to a more-than-73% drop in the share price. When the company increased the dose and started a new cohort in the IGNITE DMD trial, the first patient to receive the higher dose experienced a serious adverse event.

The barrage of negative developments looks even worse when considered against the competitive backdrop. Sarepta Therapeutics and Pfizer are both developing gene therapies for DMD, while collaborators CRISPR Therapeutics and Vertex Pharmaceuticals are exploring the possibility of developing a treatment for multiple types of muscular dystrophy based on gene editing. The cash balance of Solid Biosciences pales in comparison to those of well-funded competitors.

Now what

Today's collapse pegs Solid Biosciences to a market valuation of about $150 million. That's a strong signal that investors have all but given up on the clinical-stage company. The gene therapy developer is now working with the FDA to address the safety issue and possibly have the clinical hold lifted. Regardless of that outcome, the company still expects to report updated data from the IGNITE DMD study before the end of 2019. Will it matter? Investors don't seem interested in sticking around to find out.