What happened

Shares of Solid Biosciences (NASDAQ:SLDB) fell more than 16% today after the company announced organizational changes to prioritize the development of its lead drug candidate, SGT-001, an experimental gene therapy for Duchenne muscular dystrophy (DMD). To do so, the business will reduce its workforce by approximately one-third and suspend all other research activities.

Those efforts should help Solid Biosciences to reduce operating expenses and preserve cash. The business ended September with roughly $105 million in cash and had lost $87 million from operations in the first nine months of 2019.

Despite the planned changes, investors are concerned about the move for multiple well-founded reasons. As of 1:00 p.m. EST, the pharma stock had settled to a 14% loss.

A scientist in the lab with a dejected look on his face.

Image source: Getty Images.

So what

Solid Biosciences has struggled to develop SGT-001. The experimental gene therapy has been placed on multiple clinical holds since beginning clinical trials, with the latest being handed down by the U.S. Food and Drug Administration in November. That means the company must address the concerns raised by regulators before resuming development and dosing additional patients.

The company reported limited data from two patients in December, which management believes supports the asset's continued development. Wall Street hasn't been so sure. Solid Biosciences is now far behind in the race to develop a DMD treatment, trailing peer Sarepta Therapeutics (which just sold its DMD gene therapy candidate to Roche for up to $2.85 billion plus sales royalties) and watching gene-editing partnerships mobilize resources for attempts of their own.

Now what

While there's plenty of room for improved outcomes in DMD, nothing from SGT-001 to date suggests it's going to be a winner. Investors are interpreting today's organizational pivot as a sign that Solid Biosciences is making what amounts to an existential bet on the asset -- and they aren't very optimistic about the outcome.