Sarepta Crisis Reveals Valuable Leadership Tips for Executives

Sarepta Therapeutics found itself in turmoil after patient deaths raised safety questions about Elevidys, Sarepta’s gene therapy for Duchenne muscular dystrophy.

Compliance officers may see this as a case study in risk. But many executives view this as a distant spectacle—unique, dramatic, and irrelevant to their own business.

It’s in that gap that risk takes root. The fundamentals of Sarepta’s story aren’t unique, and the lessons matter for every small-company leader trying to balance rapid growth with sufficient oversight.

What Happened

Duchenne muscular dystrophy is a devastating and rare genetic disease. Parents must watch as their children slowly lose muscle function, stop walking, and, typically, die before 30. They’re desperate for options and their activism has fueled research.

Sarepta’s Elevidys therapy uses a virus to deliver genetic material to muscle cells. It doesn’t cure DMD but can slow progression. When Sarepta’s small trials failed to prove efficacy, parents and physicians came forward with compelling stories and videos.

This prompted an intense debate at the Food and Drug Administration over data versus anecdotal evidence. The agency ultimately granted approval pending a larger study. When that trial also failed to meet endpoints, regulators again wrestled with hope versus evidence before expanding approval.

Then, this year, fatalities of patients who had tried Elevidys emerged. Liver damage is a known risk of viral delivery, but no deaths had occurred in trials and safety didn’t weigh heavily in the FDA’s efficacy debate. The FDA opened an investigation, paused trials, and strengthened label warnings. Sarepta cooperated but resisted the agency’s request to halt US shipments.

Patient groups again weighed in. And Vinay Prasad, the FDA’s head of gene therapy and vaccines, resigned from the agency amid reported political pressure—only to be reinstated days later. As a critic of the Elevidys approval, his leadership is expected to sharpen the FDA’s scrutiny of biologics.

Evolving Stakeholders

This story highlights different issues than the familiar kickbacks and promotional concerns that dominate biopharma compliance. Small companies may need to prioritize risk differently.

Investors. When deaths began emerging, Sarepta’s stock plummeted—a dynamic that inevitably attracts the plaintiff bar. Shareholders allege the board failed to oversee risk while management overhyped Elevidys and downplayed safety. Yet Sarepta’s 10-K filings outlined the risks, and the Elevidys label has always carried a prominent liver-damage warning.

A flashpoint came when Sarepta revealed a third patient death two days after an investor call. The death had occurred in a trial of a different Sarepta therapy using the same viral delivery vehicle. Analysts balked, and on a follow-up call, the CEO insisted it wasn’t unrelated to Elevidys and thus not “material.”

Courts may not equate judgment calls in a fast-moving crisis with securities fraud, much less a board’s abdication of oversight. Sarepta’s investors are sophisticated, and the FDA ultimately agreed the third death was unrelated to Elevidys.

But splitting hairs publicly over the materiality of disclosing a patient death can undermine credibility with regulators, patients, and business partners alike.

Patients. Patient voices helped win Elevidys approval, and their outcry brought urgency when the FDA paused shipments. Yet critics, including Prasad, question the influence companies may have over advocacy groups. Sarepta allegedly pressured one group that diverged from its messaging while another group’s founder petitioned the FDA for stronger label warnings in the wake of patient deaths.

The flood of available information is changing relationships among companies, patients, and the FDA. This evolution is felt profoundly where rare diseases are involved. Parents making life-altering decisions for their children research relentlessly. They know they’re taking risks but appreciating it fully is harder.

There’s a difference between reading “organ toxicity is possible, but manageable” and grasping “a death will likely occur at some point, and despite everyone’s best efforts, it could be your child.” One father said he would rather have his son alive and in a wheelchair at age 35 than die as a teenager.Rejected His 15-year-old son died of acute liver failure after receiving the treatment.

Employees. Sarepta managed the downturn by restructuring from the top down and cutting a third of its workforce. Staff might have accepted the decision—until Securities and Exchange Commission filings revealed raises for new leaders. Rumors also spread after a Reddit post claimed workers learned of terminations through the company’s Workday platform.

These may sound like isolated missteps of a company in crisis, but today’s labor market, coupled with frustration over artificial intelligence and shifting workplace norms, has made employee loyalty fragile. Unhappy staff may become whistleblowers, but social media leaks cause instant reputational damage, often hitting small companies hardest.

Takeaways for Leaders

People and companies are seldom as they appear in the headlines. Look for the humanity that lies beneath. The excruciating pressure of balancing competing concerns while external critics circle goes largely untold. But it’s felt in C-suites and boardrooms everywhere.

Executives: Understand the tradeoffs. Think critically about how your actions might affect key stakeholders. Invite devil’s advocates into decision-making. You don’t have to follow their guidance blindly, but their judgment and perspective can clarify what you must do to meet regulatory obligations, what you can do legally, and what you should do given the circumstances.

A crisis narrative is hard to control. But thoughtful decision-making is better able to withstand scrutiny and may keep words such as “transparency,” “trust,” and “responsibility” from becoming accusations.

Risk Professionals: Focus on what matters. Resist getting buried in low-value tasks. Your political capital is finite, and protecting the company’s credibility with key stakeholders is the best use of it. Help colleagues build systems they can run so you can stay focused on emerging risks.

The goal isn’t just having “a seat at the table.” It’s being sought out before decisions are made because leaders can’t imagine making high-stakes judgment calls without your input. That kind of influence defines effective compliance leadership. And it’s earned long before a crisis hits.

Sarepta’s story is unique, but the themes are universal. And internalizing them may help your small company meet its own moment—whatever that may be.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Mary Kohler is founder and principal of Kohler Health Law. She advises life science companies on the development and commercialization of products.

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