Why Scholar Rock Stock Wilted on Wednesday

Key Points

• The company posted a relatively steep bottom-line shortfall in its second quarter.

• This was tempered by a business update that featured more positive news.

• 10 stocks we like better than Scholar Rock ›

It didn't take a high-powered academic to figure out why Scholar Rock's (NASDAQ: SRRK) share price swooned by more than 5% on Wednesday. That morning, the biotech published a quarterly earnings report and business update that fell short of expectations. That decline came on a day when the S&P 500 index rose by 0.7%.

Second-quarter slide

Scholar Rock's second quarter saw the relatively early-stage company post no revenue and a net loss of over $110 million, or $0.98 per share. This was far steeper than the nearly $59 deficit in the same period of 2024.

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On average, analysts tracking the stock were modeling a shortfall of only $0.66 per share.

Significantly higher general and administrative expenses were the main culprit in the notably deeper loss. They nearly tripled over the one-year period, landing at almost $50 million from slightly over $17 million in 2024's Q2. Research and development spend, meanwhile, increased by 47% to a bit over $62 million.

As for its financial resources, Scholar Rock had cash, equivalents, and marketable securities totaling $295 million at the end of the quarter. It said these should be sufficient to support its activities into 2027.

Not all the news was bad

As is common with biotech stocks, Scholar Rock also provided a business update within its earnings release.

The company actually provided several reasons to be bullish on its future, one of which was that the U.S. Food and Drug Administration (FDA) accepted Scholar Rock's biologics license application (BLA) for its apitegromab (an investigational drug targeting spinal muscular atrophy). A decision could come soon, as the regulator has effectively set Sept. 22 as a deadline for delivering one.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.