US FDA declines to approve Scholar Rock's muscle weakness drug; shares fall

By Puyaan Singh and Sriparna Roy

Sept 23 (Reuters) - Scholar Rock SRRK.O said on Tuesday the U.S. health regulator has declined to approve its drug for a rare neuromuscular disease citing issues at a third-party manufacturing facility, sending the company's shares down 12% in premarket trading.

Scholar Rock is banking on apitegromab to drive its growth and profitability. The drug is being tested as a treatment for spinal muscular atrophy and muscle preservation in obesity.

Analysts estimate that apitegromab, once approved, could bring in nearly $2 billion in revenues by early 2030s.

The U.S. Food and Drug Administration's so-called complete response letter is related to issues identified during a routine inspection of Catalent's Indiana fill-finish facility, which was acquired by Novo Nordisk NOVOb.CO, the company said. The agency's observations were not specific to the drug, it added.

Regeneron's REGN.O drugs have lately been impacted by delays and rejections, following the agency's site inspections at Catalent's Indiana facility.

Scholar Rock said it will resubmit its application seeking marketing approval for apitegromab, after Catalent fixes the issues raised by the FDA.

At least three analysts said they do not expect the latest development to affect the probability of approval for the drug.

"With some expecting an on-time approval and no specific date for a planned resolution noted, some investors may react more negatively to uncertainty," said BMO Capital Markets analyst Evan Seigerman, who expects the issue to be resolved in under three months.

Spinal muscular atrophy is the leading genetic cause of infant deaths and affects about 1 in 10,000 people, according to U.S. government data. It prevents the body from producing a protein necessary for neuromuscular development and leaves children too weak to walk, talk and swallow.

Scholar Rock is competing with at least a dozen other companies in the race to develop treatments that can help people shed weight without losing muscle.

The use of these muscle-preserving treatments is expected to grow with the use of GLP-1 drugs for obesity, such as the wildly popular Zepbound and Wegovy injections from Eli Lilly LLY.N and Novo Nordisk NOVOb.CO, respectively.