Why Scholar Rock Stock Tumbled 12% Today – And What Wall Street Missed

Another biotech bloodbath—Scholar Rock shares got crushed Wednesday after Phase 2 data failed to dazzle. Here's the damage.

The catalyst: Mid-stage trial results for their muscle-wasting drug landed with a thud. No safety flags, but efficacy metrics? Underwhelming.

Market reaction: Instant punishment—12% evaporated by noon. Classic case of 'buy the rumor, sell the news' meets biotech's brutal expectations game.

Silver lining? Pipeline still holds two Phase 3-ready assets. But in this rate environment, cash burn matters more than moonshots. Ask any SPAC survivor.

The kicker: Short interest doubled last month. Someone's Christmas bonus just got funded.

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.

Image source: Getty Images.

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.