By Bhanvi Satija

(Reuters) -U.S. regulators asked Sarepta Therapeutics ( SRPT ) on Friday to voluntarily halt shipments of its Elevidys gene therapy after a muscular dystrophy patient who received a different, experimental treatment died, but the company said it would not do so.

The Food and Drug Administration announced the move, confirming an earlier Reuters report, after making the request at a meeting with Sarepta on Friday.

After the FDA request, Cambridge, Massachusetts-based Sarepta said in a statement that it will continue to ship the therapy to ambulatory people but maintain a halt it implemented June 15 for non-ambulatory patients after reporting to the FDA a case of acute liver failure in a patient who could not walk.

Sarepta said it made the decision "based on our comprehensive scientific interpretation of the data, which shows no new or changed safety signals in the ambulant patient population."

While the 51-year-old man with limb girdle muscular dystrophy who died most recently was not taking Elevidys, his experimental therapy and Elevidys are based on similar gene technology, the FDA said.

The FDA said it was putting clinical trials for limb girdle muscular dystrophy on hold due to safety concerns.

Elevidys received traditional approval in 2024 for patients age 4 and older with the Duchenne muscular dystrophy gene mutation who can walk, as well as accelerated, conditional approval for those with the muscle-wasting disease who cannot, even though the therapy failed to meet the main goal in a late-stage trial.

In another setback, the regulator also revoked the platform technology designation for Sarepta's gene therapy, a status that can streamline regulatory review and that is given when a technology has promise across multiple indications.

Sarepta shares ended down 36% at $14.08. At one point on Friday, the stock tumbled over 40% to a more than nine-year low after the company disclosed the third patient death.

The agency increased scrutiny of Sarepta when two teenage boys receiving Elevidys died this year. All three of the deaths were caused by acute liver failure and occurred in non-ambulatory patients.

'DISAPPOINTMENT, CONCERN'

The FDA said it is continuing to investigate the risk of acute liver failure with serious outcomes, including hospitalization and death, with gene therapies using Sarepta's AAVrh74 platform technology.

Wall Street analysts have said the third death could make patients more hesitant to use Elevidys. Patient groups said the developments around Elevidys have been concerning.

"Families with Duchenne muscular dystrophy are grappling with a mix of disappointment, concern...and uncertainty about choices they are making for their own children or themselves," said Debra Miller, founder of the non-profit CureDuchenne.

On Wednesday, Sarepta said it was working with the FDA to add a warning label about liver toxicity risks to Elevidys' packaging.

On an investor call on Friday, analysts asked Sarepta why it had not disclosed the latest patient death on Wednesday, when it announced 500 layoffs and cuts to its limb-girdle muscular dystrophy program, citing financial reasons.

CEO Doug Ingram said the matter was "neither material, nor central" to Wednesday's update and the decision to end the limb-girdle muscular dystrophy gene therapy study was made independently of the patient death.

The company also said liver issues were not a new safety signal in the study. However, some analysts, including those at BMO Capital Markets, warned that Sarepta's handling of the disclosure could damage management credibility.

At least two analysts asked whether other deaths had occurred in Sarepta's gene therapy programs. The company said it was not aware of any beyond the three that were disclosed.