Why Scholar Rock Stock Got Socked on Monday

A potential delay in an important submission was the news item driving Scholar Rock's (NASDAQ: SRRK) share price down as the trading week kicked off. On Monday, the biotech's shares fell by more than 13% as a result, contrasting unfavorably with the 1.6% gain of the S&P 500 (SNPINDEX: ^GSPC).

A concerning inspection

In a tersely worded post on its website, Scholar Rock divulged that a third-party manufacturing facility it uses, Catalent Indiana, has been tagged by the Food and Drug Administration (FDA) as being Official Action Indicated (OAI).

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An OAI is a designation placed on a facility meaning that "regulatory and/or administrative actions are recommended," in the FDA's words. This follows an inspection by the regulator in which concerns are raised.

Catalent Indiana is owned by Novo Nordisk, best known as the developer of weight-loss drug Wegovy. The facility functions as a third-party manufacturer for other biotechs and pharmaceutical companies. Besides Scholar Rock, the list of clients includes Regeneron, among numerous others in the industry.

BLA blues

Last month, Scholar Rock suffered a setback with the FDA when the agency rejected the company's biologics license application (BLA) for its apitegromab spinal muscular atrophy (SMA) drug. It has requested a formal meeting with the FDA to help determine the next steps with the submittal, although the Catalent Indiana situation might not affect this positively.

Scholar Rock said it would continue to work with Novo Nordisk. It pledged to provide more information in its third-quarter earnings call scheduled for next month.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Regeneron Pharmaceuticals. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.