PepGen Inc. (NASDAQ:PEPG) reported a narrower-than-expected fourth-quarter loss on Thursday, but the stock plunged about 20% in after-hours trading as investors focused on regulatory concerns surrounding one of its key trials.
The company posted a quarterly loss of $0.27 per share, beating analyst estimates of $0.37 per share. Despite the earnings surprise, shares fell sharply following news that the U.S. Food and Drug Administration has placed a partial clinical hold on the company’s FREEDOM2 study in the United States.
PepGen reported a net loss of $18.3 million for the three months ended December 31, 2025, narrowing from a loss of $22.2 million in the same period a year earlier.
Research and development expenses declined to $13.9 million from $19.0 million year over year, while general and administrative costs rose slightly to $5.9 million from $5.4 million.
Investor concerns centered on the FDA’s partial hold on the FREEDOM2 trial. The agency’s review relates to previously submitted preclinical pharmacology and toxicology studies, though it did not raise issues regarding clinical data from the Phase 1 FREEDOM trial.
Patient dosing is continuing outside the U.S., with ongoing treatment in Canada and the United Kingdom. Four of the eight patients in the 10 mg/kg cohort have received up to two doses so far.
“2025 was a transformative year for PepGen as the Phase 1 FREEDOM trial delivered compelling data that set a new benchmark for splicing correction in DM1,” said James McArthur, President and Chief Executive Officer.
The company expects to release results from the 5 mg/kg cohort of the FREEDOM2 trial during the first quarter of 2026, with data from the 10 mg/kg cohort anticipated in the second half of the year.
Following a review by the Data Safety Monitoring Board, PepGen has been cleared to escalate dosing and has updated the study protocol to allow doses of up to 12.5 mg/kg.
PepGen reported cash, cash equivalents and marketable securities totaling $148.5 million as of December 31, 2025, which management believes will be sufficient to fund operations into the second half of 2027.