Shares of PepGen Inc. (PEPG) are taking a dive in premarket trading Thursday. The reason? Another regulatory speed bump from the FDA, this time for the company's lead drug candidate in myotonic dystrophy.

Here's what happened: The U.S. Food and Drug Administration (FDA) on Wednesday placed the company's FREEDOM2-DM1 trial on a partial clinical hold. They have questions—specifically about the preclinical pharmacology and toxicology studies. This is a Phase 2 study testing multiple doses of PGN-EDODM1 in patients with myotonic dystrophy type 1 (DM1).

Now, a partial hold isn't a full stop. It's more like the FDA saying, "Hold on a second, we need to check something." Importantly, the agency didn't cite any issues with the blinded clinical data from the earlier Phase 1 FREEDOM study. That's the data PepGen used to get the green light for this Phase 2 trial in the U.S. in the first place.

So, what's PepGen doing about it? The company is in an ongoing dialogue with the FDA and is submitting additional analyses. This includes the recently unblinded data from that FREEDOM study. You might remember that back in September 2025, PepGen released promising clinical data from the 15 mg/kg dose cohort of that Phase 1 study, showing the highest splicing correction in DM1 patients to date.

This latest hiccup comes as PepGen has been putting all its eggs in the DM1 basket. Just last May, the company made a big strategic shift. It voluntarily discontinued the development of PGN-EDO51 for Duchenne muscular dystrophy and wound down all related R&D. That decision was based on the levels of dystrophin protein measured in a clinical trial—it just wasn't hitting the mark they needed.

The focus is now squarely on DM1. And while the FDA has pressed pause in the U.S., the trial wheels are still turning elsewhere. PepGen has received regulatory clearance to start the FREEDOM2 study in South Korea, Australia, and New Zealand. Dosing for the 10 mg/kg cohort is also continuing in the U.K. and Canada.

The company still expects to report new data next year: results from the 5 mg/kg cohort in the first quarter of 2026, and from the 10 mg/kg cohort in the second half of 2026.

Unsurprisingly, the news is weighing on the stock. A quick look at the charts shows a bearish picture. The stock is currently trading 25% below its 20-day simple moving average and 30% below its 100-day average. Over the past year, shares have fallen significantly and are sitting much closer to their 52-week lows than their highs.

The Relative Strength Index (RSI) is right at 50, which is neutral—no strong momentum in either direction. But the MACD indicator is at -0.10, below its signal line, suggesting bearish pressure is still there. The technical setup points to key resistance at $7.50 and key support at $4.50.

Despite the stock's struggles and the latest FDA delay, Wall Street analysts haven't thrown in the towel. The consensus rating on the stock is still a Buy, with an average price target of $13.25. Recent moves include Oppenheimer initiating coverage with an Outperform rating and a $15 target in late February, and Guggenheim raising its price target to $7.00 in mid-February while maintaining a Buy rating.

As of premarket trading Thursday, PepGen shares were down 14.20% at $5.80.