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Investing.com - BMO Capital maintained its Outperform rating and $27.00 price target on Replimune Group (NASDAQ:REPL), currently trading at $2.93, following a Complete Response Letter (CRL) from the FDA for the company’s RP1 therapy. The target represents significant upside potential, though InvestingPro data shows the company is quickly burning through cash despite maintaining a strong balance sheet with more cash than debt.
The FDA cited issues with Replimune’s IGNYTE and confirmatory trial designs, effectively sending the company "back to the drawing board" according to BMO Capital’s analysis.
The regulatory setback may be connected to recent leadership changes at the FDA, particularly with Vinay Prasad as the new head of the Center for Biologics Evaluation and Research (CBER), who has previously expressed criticism regarding the approval of treatments based on uncontrolled data.
BMO Capital noted this development could potentially cause "softness across the broader sector" as it reinforces stricter regulatory standards for drug approvals.
Replimune is expected to schedule a Type A meeting with the FDA to determine next steps, though BMO Capital anticipates "a long road ahead" for the company following this regulatory feedback.
In other recent news, Replimune Group, Inc. faced a significant setback as the U.S. Food and Drug Administration issued a Complete Response Letter rejecting the company’s Biologics License Application for its RP1 therapy in combination with nivolumab for advanced melanoma treatment. The FDA cited inadequacies in the supporting IGNYTE trial, noting it did not provide substantial evidence of effectiveness due to the heterogeneity of the patient population. Despite this development, analyst firms have maintained their ratings on Replimune. H.C. Wainwright reiterated its Buy rating with a $22.00 price target, while JPMorgan reaffirmed an Overweight rating and a $16.00 price target, highlighting expectations for RP1’s approval and a significant market opportunity. Cantor Fitzgerald also initiated coverage with an Overweight rating ahead of the anticipated PDUFA date. Replimune has maintained consistent communication with the FDA, having completed late-cycle reviews and manufacturing inspections. The company is preparing for potential approval by setting up 150 centers for immediate deployment of the treatment, focusing on academic centers.
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