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Investing.com - Jefferies has significantly reduced its price target on Replimune Group (NASDAQ:REPL) to $6.00 from $31.00 while maintaining a Buy rating on Tuesday. The company, currently trading at $3.01 with a market cap of $234 million, has seen its stock decline significantly from its 52-week high of $17.00.
The price target cut follows a Complete Response Letter (CRL) from the FDA for Replimune’s RP1 therapy, which the company reported came as a surprise since the cited issues were not raised during the review process.
According to Jefferies, the decision appeared to be overruled by a senior FDA leader during the last minute without thorough review of previous agreements and history, despite the company having aligned with the FDA since 2021 on accelerated approval parameters.
Replimune plans to request a Type A meeting with the FDA to discuss the path forward, with hopes of convincing regulators that the existing package is approvable.
Jefferies has conservatively pushed its projected launch timeline by approximately three years and lowered the probability of success to 35% from 80%, resulting in the substantial price target reduction.
In other recent news, Replimune Group has encountered significant regulatory challenges following a Complete Response Letter (CRL) from the U.S. Food and Drug Administration (FDA) regarding its Biologics License Application for the RP1 therapy in combination with nivolumab for melanoma treatment. The FDA stated that the Phase II IGNYTE trial, which formed the basis of the application, was not "adequate and well-controlled" to provide substantial evidence of effectiveness. This development led Leerink Partners to maintain an Outperform rating with a $17.00 price target, while Barclays (LON:BARC) also reiterated an Overweight rating with the same price target, noting no safety concerns were raised by the FDA.
Conversely, Wedbush downgraded Replimune from Outperform to Neutral, significantly reducing its price target from $19.00 to $4.00. Cantor Fitzgerald also adjusted its rating from Overweight to Neutral, highlighting the trial’s lack of adequate clinical investigation despite a 33% objective response rate. The CRL marks a setback for Replimune, as the FDA indicated concerns about patient population heterogeneity and insufficient evidence of efficacy. Mizuho (NYSE:MFG) analysts noted the decline in Replimune’s shares following the FDA’s decision, emphasizing the impact of this regulatory hurdle on the company’s prospects.
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