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Investing.com - Replimune Group Inc (NASDAQ:REPL) shares plunged to $2.92, down 76% from the previous close of $12.09, after receiving a Complete Response Letter (CRL) from the U.S. Food and Drug Administration. The clinical-stage biotech, currently valued at $223 million, has seen its stock drop significantly despite maintaining strong liquidity with more cash than debt on its balance sheet.
The CRL represents a setback for the clinical-stage biotechnology company, which had been awaiting a decision on its regulatory submission. The FDA issues Complete Response Letters to indicate that a drug application cannot be approved in its current form. According to InvestingPro analysis, the company has been quickly burning through cash, though it maintains a healthy current ratio of 7.95, indicating strong short-term financial stability.
Mizuho (NYSE:MFG)’s research desk noted that the stock was "clobbered" following the regulatory news, which had been anticipated as a potential risk by some investors.
According to Mizuho, the possibility of an unfavorable outcome had been discussed "a few times last month at investor meetings" where concerns were raised about the "unfavorable risk/reward into the PDUFA." PDUFA refers to the Prescription Drug User Fee Act date, which is the deadline for the FDA to review a new drug application.
Mizuho further observed that the situation was "playing out nicely this morning for those patient enough to stay the course on short side given the recent move higher into today’s catalyst."
In other recent news, Replimune Group received a Complete Response Letter (CRL) from the U.S. Food and Drug Administration (FDA) regarding its Biologics License Application for RP1 in combination with nivolumab for advanced melanoma treatment. The FDA’s decision was based on concerns about the trial design and the lack of substantial evidence of efficacy, although no safety issues were identified. The agency highlighted that the IGNYTE trial results were challenging to interpret due to the heterogeneity of the patient population. Despite this setback, Barclays (LON:BARC) has maintained an Overweight rating with a price target of $17.00, and BMO Capital reiterated its Outperform rating with a $27.00 price target. Both firms acknowledge the FDA’s feedback and suggest that Replimune may need to revisit its trial designs. Prior to the FDA decision, H.C. Wainwright had reiterated a Buy rating with a $22.00 price target, focusing on the potential of the RP1 therapy. These recent developments underscore the challenges Replimune faces in advancing its melanoma treatment.
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