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Investing.com - Cantor Fitzgerald downgraded Replimune Group (NASDAQ:REPL) from Overweight to Neutral following the FDA’s rejection of the company’s melanoma treatment. The stock plunged to $3.07, down significantly from its previous close of $12.09, with trading volume surging to 1.57 million shares.
The FDA issued a Complete Response Letter (CRL) for Replimune’s RP1 therapy in advanced melanoma, citing the lack of "adequate and well-controlled clinical investigation." The application was based on the single-arm IGNYTE trial, which showed a 33% objective response rate and 33.7-month duration of response in refractory patients. According to InvestingPro data, analysts maintain a bullish consensus with price targets ranging from $17 to $31.
Despite previously receiving breakthrough designation and progressing through FDA review meetings without issues, the therapy faced rejection under CBER head Dr. Vinay Prasad’s leadership. Cantor Fitzgerald noted this decision aligns with Dr. Prasad’s published views on approval standards.
Replimune plans to seek a Type A meeting with the FDA for clarification, but Cantor Fitzgerald expressed skepticism about a reversal. The firm believes the FDA will require a randomized controlled trial for approval, which Replimune has indicated it lacks resources to conduct.
The company reported $484 million in cash as of March 31, 2024, and maintains a healthy current ratio of 7.95, with more cash than debt on its balance sheet. However, InvestingPro analysis indicates the company is quickly burning through cash. Cantor Fitzgerald suggested this rejection may have broader implications for cancer drug approvals, potentially signaling increased FDA emphasis on survival outcomes from randomized trials. Get deeper insights into Replimune’s financial health and 8 additional key ProTips with an InvestingPro subscription.
In other recent news, Replimune Group Inc . faced a significant setback after receiving a Complete Response Letter (CRL) from the U.S. Food and Drug Administration (FDA). The FDA rejected the company’s Biologics License Application (BLA) for its RP1 therapy in combination with nivolumab for treating advanced melanoma. The decision was based on concerns regarding the IGNYTE trial design, which the FDA deemed inadequate and lacking substantial evidence of effectiveness. Despite this, Barclays (LON:BARC) maintained an Overweight rating with a $17.00 price target, and BMO Capital reiterated an Outperform rating with a $27.00 price target for Replimune. Both firms acknowledged the FDA’s concerns but did not raise any safety issues related to the therapy. The CRL indicates that Replimune needs to address the trial design issues before resubmitting their application. This development has led analysts to suggest that Replimune may have to revisit its approach to the clinical trials. The company will need to make significant adjustments to meet regulatory standards in the future.
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