Replimune Shares Plummet as FDA Rejects Cancer Drug Pathway
Company's lead drug candidate, RP1, faces uncertain future after regulators find clinical trial data inadequate, prompting analyst downgrades and lawsuits.
Shares of Replimune Group (REPL) cratered, extending their dramatic slide after the company announced it has failed to find a clear regulatory pathway for its lead cancer therapy, RP1. The announcement follows a critical meeting with the U.S. Food and Drug Administration (FDA) and has triggered a wave of analyst downgrades and mounting legal challenges for the embattled biotech firm.
The company's stock fell by as much as 39.4% after it disclosed that a did not result in a viable path for accelerated approval of RP1 for the treatment of advanced melanoma. This setback is the latest in a series of blows for Replimune, which received a Complete Response Letter (CRL) from the FDA in July, effectively rejecting the drug's initial application. The agency cited concerns that the pivotal IGNYTE trial was not an "adequate and well-controlled clinical investigation" necessary to prove the drug's effectiveness.
Wall Street's reaction has been swift and severe. In the wake of the latest FDA update, JPMorgan downgraded Replimune's stock from Neutral to Underweight and removed its price target, citing the significant regulatory uncertainty. This follows a previous round of downgrades in July, when Wedbush cut its rating from Outperform to Neutral and slashed its price target from $19 to $4. Similarly, Cantor Fitzgerald , anticipating the need for a new, lengthy, and costly randomized controlled trial.
Adding to the company's woes, Replimune is now facing . These lawsuits allege that the company misled investors by overstating the likelihood of success for the IGNYTE trial and failing to disclose the material risk that the FDA would find its clinical data inadequate for approval. The initial news of the CRL in July caused the stock to plummet by approximately 77% in a single day, wiping out significant shareholder value.
RP1, an oncolytic immunotherapy based on a modified herpes simplex virus, is the company's lead product candidate. It is designed to both directly kill tumors and stimulate a broader anti-tumor immune response. Despite the regulatory setbacks, Replimune's CEO, Sushil Patel, Ph.D., has expressed continued confidence in RP1's potential, citing the "unmet need in advanced melanoma and the compelling risk-benefit profile of RP1 observed in the IGNYTE trial." The company has stated it is committed to working with the FDA to find an "expeditious path forward." However, with no clear timeline for resolution and the prospect of a new clinical trial, the future for RP1, and for Replimune itself, remains highly uncertain.