Replimune stock cratered Tuesday after the Food and Drug Administration unexpectedly rejected its experimental melanoma treatment.
Shares plummeted 77.2%, closing at 2.80 on today's stock market. Replimune stock hit a record low after climbing 32% over the past two weeks in anticipation of an FDA approval.
"We believed an accelerated approval was likely, given positive developments following the BLA (biologics license agreement) submission including receiving breakthrough therapy designation, as well as the priority review status on this program, with no advisory committee meetings during the process," Leerink Partners analyst Jonathan Chang said in a report.
But the FDA said the midstage study called Ignyte wasn't sufficient to clinch an accelerated approval. Replimune was testing its drug in combination with Bristol Myers Squibb's Opdivo in patients who previously worsened while undergoing treatment with a PD-1-blocking drug. Opdivo and Merck's Keytruda are the best-known PD-1 blockers.
Replimune Stock Tanks On Surprise Rejection
The development "comes as a negative surprise" to us, Chang said. His sentiment echoed other analysts who also noted the unexpected nature of the FDA's decision.
Wedbush analyst Robert Driscoll says Vinay Prasad likely played a "key role." Prasad is the new director of the Center for Biologics Evaluation and Research. Prasad has authored articles criticizing the FDA's accelerated approval pathway, which allows drugs to win approval based on earlier-stage testing and contingent upon a confirmatory study.
He has also been skeptical of surrogate endpoints, or alternative measurements to determine whether drugs are effectively treating patients.
"However, at a recent FDA roundtable on May 20th, Dr. Prasad appeared to indicate support for surrogate endpoints and accelerated approvals," Driscoll said in a report.
In midstage testing, Replimune's regimen led to an overall response rate of 33%. Patients responded for a median of 33.7 months before their cancer worsened. In comparison, Iovance Biotherapeutics won accelerated approval for a melanoma drug that had an overall response rate of 31.5%.
Driscoll downgraded Replimune stock to a neutral rating and cut his price target to 4.
"We conservatively assume the IGNYTE Ph 3 study will have to be restarted with a new design, pushing our approval timelines back to late 2030," he said in the report. "We also expect a significant restructuring in the near term to accommodate study changes and reduced opex."
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
