Yesterday, DURECT Corporation’s (NASDAQ:DRRX) licensee Pain Therapeutics announced that it had received a complete response letter (CRL) from the FDA for the resubmitted NDA of pipeline drug REMOXY, a long-acting oral formulation drug designed as an abuse deterrent oxycodone candidate.

According to the FDA, the long-acting gelatin capsule formulation of oxycodone cannot be approved in its present form. Specifically, the FDA’s concerns lie with REMOXY’s abuse-deterrent features as well as the proposed drug labeling. For the drug to be approved, the FDA requires specified additional trials and data.

Nonetheless, Rodman & Renshaw analyst Ram Selvaraju remains positive on the bigger picture and underscores, “This CRL contains a different set of requirements from the previous CRL, and does not mention anything regarding REMOXY®’s clinical safety, efficacy, manufacturing, stability or bioequivalence.”

As such, the analyst reiterates a Buy rating on shares of DRRX, while reducing the price target from $4.00 to $3.50, which represents a nearly 202% increase from where the stock is currently trading.

Selvaraju asserts, “This FDA decision came as a surprise to us, considering the fact that the FDA determined in July that an Advisory Committee meeting for REMOXY® was unnecessary, where all the issues in this CRL could have been brought to light and discussed.”

Additionally, the studies the FDA requires to back drug label claims against both injection and inhalation abuse will not take more than a few months. However, studies against snorting abuse are admittedly longer in duration, as these must be a human study and not the submitted animal study.

Ultimately, “We believe REMOXY® should still get approval eventually with revised drug labeling. Conservatively, we currently project the commercialization of REMOXY® starting in 2018,” the analyst contends.

The analyst also looks to DUR-928, the firm’s lead candidate in the epigenomic regulator program, which is in the midst of two Phase 1b safety and pharmacokinetic (PK) trials in patients with NASH and impaired kidney function, respectively. To further bolster his bullish forecast, Selvaraju anticipates positive readouts from both of these trials when taking into account DUR-928’s “multiple levels of mechanism of action.”

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Ram Selvaraju is ranked #586 out of 4,183 analysts. Selvaraju has a 51% success rate and yields 4.4% in his annual returns. When recommending DRRX, Selvaraju realizes 22.8% in average profits on the stock.

In addition, Zacks analyst Grant Zeng rates a Buy on DRRX with a price target of $6.00 and Laidlaw analyst James Molloy rates a Buy on DRXX with a price target of $4.00.