William Tanner Cuts Price Target on Agile Therapeutics Inc (AGRX) But Believes Twirla Patch “Still Approvable”

Even though Cantor's William Tanner slices his price target, he nonetheless angles for almost 115% whopping upside potential for AGRX shares.

Agile Therapeutics Inc (NASDAQ:AGRX) stock lost almost half of its value on Friday after the market caught word that ahead of its contraceptive patch Twirla’s PDUFA date today, the FDA issued the sharpest “dent in holiday cheer,” a Complete Response Letter.

The agency had an eyebrow raised regarding patch adhesion testing, manufacturer facility inspection, along with a question as to if adhesion could have affected SECURE clinical study results. How bad will this trip up Agile shares down the road?

Though Cantor analyst William Tanner acknowledges “CRLs are a bummer,” he likewise notes that “they can be revealing, too,” and continues to wager that “a path forward remains.”

Therefore, the analyst reiterates an Overweight rating on AGRX stock. However, acknowledging that this nonetheless is a setback for the healthcare player, Tanner dials the price target back from $8 to $5, which positively still implies a nearly 115% upside from current levels. (To watch Tanner’s track record, click here)

Tanner writes, “Pending the outcome of discussions with the FDA regarding the recent CRL, we believe Twirla is still approvable. Main factors impacting the value of AGRX stock in the delay is the time-value-of-money and dilution created by a need to finance.”

“Tackling the easiest issue first. Corium […] manufactures the patch and, as part of routine and pre-approval inspection, a ‘small number’ of items were identified, mostly related to Twirla. According to CORI management, the plant’s status remains VAI (voluntary action indicated) meaning that there is no action to be taken by the FDA.”

Notably, the analyst underscores that the two healthcare companies already addressed the question of adhesion, as whereas a circular patch could lead to “poorly reproducible data,” rectangular strip testing results were deemed “acceptable” to the CORI and AGRX teams. However, as per the AGRX team, when considering the CRL, the FDA had not reviewed the data from testing that was submitted the first of the month just yet.

To Tanner, the most pressing question boils down to concerns hovering around adhesion and SECURE clinical results, as he surmises: “If the CMC reviewers requested the clinical data reviewers to assess whether there was some apparent relationship, then we believe a red flag has not been raised. If, however, the situation is reversed, then we wonder whether the FDA may scrutinize the product and data more closely.”

On the heels of the CRL, the analyst is pushing his launch timing to the second quarter of 2019, anticipating that with an FDA meeting and refiling in the first quarter of the new year, this will point to a 9 to 12-month approval delay. In reaction,t he analyst has scaled back his Twirl pTS from 75% to 50% but affirms peak sales expectations of $230 million come 2024.

TipRanks highlights a Wall Street opinion that goes to the bulls on Agile Therapeutics, with 3 out of 4 analysts in the last 3 months rating a Buy on the healthcare stock and just 1 maintaining a Hold. The 12-month average price target stands at $6.50, marking a nearly 158% upside from where the stock is currently trading.  

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