Recro Pharma (NASDAQ:REPH) received devastating news on Thursday. The U.S. Food and Drug Administration (FDA) rejected the company’s lead pipeline candidate, IV meloxicam, for the treatment of moderate to severe pain. Recro’s shares plunged nearly 55% lower on the announcement. Is there any hope for IV meloxicam — and what will Recro do now?
Janney Montgomery analyst Ken Trbovich commented, “It appears the decision to issue the CRL was based on the FDA’s ad hoc analysis of secondary endpoints and not on the primary endpoints of REPH’s Phase 3 studies, which showed statistically significant pain reduction. In addition, the CRL raised questions pertaining to what REPH describes as “extractable and leachable data” that may relate to potential interaction between the drug product and the packaging in which it is contained.”
“We continue to believe, based on the entirety of the clinical package of Phase 2 and Phase 3 studies, that IV-Meloxicam has demonstrated a clinically meaningful benefit in reducing pain as evidenced by reduction in pain scores and as further shown by the reduced use of opioid rescue after surgery. There is a desperate need for alternative, non-opioid treatments to post-surgical pain, and we continue to believe IV-Meloxicam offers an important option and should be approved. For these reasons we are maintaining our Buy rating,” the analyst continued.
Trbovich believes conducting an additional study would, depending on the study design, likely take no less than one year to complete. As such, based on expected delays in timing of potential approval and commercialization of IV-Meloxicam, the analyst slashes his price target on REPH from $21 to $11. (To watch Trbovich’s track record, click here)
How does Trbovich’s bullish bet measure up against the word of the Street? Quite on point, it seems, considering TipRanks analytics exhibit REPH as a Strong Buy. Out of 5 analysts polled by TipRanks in the last 3 months, all 5 are bullish on Recro stock. With a return potential of 188%, the stock’s consensus target price stands at $16.25.