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More Pain For Recro Pharma: FDA Rejects Meloxicam NDA For Second Time

More Pain For Recro Pharma: FDA Rejects Meloxicam NDA For Second Time

Recro Pharma Inc (NASDAQ: REPH) shares were crashing Monday in reaction to an adverse regulatory decision on its lead pain medication candidate that was announced late Friday.

What Happened

Recro, a micro-cap specialty pharma company that focuses on therapeutics for hospitals and other acute care settings, announced Friday the FDA handed down a complete response letter for its NDA seeking approval for intravenous meloxicam for the management of moderate to severe pain.

The investigational drug was issued a complete response letter for the first time in May 2018, with the FDA reasoning that data from ad hoc analyses and selective secondary endpoints suggested that the analgesic effect of the asset doesn't meet its expectations.

Subsequently, the company resubmitted the NDA in September, with the revised PDUFA date set for March 24, 2019.

The FDA had attributed its second CRL to the delayed onset of meloxicam, which failed to meet the prescriber expectations for IV drugs, according to Recro. Additionally, the FDA cited regulatory concerns about the role of IV meloxicam as a monotherapy in acute pain as well as how it would meet patient and prescriber needs in that setting.

Oppenheimer analyst Leland Gershell said the CRL was a surprising outcome, as the two Phase 3 trials had met the primary pain endpoints.

The company said it strongly disagrees with FDA's interpretation and views on the clinical utility of IV meloxicam in the acute pain setting.

The company also noted that the FDA did not identify any chemical, manufacturing and controls issues in the recent CRL.

What's Next

Recro said it will continue to pursue regulatory approval for IV meloxicam and request a meeting with the FDA to resolve the issues.

Gershell said scheduling of a meeting with the DAAAP is likely, although he did not rule out of the possibility of Recro pursuing a formal dispute resolution.

The next update could come with the first-quarter corporate update in mid-May, the analyst said.

"The change in REPH's business plans and a stock re-pricing that, in our view, substantially undervalues a growing commercial business may well motivate leadership to actively explore M&A," Gershell said. 

Even if IV meloxicam is taken out of the model, the CDMO business — which has the potential of growing revenues in mid-single digits and EBIDTA margins of 45-50 percent — provides valuation support above current levels, according to Oppenheimer. 

Also, the sell-side firm does not see any near-term financing needs.

Oppenheimer maintained an Outperform rating on Recro and lowered the price target from $19 to $9.

Recro shares were sliding 37.31 percent to $6.08 at the time of publication Monday. 

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Latest Ratings for REPH

Nov 2019MaintainsOverweight
Oct 2019Initiates Coverage OnOverweight
Mar 2019DowngradesBuyNeutral

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