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Massachusetts Biotech Plummets as Skin Cancer Trial Fails

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In recent news, Massachusetts clinical-stage biotechnology company Replimune Group Inc. revealed its latest clinical trial did not meet the endpoints needed to call it a success. With this, the stock has plummeted.

Replimune Group Inc. (REPL:NASDAQ), a clinical-stage biotechnology company headquartered in Massachusetts, saw its shares plummet in premarket trading on Tuesday after the company announced that a key clinical trial failed to meet its primary endpoints. The company's experimental therapy, RP1, was being tested in combination with Regeneron's Libtayo as a treatment for cutaneous squamous cell carcinoma. However, the data showed that the combination therapy failed to significantly improve complete response rates or overall response rates compared to Libtayo alone.

The failure of this mid-stage study sent Replimune's shares plunging by 47% in premarket trading, opening the day at only US$27.24 compared to Monday's closing price of US$52.

While the combination therapy did show an increased duration of response, Replimune acknowledged that the data are immature and require further follow-up. As such, the trial will continue as planned to further assess the efficacy measures of duration of response, progression-free survival, and overall survival.

Disappointing Trial but Positive Data in Other Study

This disappointing clinical trial update comes alongside more positive data from a separate study testing RP1 in anti-PD1 failed non-melanoma skin cancer. Replimune suggested that this second trial adds to a growing body of evidence supporting RP1's potential to treat difficult-to-treat cancer settings.

In light of the failed cutaneous squamous cell carcinoma study, Replimune also announced that it would narrow its near-term focus by discontinuing the development of two other pipeline therapies.

Stock Analysis also had a "Strong Buy" rating on the company. 

The company will stop further efforts for RP2 as a treatment of squamous cell carcinoma of the head and neck and will discontinue the development of RP3 for colorectal cancer.

Replimune said this reprioritization of its portfolio will allow the company to focus on its nearer-term priority studies and will likely extend its cash runway into early 2026. By shelving RP2 and RP3, the company aims to zero in on additional clinical work to further establish RP1's efficacy.

The disappointing results for RP1 come at a difficult time for Replimune, which has faced setbacks across multiple clinical programs over the past year. Along with Tuesday's study failure, Replimune ended 2022 by halting the development of RP2 as a liver cancer treatment after the therapy failed to improve overall survival compared to the placebo.

However, MarketBeat halted its rating on Replimune while awaiting updates after the latest news. 

Prior to that, the company had discontinued a Phase 2 study of RP1 combined with Opdivo due to new competitor therapies reaching the market.

While Replimune looks to rebound by narrowing focus on its most promising near-term product in RP1, it remains to be seen whether the immunotherapy will ultimately prove effective enough to gain regulatory approval. With shares plummeting to open 2023, Replimune faces pressure to deliver on RP1’s potential in order to regain investor confidence after this latest clinical setback.

Expert Ratings

While this news is still fresh, TipRanks still has a "Strong Buy" rating on the company, based on past analysts' estimates. 

CNN Business was quoted today saying, "The nine analysts offering 12-month price forecasts for Replimune Group Inc have a median target of US$48.00, with a high estimate of US$70.00 and a low estimate of US$32.00. The median estimate represents a +290.24% increase from the last price of US$12.30."

Stock Analysis also had a "Strong Buy" rating on the company. 

However, MarketBeat halted its rating on Replimune while awaiting updates after the latest news. 

We will have to wait and see what analysts are saying as the news begins to settle in.

Ownership and Share Structure

According to Reuters, the bulk of shares are owned by institutional investors.

Market Watch reports that Replimune has a market cap of US$691.58 million and 59.06 million shares outstanding. It trades in the 52-week range between US$9.79 and US$29.52.

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