Recro Pharma’s Shares Plunges Following FDA Letter

Contact between companies in the life science sector and the US Food and Drug Administration (FDA) can have a significant impact on the company’s share price.

On Thursday (May 24), this was the case for Recro Pharma (NASDAQ:REPH) when the company announced it received a complete response letter (CRL) from the FDA stating Recro’s new drug application (NDA) for IV Meloxicam wasn’t approved after its Phase 3 trial.

The CRL stated although the Phase 3 trial “demonstrated statistically significant outcomes on the primary endpoints.” The FDA said that it couldn’t approve the application based on data from ad hoc analyses and selective secondary endpoints suggesting the analgesic effect does not meet the FDA’s expectations.

“We stand behind the body of evidence included in our NDA,” Recro’s CEO Gerri Henwood said in the conference call on Thursday about the CRL. “We intend to request a meeting with the FDA as soon as possible to discuss the points raised in the CRL.”

During the conference call, Henwood said the company needs to meet with the FDA to answer questions as the CRL didn’t offer a solution. At this time the company is unsure if another trial is required or if there was a dosing issue to further pursue the drug’s approval.

Henwood added no immediate action will be taken to reducing commercial activities, but the company is evaluating the issue. A generic time-frame for this meeting should be within the next 30-days depending on the FDA’s schedule.

Meloxicam has been used as an oral treatment for osteoarthritis and rheumatoid arthritis symptoms since the 1990’s by Boehringer Ingelheim Pharmaceuticals under the name Mobic. Recro’s IV Meloxicam is a long-acting nonsteroidal anti-inflammatory drug (NSAID) with preferential COX-2 inhibition to have anti-inflammatory, analgesic and antipyretic activities. The indication for this formulation is for quick acute postoperative pain treatment as a possible opioid alternative.

Aside from this product, Recro has two other treatments in its pipeline for non-opioid pain treatments. The company hopes its candidates would avoid many side effects associated with commonly prescribed opioid therapeutics including constipation, respiratory distress and addiction.

The company also manufactures five commercial products commercialized by partners and receives royalties to generate revenue.

Investor Takeaway

Recro’s share price decreased 54.67 percent to close at US$5.63 from $12.42 following Thursday’s. In earlier trading on Thursday the share price decrease was as low at 59 percent.

According to TipRanks, Ken Trbovich, analyst with Janney Montgomery reiterated a “buy” rating for the company on Thursday, but lowered the price target to $11.00 from $21.00 due to the CRL.

Keen investors interested in Recro can look forward to hearing about the FDA meeting regarding the CRL and other news about other drugs in its pipeline.

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Securities Disclosure: I, Gabrielle Lakusta, hold no direct investment interest in any company mentioned in this article.