Shares of Replimune Group (NASDAQ:REPL) tumbled sharply in premarket trading on Monday, falling close to 60% after the U.S. Food and Drug Administration issued a second complete response letter (CRL) for RP1, its oncolytic virus treatment being developed in combination with nivolumab for advanced melanoma.
The stock was down more than 57% by 05:10 ET in premarket activity.
Analysts reacted swiftly to the news. BMO Capital Markets cut its rating to Underperform and slashed its price target to $1 from $11, while JPMorgan downgraded the shares to Underweight from Neutral and removed its $10 target altogether.
The FDA’s decision focused on persistent concerns surrounding the design of Replimune’s IGNYTE trial—issues that had been highlighted well before the company filed its original application.
According to BMO analyst Evan David Seigerman, regulators had already indicated during a March 2021 meeting that a single-arm study “would not enable identification of the contribution of each component of the combination to the overall response rate” and that it “would not recommend that the Sponsor submit a BLA based on the results of a single-arm study.”
“Through the detailed CRL, we are able to more clearly see challenges FDA raised with the RP1 development plan that likely require a subsequent trial to address. Such a path will likely be long and financially challenging for Replimune and shareholders,” Seigerman wrote.
In its latest response, the FDA pointed to difficulties in evaluating systemic treatment effects, noting that more than half of the patients assessed for efficacy did not have non-injected lesions.
The agency also raised concerns over aspects of the trial protocol, including reinjection of lesions just before progression assessments, surgical interventions conducted prior to tumor measurement, and histology analyses that lacked central review—all of which complicated interpretation of the efficacy data.
Additional challenges included patient variability and the absence of a control arm, limiting regulators’ ability to determine how much incremental benefit RP1 provided beyond nivolumab alone.
JPMorgan analyst Anupam Rama said he had previously believed the overall RP1 dataset supported approval, though he acknowledged there had been regulatory risks ahead of the decision.
Seigerman also suggested that earlier resubmission attempts appeared “grounded more on hope than true alignment with FDA.”
“Hope is never a winning strategy, unfortunately,” he added.
Replimune ended 2025 with less than $200 million in net cash, and analysts believe the company may need to implement significant cost reductions. Seigerman noted that strategic alternatives could include returning capital to shareholders or seeking a larger partner to take over development of RP1.