Oppenheimer analysts downgraded Capricor Therapeutics after an FDA advisory committee declined to endorse the company's lead drug, Deramiocel.
The decision creates a significant hurdle for the company's primary product candidate. Because the advisory committee's vote often signals the FDA's eventual decision on drug approval, the lack of endorsement suggests a difficult path forward for Deramiocel's commercial availability.
The market responded sharply to the news on Thursday. Shares of Capricor Therapeutics lost more than 45% [1] to reach a new 52-week low. Other reports indicated the stock plunge could have reached as high as 64% [2] following the release of FDA briefing documents and the committee's subsequent vote.
The advisory committee is tasked with reviewing clinical data to determine if a drug's benefits outweigh its risks. In this instance, the committee did not provide the endorsement Capricor required to maintain its previous valuation and analyst ratings.
Oppenheimer shifted its rating of the stock in direct response to the committee's findings. The downgrade reflects the increased risk that the FDA may not grant marketing authorization for Deramiocel based on the current data set.
Capricor Therapeutics continues to navigate the regulatory process in the U.S., but the negative vote represents a critical setback for the company's growth strategy. The stock remains volatile as investors weigh the possibility of a formal FDA rejection, or a requirement for additional clinical trials.
“Shares of Capricor Therapeutics (CAPR) lost more than 45% to reach a new 52-week low”
The failure to secure an advisory committee endorsement significantly lowers the probability of immediate FDA approval for Deramiocel. For a biotech company with a lead candidate, such a vote often triggers a loss of investor confidence and a sharp correction in market capitalization, as the company may now face costly delays or the need to conduct new, extensive trials to satisfy regulatory concerns.
