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Recro Pharma Falls as FDA Denies Approval to Pain Candidate

Zacks Equity Research

Shares of Recro Pharma, Inc. REPH plunged 34% on Mar 25, following a complete response letter (“CRL”) to the new drug application (“NDA”) seeking approval of its pain candidate, meloxicam. The company was looking to get this approval to the intravenous (“IV”) administration of meloxicam for the treatment of moderate to severe pain.

The FDA has cited that delayed onset of the candidate has failed to meet the prescriber expectations for IV drugs. Moreover, the regulatory authority raised concerns about the role of meloxicam monotherapy for acute pain, based on its interpretation of clinical data.

So far this year, shares of Recro Pharma have lost 9.7% against the industry’s 15.3% rally.

We remind investors that this is second CRL for meloxicam. In May, the FDA had issued a CRL related to the NDA for meloxicam. The regulatory authority had stated that although the candidate met primary endpoints in clinical studies, analgesic effect failed to meet the FDA’s expectations based on data from ad hoc analyses and selective secondary endpoints. In October, the company re-filed the NDA following discussion with the FDA.

Recro Pharma stated that it strongly disagrees with the FDA and firmly believes that the non-opioid candidate (meloxicam) holds significant potential. The company remains committed to get regulatory approval for IV meloxicam and plans to meet the FDA to resolve the issues and discuss the path forward for the same.

In December 2018, the company amended its license agreement with Alkermes ALKS related to milestone payment on the approval of meloxicam. Previously, Recro Pharma was liable to pay $45 million to Alkermes on receiving the approval. The amended agreement allows Recro Pharma to spread the payment over seven years, which reduces cash requirement for 2019 by $30 million. The availability of more funds will help Recro Pharma to consistently support development and getting approval for meloxicam.

Recro Pharma is also evaluating the candidate in a phase III study for the treatment of pain following abdominoplasty surgery. The company is also developing intramuscular administration of meloxicam for acute pain.  The company has another clinical-stage pain candidate and an anesthetic candidate in its pipeline.

A potential approval to meloxicam will boost the company’s top-line performance as it may get better acceptance in the pain market due to prevalence of abuse of opioid-based drugs approved for treating pain.

However, the market for the pain drugs is crowded with availability of multiple drugs and several candidates under development based on different technologies which include Ocular Therapeutix’s OCUL Dextenza and Heron Therapeutics’ HTX-011.

Recro Pharma, Inc. Price

Recro Pharma, Inc. Price | Recro Pharma, Inc. Quote

Zacks Rank & Stock to Consider

Recro Pharma currently carries a Zacks Rank #3 (Hold). AIT Therapeutics, Inc. AITB is a better-ranked stock from the same sector sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AIT Therapeutics’ loss estimates narrowed 18.6% for 2019 over the past 60 days. The stock has gained 5.2% so far this year.

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