Capricor’s FDA Fate Divides Wall Street And Investors: One Analyst Sees A $2 Stock But Retail Holds Out Hope

Capricor stock is headed for its worst week on record after a negative FDA advisory committee vote rattled Wall Street.

• Capricor Therapeutics plunged after an FDA advisory committee voted 9-3 that the company had not shown substantial evidence supporting Deramiocel's cardiac benefit in Duchenne muscular dystrophy.
• Analysts rapidly turned bearish, with Piper Sandler slashing its price target from $58 to $2.
• Retail traders remain split, with some betting the agency could still approve the Duchenne muscular dystrophy therapy later this month. 

Shares of Capricor Therapeutics (CAPR) slumped nearly 58% in pre-market trading on Thursday, with Wall Street sharply cutting its expectations following a U.S. Food and Drug Administration (FDA) advisory panel’s 9-3 vote against Deramiocel, raising doubts about the Duchenne muscular dystrophy therapy’s chances of securing regulatory approval.

CAPR stock, which just resumed trading after being placed on a halt in the previous session, is on track to clock its worst week on record.

Deramiocel Approval: Wall Street Sees Approval Odds Falling 

According to The Fly, the negative vote prompted Piper Sandler to downgrade Capricor to ‘Neutral’ from ‘Overweight’ and slash its price target to $2 from $58, a massive 96.6% downside. The firm said the FDA’s negative view of the HOPE-3 trial makes it likely that the agency will issue a complete response letter, rather than approve Deramiocel by the Aug. 22 action date.

H.C. Wainwright analyst Joseph Pantginis also downgraded the stock to ‘Neutral’ from ‘Buy’ but did not add a price target. He said the 9-3 panel vote leaves Capricor in a “quite a precarious position,” adding that it is difficult to envision the company conducting another large study because of the time and funding required.

FDA Panel Questions Cardiac Benefit

On Wednesday, the FDA’s Cellular, Tissue, and Gene Therapies Advisory Committee, an independent panel, concluded that Capricor had not provided substantial evidence that Deramiocel effectively treats cardiomyopathy associated with DMD. Several panelists said the trial data were not convincing enough to support approval for the cardiac indication.

The vote is advisory rather than binding, and the FDA is still expected to make its final decision by Aug. 22.

The advisory committee concentrated its discussion on whether Deramiocel provides meaningful benefit for cardiomyopathy associated with DMD, rather than Capricor’s broader proposed label. The company is pursuing approval for both upper-limb impairment and cardiomyopathy in DMD patients aged nine and older.

Although the panel expressed significant concerns about the cardiac data, some members were more receptive about the upper-limb findings, with one adviser stating that the data appears “a little more favorable”. Separately, Capricor said the full HOPE-3 study findings were published in The Lancet on Wednesday.

Retail Investors Still See A Path Forward

Retail sentiment surrounding CAPR on Stocktwits remained in the ‘extremely bullish’ territory over the past 24 hours, 

Users stated that a conditional approval could be on the cards with regard to the drug’s treatment of upper limb impairment. 

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One user questioned if the company had enough funding to redo the whole process with the test plan agreed with FDA. 

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Another user also pinned hopes on a conditional approval, with the stock expected to climb to $30.

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One user empathized with the patients, hoping that an effective treatment becomes available soon.

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The stock has crashed more than 90% so far this year.

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