Regenxbio’s RGX-121 Setback Carries A Potential Cash Risk, Warns Clear Street

Clear Street said the FDA decision would significantly delay Regenxbio’s resubmission of its application and a potential voucher that could bring in additional cash.

• Analyst Bill Maughan lowered the price target on Regenxbio to $32 from $45, a 292% upside potential.
• Earlier, BofA called the FDA hold disappointing but pointed to the company’s planned filing for Duchenne muscular dystrophy therapy as the next major catalyst.
• On Monday, the FDA placed RGX-121 on clinical hold after spinal scan results showed unexpected results.

Regenxbio (RGNX) remained on investors’ radar on Tuesday, with Clear Street highlighting that the regulatory setback for its Hunter Syndrome therapy could affect more than just the approval timeline.

RGNX shares edged 1% higher in pre-market trading on Tuesday after crashing to a two-month low in the previous session.

FDA Places Hunter Syndrome Study On Hold

On Monday, the U.S. Food and Drug Administration (FDA) placed RGX-121 on clinical hold after spinal scan results showed unexpected small nodules or cyst-like masses in five patients treated with the therapy three to six years earlier.

All five patients remain asymptomatic and have shown stable or improved cognitive and behavioral results. Investigators classified the findings as non-serious, and radiologists believe they are likely benign. Regenxbio had planned to resubmit RGX-121’s application during the third quarter following encouraging FDA discussions in July. It no longer expects a near-term filing.

Potential Loss Of Priority Review Voucher

Clear Street analyst Bill Maughan said the setback would significantly delay Regenxbio’s resubmission of its application and a potential FDA voucher that could bring in additional cash.

Approval may have qualified Regenxbio for a rare pediatric disease priority review voucher. Such vouchers allow faster FDA review of another drug by the same company. It can also sell or transfer the voucher to another company.

The analyst lowered his price target on Regenxbio to $32 from $45 and maintained a ‘Buy’ rating, according to The Fly. It still represents a potential upside of 292% from current levels.

Baird lowered the price target to $29 from $32 and maintained an ‘Outperform’ rating on the shares, with analyst Brian Skorney stating that ‘Radiographic findings’ make approval unlikely.

Meanwhile, BofA called the hold disappointing but pointed to the planned RGX-202 filing for Duchenne muscular dystrophy (DMD) as Regenxbio’s next major catalyst.

RGNX Investors Turn ‘Extremely Bullish’

Retail sentiment surrounding RGNX on Stocktwits turned ‘extremely bullish’ from ‘neutral’ a day earlier, amid ‘extremely high’ message volumes.

One user remained positive on the company’s pipeline.

View this Stocktwits post

Another user said the FDA decision should not impact its other assets for DMD and eye diseases.

View this Stocktwits post

The stock has declined more than 40% so far this year.

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