Press Release: Investigation Into Regenxbio: Questions Arise Over Disclosure Completeness Prior To Fda Action

Shares of REGENXBIO Inc.’s (RGNX) pared some losses on Wednesday after Wall Street dismissed an earlier selloff as an overreaction.

The company announced earlier on Wednesday that the U.S. Food and Drug Administration placed a clinical hold on its investigational gene therapy, RGX-111, for the treatment of Hurler syndrome. The hold followed a case of tumor in a child participant treated in a study with RGX-111. The news sent shares of the company tumbling about 30% premarket. The causality between the tumor and the experimental therapy has not been established and investigation is ongoing, the company noted.

The agency also placed a hold on RGX-121, being studied in the treatment of Hunter Syndrome, citing similarities between the two products, study populations and shared risks.

Wall Street Dismisses Selloff

However, Leerink said the premarket selloff in shares underscores the degree of surprise on the news, feeding into the "FDA unpredictability" element of the bear thesis across gene therapy. However, the firm views this pullback as "an overreaction" based on the modest financial contribution of Hunter/Hurler to the fundamental value of shares and views this as a buying opportunity. Leerink has an ‘Outperform’ rating on Regenxbio shares.

Clear Street analyst Bill Maughan, meanwhile, reiterated a ‘Buy’ rating on Regenxbio with a $50 price target. The firm believes the clinical hold has a limited impact on the stock's thesis. It is not known if the RGX-111 integration was causative of the neoplasm and the patient was asymptomatic and doing well on the therapy, the analyst told investors in a research note.

Stifel, too, reiterated a ‘Buy’ rating on Regenxbio with a price target of $45. Neoplasm warnings are on other gene therapies, and the risk-benefit remains favorable, the analyst said, while adding that it still expects a delay in FDA approval for RGX-121. The FDA is expected to rule on potential approval for the therapy by Feb. 8.

RGNX shares traded 17% lower at the time of writing.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment around RGNX stock rose from ‘bullish’ to ‘extremely bullish’ territory over the past 24 hours, while message volume rose from ‘high’ to ‘extremely high’ levels.

A Stocktwits user dismissed hopes for a FDA approval of RGX-121 by Feb 8. “11 days is not enough time to clear a safety hold of this magnitude,” they wrote.

https://www.stocktwits.com/Teillbou/message/643165513

“I think the news is worse than the price action,” another user wrote.

https://www.stocktwits.com/kenny91655/message/643185332

RGNX shares have gained 46% over the past 12 months.