This Analyst Slashed CAPR Stock’s Target By 86% – But, Retail Bulls Say Setup Offers An Attractive Risk-Reward

• Alliance Global Partners downgraded Capricor Therapeutics to ‘Neutral’ from ‘Buy’ and cut its price target to $7 from $51, according to The Fly.
• The brokerage said the downgrade reflects a lower probability of approval, a higher discount rate, and a reduced sales outlook for Deramiocel.
• On Monday, Capricor’s CEO Linda Marban told Reuters the company was ‘completely shocked’ by the FDA’s review approach.

Capricor Therapeutics (CAPR) remained in the spotlight on Tuesday, as Wall Street continued to react to the U.S. Food and Drug Administration’s briefing documents on the firm’s Duchenne muscular dystrophy therapy, with Alliance Global Partners slashing its price target on the stock by 86%.

At the time of writing, CAPR stock was down 16%, after having crashed over 64% in the previous session.

Alliance Global Says CAPR Will Face An ‘Uphill Battle’ During Adcom

On Tuesday, Alliance Global Partners downgraded Capricor Therapeutics to ‘Neutral’ from ‘Buy’ and cut its price target to $7 from $51, according to The Fly. The firm said that the upcoming FDA advisory committee meeting for Deramiocel now appears to be an “uphill battle” for Capricor.

The brokerage said the downgrade reflects a lower probability of approval, a higher discount rate, and a reduced sales outlook for Deramiocel.

According to Koyfin data, CAPR stock has a consensus 12-month price target of $45.2, while eight have a ‘Buy’ rating and two have a ‘Sell’ rating.

Dispute Over Statistical Analysis

The FDA released briefing documents on Monday, with reviewers questioning whether the company’s HOPE-3 trial provided convincing evidence that Deramiocel is effective.

According to the FDA, the study missed its pre-specified primary endpoint measuring upper-limb function and also failed on a key secondary endpoint related to heart function, known as left ventricular ejection fraction (LVEF).

A central issue is which statistical analysis plan should be used. FDA staff argued that Capricor later changed how the trial data were analyzed, potentially affecting the reported results.

Capricor strongly rejected the agency’s interpretation. Chief Executive Linda Marban told Reuters the company was “completely shocked” by the FDA’s review approach and said using the wrong statistical plan could make almost any clinical trial look negative.

Wall Street Expects Unfavorable Adcom Vote

Roth Capital described the situation as high-risk and warned of a possible unfavorable advisory committee vote and even a second Complete Response Letter. Cantor Fitzgerald said the FDA documents “paint an ugly picture.”

The regulatory dispute has also revived criticism from former pharmaceutical executive Martin Shkreli, who renewed his bearish stance on Capricor and called the company “a complete fraud” in a post on X on Monday.

Retail Remains ‘Extremely Bullish’ On CAPR

Despite the slump, retail sentiment surrounding CAPR has remained in the ‘extremely bullish’ territory over the past 24 hours, amid a near 1,200% increase in message volumes.

One user said that the stock’s “downside risk is now much smaller than the upside potential.”

Another user saw similarities in the setup last December, during which the stock soared after the company released the Hop-3 results.  

The stock has tanked nearly 80% so far this year.

Also read: FDA Staff Raise Concerns On Replimune’s Skin Cancer Drug – REPL Stock Crashes 32% Today Ahead Of Advisory Meeting This Week

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