GRCE Stock Plunges 45% After FDA Rejects Brain Injury Drug — Company Says Concerns Are Fixable

• FDA cited issues in the chemistry, manufacturing, and controls (CMC) and non-clinical sections of the company’s application.
• The agency, however, did not request additional clinical data, the company highlighted.
• The company expects to have a meeting with the FDA to determine the next steps ahead.

Shares of Grace Therapeutics Inc. (GRCE) closed 45% lower on Thursday after the U.S. Food and Drug Administration refused to approve its experimental drug for the treatment of a severe form of acute brain injury.

Grace was seeking FDA approval for GTx-104 in the treatment of patients with aneurysmal subarachnoid hemorrhage (aSAH), or bleeding over the surface of the brain in the space between the brain and the skull as a result of a ruptured brain aneurysm. aSAH accounts for about 5% of all strokes and affects about 42,500 patients in the U.S., according to Grace.  

Why The Rejection?

The company said that the FDA issued it a complete response letter, in which the agency cites issues in the Chemistry, Manufacturing, and Controls (CMC) and Non-Clinical sections of the application. The agency highlighted leachables data for product packaging, non-clinical product toxicology risk assessments, and product manufacturing deficiencies at the company’s contract manufacturing organization, it said.

The agency, however, did not request additional clinical data, the company highlighted. Grace submitted its application with positive results from the Phase 3 STRIVE-ON safety trial, which compared GTx-104, an injectable form of nimodipine, with its oral version. The study met its primary endpoint, showing a 19% reduction in clinically significant hypotension among patients treated with GTx-104.

Executive Optimism

“We are confident in the robust data package supporting our NDA submission, and that the CMC issues identified by the FDA can be successfully addressed in our resubmission,” CEO Prashant Kohli said. The company expects to have a meeting with the FDA to determine the next steps ahead.

How Did Retail Traders React?

On Stocktwits, retail sentiment around GRCE stock jumped from ‘neutral’ to ‘bullish’ territory over the past 24 hours, while message volume jumped from ‘normal’ to ‘high’ levels.

A Stocktwits user expressed optimism for the company fixing the issues.

Another user expressed optimism for the stock to rally while the company resubmits its application.

GRCE stock has added 2% over the past 12 months. 

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