Roth says ‘excessive’ Capricor selloff due to ‘investor overreaction’

Roth Capital analyst Boobalan Pachaiyappan notes Capricor Therapeutics (CAPR) depreciated about 31% from its previous day’s close as about 14.36M shares were traded on June 20, which represents about 36% of the company’s float of about 40M shares. The firm believes a “confluence of two important factors” – the FDA’s removal of a deramiocel Advisory Committee meeting from their July calendar and the forced administrative leave of Dr. Nicole Verdun, who is believed to be a major review contact for Capricor’s BLA filed early this year – could be “partially to blame for investor overreaction.” In the absence of management clarity on the ongoing regulatory developments since the firm’s scheduled call with the company’s CEO on Friday, June 20, was canceled at the last minute, it reiterates the view that if an Ad Comm occurs by August 15 or before, there is a chance the FDA will honor its PDUFA commitment of August 31. If not, a regulatory “tug-of-war” between parties might ensue, which could push the approval timeline by about four quarters, based on Roth’s current thinking, says the firm, which has a Buy rating and $31 price target on Capricor shares.