Immunomedics (IMMU) - Get Report received a double downgrade to sell from buy from an analyst at Goldman Sachs, who cited a report by the Food and Drug Administration that found new quality control issues at the biopharm company's manufacturing site.
Shares of the Morris Plains, New Jersey-based company declined 12.35% to $9.34.
Analyst Paul Choi, who also slashed his price target to $5 a share from $24, said in a note to clients that an FDA Form 483, which documents concerns about an inspection, listed 10 observations of quality control, procedural, maintenance and other issues found during the FDA's most recent inspection of the Morris Plains facility.
"Based on this, we now think it is unlikely that IMMU’s sacituzumab govitecan (SG) will be approved at its June 2, 2020 PDUFA for triple negative breast cancer (TNBC) given the issues identified and limited time for remediation," Choi wrote. "While some of these observations may be addressable as part of post-approval commitments, we are concerned about issues of procedural and equipment control."
The analyst said it was unclear whether the company will be able to address these concerns adequately, and was cautious on the company's ability to execute on the other ongoing clinical studies without the revenue generated in triple negative breast cancer.
"As a result of our lower estimates for revenue generation in the intermediate term, we expect IMMU to have more capital constraints requiring adjustments to its prior development timelines," Choi said.
Goldman was the lead manager four months ago when Immunomedics sold an additional $288 million of stock at $17.50 a share, Bloomberg reported.
Choi said that since the company has been added to Goldman's America's Buy list in September 2018, Immunomedics has been down 52% compared with the Russell 2000, which is down 38%, and the SPDR S&P Biotech ETF (XBI) which is down 21%.
The FDA is expected to make a decision on sacituzumab govitecan as a third line of therapy in the disease by June 2, Bloomberg said. The company has been seeking a faster approval based on results from testing in a small number of patients. A larger late-stage study is ongoing.