Analyst Remains Confident In Corium Despite Partner's Bad FDA News

The U.S. Food and Drug Administration sent an unfavorable Complete Response Letter last week to Agile Therapeutics Inc AGRX regarding approval for the Twirla contraceptive patch. The letter also included concerns at a third-party manufacturer, Corium International Inc CORI.

The Analyst

H.C. Wainwright & Co.'s Oren Livnat maintains a Buy rating on Corium's stock with a price target lowered from $15 to $14.

The Thesis

Agile's receipt of a Complete Response Letter was "surprising" given the therapy's robust clinical package and a "very compelling" risk-benefit profile, Livnat said in a Wednesday note. (See Livnat's track record here.) 

The deficiencies cited by the FDA were focused on the patch adhesion testing methods, manufacturing "483" observations at Corium and potential read-across of adhesion issues in the Twirla Phase 3 result, according to H.C. Wainwright. 

Systemic manufacturing issues at Corium are unlikely, and the problems are "few and minor," with no negative read-through to the company's patch technology platform or pipeline, Livnat said. 

The FDA's letter isn't a "deal breaker" for Twirla, the analyst said, and the FDA could approve the therapy in one year — but an FDA meeting scheduled for the first quarter of 2018 may accelerate the approval timeline.

The FDA letter's referernce to adhesion issues points to caution on the agency's part in making sure no issues specific to the patch result in higher pregnancy rates versus approved contraceptives, Livnat said. 

"Hopefully, Agile's detailed Phase data showing no correlation between adhesion and efficacy will quickly put the FDA's mind back at ease, and Twirla can be approved in 2018."

Price Action

Shares of Corium were trading slightly higher at $10.01 at the time of publication Wednesday.

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