Shares of the aesthetic and therapeutic company Revance Therapeutics (RVNC -2.21%) are in for a turbulent Monday. In premarket trading, the biopharma's shares sank by as much as 34% on heavy volume.
What's sparking this double-digit sell-off? After the closing bell last Friday, Revance announced that the U.S. Food and Drug Administration issued a complete response letter (a rejection) for the company's experimental treatment for moderate to severe glabellar (frown) lines called DaxibotulinumtoxinA for Injection.
DaxibotulinumtoxinA for Injection was expected to compete against AbbVie's blockbuster cosmetic therapy Botox, which the biotech acquired when it merged with Allergan last year. Now, that putative competition will have to wait while Revance sorts out the problems associated with its regulatory filing for DaxibotulinumtoxinA for Injection. The silver lining, if you can call it that, is that Revance noted that the only issue cited by the FDA for the rejection was a "deficiency" in the company's manufacturing site for the drug. Revance thus plans to request a Type A meeting with the FDA as soon as possible to discuss a possible fix.
Is this small-cap biopharma stock a bad news buy? In this case, I think the answer is yes. Manufacturing issues are typically easy to remedy. More importantly, the company apparently won't have to run another costly clinical trial to get this high-value drug over the finish line from a regulatory standpoint (at least according to Revance's press release). So, if things go smoothly, Revance could have this rival to AbbVie's Botox on the market by mid to late 2022.