Replimune Group (REPL) is facing "significant risk" related to the ongoing phase 3 study of RP1 in melanoma after the US Food and Drug Administration rejected the company's biologics license application for the product candidate, Wedbush Securities said in a Monday note.

The FDA rejected the application, citing response assessment uncertainty, study population heterogeneity, and failure to isolate RP1's contribution when administered in combination with nivolumab as deficiencies in the phase 2 IGNYTE trial of of RP1, the brokerage noted.

"We see no path forward for RP1 with IGNYTE," Wedbush said.

Wedbush downgraded its rating on Replimune Group to neutral from outperform, with a lower price target of $2 from $19.

Shares of Replimune Group were down more than 62% around midday Monday.

Price: 1.81, Change: -2.95, Percent Change: -62.02