Reviva Pharmaceuticals Holdings Inc. saw its stock price collapse by more than 50% in a single trading session. The dramatic sell-off was triggered by a significant regulatory setback from the U.S. Food and Drug Administration (FDA) concerning the company’s lead drug candidate, brilaroxazine, which is being developed to treat schizophrenia.
A Major Hurdle for Brilaroxazine
The catalyst for the plunge was feedback from a recent Type C meeting with the FDA. The regulatory agency has advised that an additional Phase 3 clinical trial, to be named “RECOVER-2,” is required before a New Drug Application (NDA) can be submitted. This unexpected demand introduces a substantial delay, pushing a potential commercial launch back by several years and creating severe financial strain for the pre-revenue biopharmaceutical firm.
The FDA provided specific guidance on necessary analytical procedures and additional studies. Reviva now aims to initiate the RECOVER-2 trial in the first half of 2026, contingent upon securing the required funding.
Financial Strain and a Delayed Timeline
The estimated cost for the new Phase 3 study is approximately $60 million. This figure represents a daunting challenge for Reviva, whose market capitalization fell to just around $33 million following the steep decline in its share price. Investors had previously anticipated an NDA filing in early 2026; the new requirement indicates regulatory hurdles are higher than the market had priced in.
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To finance the $60 million study, the company will likely need to pursue a dilutive equity offering or seek a major strategic partnership. Both options have become considerably more difficult following the share price collapse. The potential market introduction of brilaroxazine is now delayed by a minimum of 18 to 24 months.
Outlook: Capital Search and Listing Compliance
Management’s immediate focus has shifted entirely to securing the capital needed for the RECOVER-2 trial. From a technical perspective, the stock has breached all key support levels and is currently testing its 52-week low of $0.2522.
Market analysts are expected to significantly revise their prior optimistic price targets—which averaged around $5—downward in light of the extended timeline and the looming threat of shareholder dilution. Furthermore, investors will monitor the potential for a reverse stock split, a measure shareholders approved on December 18 to help the company maintain its listing requirements on the NASDAQ exchange.
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