Replimune (REPL) options positioning recently caught my eye as 5500 May $5 puts sold to open on 4/9 and 5000 August $10 ITM puts sold to open on 4/1 $2.45 down to $2.30. On 4/2 the August $12.50 calls sold to open 12,000X in spreads with the $7.50 puts bought 12,000X, potentially collaring a stock position. On 4/3 a buyer came for 1200 August $10 calls at $1.25. and on 4/4 August $7.50 calls bought 1000X to open up to $2.25. REPL shares are at multi-year lows down 34% YTD and trading 1.15X Cash. REPL short interest has been rising and at 12.4% of the float up from 8% to start the year. REPL’s execution of RP1 in combination with nivolumab in anti-PD-1-failed melanoma is in focus. REPL has a PDUFA set for July 22, 2025 and IGNYTE-3 confirmatory trial is also now well underway, with management planning to enroll over 100 sites globally. The FDA accepted the Biologics License Application, BLA, for RP1 in combination with nivolumab for patients with advanced melanoma and announced a Priority Review.

Replimune Group, Inc., a clinical-stage biotechnology company, focuses on the development of oncolytic immunotherapies to treat cancer. The company’s proprietary tumor-directed oncolytic immunotherapy product candidates are designed and intended to activate the immune system against cancer. Its lead product candidate is RP1, a selectively replicating version of HSV-1 that expresses GALV-GP R(-) and human GM-CSF, which is in Phase I/II clinical trials for a range of solid tumors. The company is also developing RP2, which is in Phase I clinical trials to express an anti-CTLA-4 antibody-like protein to block the inhibition of the immune response otherwise caused by CTLA-4; and RP3 that is in Phase I clinical trial to express immune-activating proteins that stimulate T cells.

Replimune has a strong cash position of over $500 million, which the company expects will fund operations through the second half of 2026, including the launch of RP1 and continued pipeline investment. There is significant unmet need in the refractory melanoma setting, with limited treatment options and poor outcomes for patients who have failed prior PD-1 containing regimens. Replimune sees a substantial commercial opportunity, estimating around 13,000 addressable patients in the anti-PD1 failed melanoma setting. Replimune’s oncolytic immunotherapy platform is designed to combine with various modalities, including targeted therapies, to overcome limitations of other agents like checkpoint inhibitors.

Leerink with a $21 target noting an increased probability of success for RP1 in melanoma. Jefferies views the odds of success of RP1 in aPD1 failed melanoma at 80%. Approval sets up for launch in late 2025 and one would believe it would also immediately make the small Biotech a M&A target with its current $615M market cap. Beyond RP1, there is potential for RP2 to succeed in metastatic uveal melanoma.

REPL feels quite undervalued given it is trading near cash value and high odds of approval and commercial launch later in 2025. Based on positioning, getting long stock at $8.40 and collaring with August $12.50/$7.50 would be a net entry price of $9.20 which gives a risk of 18.5% downside and potential for 35.5% upside, a solid risk-reward. A more aggressive trade would be getting long August $10/$12.50 call spreads for $0.65.