The Upside Scenario For Cempra

In a report issued Wednesday, Roth Capital analyst Debjit Chattopadhyay reiterated a Buy rating and $56 price target on Cempra Inc CEMP on potential upside from U.S. net sales of lead drug Solithromycin, and ex-US, pediatric, NASH, and Taksta sales. However, the note focuses on Solithromycin, which the expert thinks will be reviewed within the next eight months.

Over the past month, the stock fell more than 21 percent, considerably trailing its peers. This situation creates potentially better entry points for investors, ahead of the company’s second phase 3 readout, scheduled for the fourth quarter, the expert notes. Since Solithromycin has been granted fast track designation, it will receive a priority/expedited review, and will be able to submit its NDA on a rolling basis.

The note goes on to explain that Solithromycin performed about 20 percent better than “the most potent antibiotic in early cure rates in the sickest patients despite having 27% lower bio-availability and being administered for two fewer days, has increased expectations from the -IV study. While the -IV study is evenly balanced, and enrollment of a higher percentage of Port-III, IV patients is favorable, the study is powered for non-inferiority. Hence, a repeat of the –Oral Study would be a compelling outcome,” the analyst believes.

Chattopadhyay adds that the drug’s “robust immuno-modulatory, anti-inflammatory, bactericidal properties coupled with its broad pathogen coverage, safety (both GI and CV), and higher barriers to acquired resistance makes it a broadly applicable antibiotic in the community and hospital setting.”

Finally, Roth Capital assures it expects ROW partnership post IV data, a mid-2016 NDA, and approval in the first quarter of 2017.