Tetraphase's Stock Just Lost 80%, You Should Flush It...Right?

Shares of Tetraphase Pharmaceuticals Inc TTPH plunged nearly 80 percent on Wednesday, trading as low as $9.00 per share. The massive selloff is attributed to the company failing to meet the primary endpoint of statistical non-inferiority for IGNITE2 compared to levofloxacin.

Here is a roundup of what some of Wall Street's top analysts are saying following the massive decline in the stock.

JMP Securities: Future Is ‘Uncertain'

Liisa Bayko of JMP Securities commented in a note that Tetraphase revealed that eravacycline missed its efficacy endpoint of non-inferiority to highly resistant comparator levofloxacin in its Phase 3 study in complicated urinary tract infections (cUTI).

Bayko continued that prior to Tetraphase's report, she had assumed a 75 percent probability of success for the program. She added that the company did report during a conference call that "eravacycline was actually superior to levofloxacin in the quinolone-resistant patient population in the pivotal phase of the study (~25 percent of patients), implying that the efficacy of eravacycline was worse than levofloxacin for quinolone-sensitive patients."

Related Link: Wall Street Analysts Abandon Tetraphase One Day Too Late

Bayko also noted that regulators have made it "relatively clear" about the need for two Phase 3 studies to support approval. With that said, the analyst is now suggesting that the likelihood of approval based on a single non-inferior outcome in cIAI is "unlikely," although there may be a "path forward in quinolone-resistant patients in cUT."

With that said, Bayko recommended investors "move to the sidelines" given the "uncertainty of the company's future." Nevertheless, the company's approximate $200 million in cash (net of debt) translates to $5 per share, which could be viewed as a "bottom" for the stock.

Shares remain Market Perform rated with no assigned price target.

Brean Capital: Downgrading To Hold Until ‘Clearer Path' Emerges

Jonathan Aschoff of Brean Capital downgraded shares of Tetraphase to Hold from Buy (with no assigned price target) until a "clearer path forward emerges."

Aschoff continued that given the top-line results from IGNITE2, and his "lack of clarity" on a path forward with existing data, a downgrade is justified. However, given eravacycline's QIDP and Fast Track status, the analyst believes that the company will be able to meet with the FDA by the end of the year to discuss its next steps. In addition, the company's $242.1 million cash position (as of the end of the second quarter), coupled with expected revenue from government grants, should prove to be "sufficient" to support the company's operations through the first quarter of 2017.

Stifel: Path Forward ‘Unclear'

Stephen Willey of Stifel downgraded shares of Tetraphase to Hold from Buy (with no assigned price target versus a previous $57 price target) following the "surprisingly negative" IGNITE2 data, which "significantly limits our visibility into any near-term regulatory path forward for eravacycline."

Willey continued that he has now removed eravacycline sales estimates from his valuation model, pending clarity from management and regulatory feedback regarding a potential filing in complicated intra-abdominal infections. The analyst expanded that management "did not provide any numerical details around the efficacy data but noted eravacycline achieved statistical superiority versus levofloxacin against quinolone-resistant isolates."

The analyst also stated, "Given the oral step-down optionality was, in our opinion, the primary differentiating factor for eravacycline on the competitive positioning front (particularly in cUTI – where 75-80 percent of our peak sales estimate were being generated), the notion of any additional development work potentially required here further limits our ability to remain optimistic near-term."

Nomura: Downgrading To Neutral, Lowering Price Target To $10

Finally, M. Ian Somaiya of Nomura downgraded Tetraphase to Neutral from Buy with a price target lowered to $10 from a previous $54 following the trial results.

Somaiya is now removing his complicated urinary tract infection (cUTI) estimates from his valuation model, but is maintaining his complicated intra-abdominal infection (cIAI) estimates (peak sales of around $475 million) given positive data from the IGNITE1 trial.

However, the analyst added that his 2016 cIAI launch assumption could be at risk if the FDA requires additional Phase 3 trials given the negative results in cUTI. As such, investors should wait to become "more constructive" on the stock once there is further clarity on the reason for the trial failure and the FDA's perspective on adequacy of data for filing for cIAI indication and future trials in cUTI.