Cempra Is 'A Good Drug For Bad Bugs,' Says JPMorgan

JPMorgan’s Jessica Fye believes a key driver for Cempra Inc CEMP will be Solithera, a new antibiotic for community acquired pneumonia (CABP) in adults.

Fye initiated coverage of the company with an Overweight rating and price target of $31.

Potential For Solithera

“With the NDAs accepted and MAA in, we see a high probability of Fast Track US approval (for Solithera) by year-end despite a transient liver signal, which has been a focus of the Street,” the analyst mentioned.

With 10 million prescriptions being written each year for pneumonia, Fye believes there is a large commercial opportunity for the product, and pricing would position Solithera for a successful launch.

The analyst also believes the large commercial opportunity presented by CABP supports expectations of more than $1 billion in sales by 2025.

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Opportunities

“We see a substantial opportunity for Solithera of ~$1.1 billion by 2025 not reflected in the stock’s ~$870 million market cap. We model adult CABP as the largest driver where we conservatively assume 15 percent penetration at peak,” Fye said.

In addition, with two positive Phase III studies, Solithera has been relatively de-risked for effective treatment of other infections.

“With Soli’s potent and broad spectrum activity, we see a number of label expansion opportunities.,” the analyst went on to say.

At time of writing, Cepra was up 4.26 percent on the day and trading at $18.83.

Furthermore, reasonable pricing is likely to drive favorable payer coverage.

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