Achaogen's Phase 3 Shows 'Best Case Scenario'

Shares of Achaogen Inc AKAO hit a new 52-week high of $16.07 after its lead product candidate plazomicin late-stage trial successfully achieved FDA primary endpoints in patients with complicated urinary tract infections (cUTI).

The trial demonstrated non-inferiority compared to meropenem and another trial showed 71 percent relative reduction all-cause mortality compared with colistin in patients with serious carbapenem-resistant Enterobacteriaceae (CRE) infections.

Meanwhile, plazomicin was well tolerated in both trials and showed improved overall safety compared with colistin.

Analyst Commentary

“In our view, these data suggest the company can price plazomicin at a premium and gain market share treating the sickest patients; we believe these data increase the likelihood of upside from outpatient use in the UTI setting,” Wedbush analyst Heather Behanna wrote in a note.

Behanna estimates about $4,000–$7,000 per course of therapy, with upside to estimates if the drug is priced higher.

“We continue to mostly model a niche opportunity in the sickest of patients, with most use in HAP/VAP and bloodstream infections, with peak US sales of ~$570 million,” Behanna continued.

Further, the analyst said a potential broader plazomicin use in the MDR UTI setting as outpatient therapy could increase the market opportunity to about $ 1 billion.

Behanna reiterated its Outperform rating and raised price target to $19 from $10.

“We continue to recommend shares; we see regulatory risk as low, upside in Achaogen’s pipeline, or the potential for Achaogen to be a takeout candidate late next year,” Behanna added.

At last check, shares of South San Francisco, California-based Achaogen surged 21.56 percent to $15.84. About 29.74 million shares changed hands versus its three-month average of 1.16 million shares.