October 26, 2016
By Alex Keown, BioSpace.com Breaking News Staff
CHAPEL HILL, N.C. – As Cempra prepares to meet with the U.S. Food and Drug Administration for its anti-bacterial drug Solithera, the company could become the target of a big pharma acquisition.
That’s the theory of Kyle Dennis, a trader who follows antibiotic drugmakers and said he was long on Cempra. Writing for Seeking Alpha this morning, Dennis said big pharma is “on the lookout” for new antibiotic drugs that will replace existing medications that have lost efficacy. That’s what happened with Cubist , which was snapped up by Merck in 2014. Cempra’s Solithera, which has been developed to treat community-acquired bacterial pneumonia (CABP), has demonstrated strong efficacy in clinical trials. CABP is one of the most commonly diagnosed bacterial infections in the U.S. resulting in 5 to 10 million cases per year. The FDA accepted Cempra’s New Drug Application for Solithera in July for an intravenous treatment, as well as an oral dosage. The FDA accepted the application based on positive data from two Phase III trials.
Solithera (solithromycin) is a highly potent next-generation macrolide, the first fluoroketolide, which has potent activity against most macrolide-resistant strains. Studies have shown that the drug shown potent activity against S. pneumoniae as well as an extended spectrum of activity against community-acquired methicillin resistant S. aureus (CA-MRSA), streptococci, haemophilus, enterococci, Mycobacterium avium and in animal models of malaria, according to the company.
As BioSpace previously reported, Solithera is immune to antibiotic resistance, which will be one of the key strengths for the drug. According to survey results of physicians, 66 percent said they would be likely to prescribe Solithera based primarily on it not being affected by antibiotic resistance.
While Cempra prepares for its meeting with the FDA, the company has been aggressive in developing a financial strategy to commercialize the drug upon expected approval. If the drug is approved by the end of the year, as Cempra hopes, the company said it anticipates a quick commercial launch. In his column, Dennis said he appreciates the company plans to roll the drug out on its own “because that would give it leverage in a buyout.”
“If it is prepared and has a sales force ready, it could fetch top dollar,” he said.
In addition to Solithera, Cempra is also in the midst of developing Taksta, which is currently in Phase III for Acute Bacterial Skin and Skin Structure Infections. Dennis touted this experimental drug, calling it another “low-risk - higher-reward pipeline drug” due to its safety and its use in other parts of the world.
If the company becomes an M&A target, Dennis said he anticipates a sale price of about $1.5 billion, with shares of common stock reaching the $40 to $50 plateau. Shares of Cempra are trading at $23.76 this morning, up from a low of $23.19.
