Jefferies Chimes In On Cempra Inc (CEMP) Following CEO Dr. Prabha Fernandes’ Retirement


Cempra Inc (NASDAQ:CEMP) shares were dipping 3% yesterday after CEO, President, and member of the board Dr. Prabha Fernandes has informed the board she intends to retire effective immediately. Dr. David Zaccardelli will assume the role as acting CEO in her stead, a board member with both operational and regulatory experience who odds are will also transition to a permanent position as CEO.

For Jefferies analyst Eun Yang, when considering the “recent significant setbacks” the biotech firm has endured, the CEO’s resignation is not a move from out of left field. As such, the analyst remains sidelined, reiterating a Hold rating on shares of CEMP with a $10 price target, which represents a 35% increase from current levels.

Yang explains, “This does not come as surprise given the recent issues on lead antibiotic Solithera & stock performance. Risks/uncertainty remain for approval timeline of Solithera due to manufacturing issue & commercialization, if approved.”

Prabha is set to receive $1.6 million and will still maintain a connection with CEMP, offering consulting services for up to $420k.

Meanwhile, “Given remaining regulatory risks, Cempra previously noted a range of possible outcomes for Solithera by PDUFA dates (from CRL to a possible timely approval),” Yang adds, concluding, “If approved, post-marketing requirements & label remain to be seen; CEMP noted that barring a label restriction for Solithera to last-line use, nothing has changed about its anticipated market size & need for a novel antibiotic for CABP. However, following recent FDA panel discussions on 11/4/16, we forecast Soli uptake would be significantly slow.”

If the firm garners prospective FDA approval by the close of 2017, the analyst projects peak annual U.S. Sales circling $350 million, mostly on back of possibly stringent post-marketing surveillance.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, two-star analyst Eun Yang is ranked #2,673 out of 4,285 analysts. Yang has a 49% success rate and earns 0.0% in annual returns. However, when suggesting CEMP, Yang loses 30.6% in average profits on the stock.

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