Analyst Boosts Price Target on Tetraphase (TTPH) Following FDA Approval, But Shares Are Falling

Tetraphase (NASDAQ:TTPH) investors are scratching their heads today as to why the stock is falling 8% following the announcement of FDA approval for TTPH’s lead asset, antibiotic Xerava (eravacycline). That’s good news for Tetraphase, but less good news for long-term investors. You see, according to the principle of “buy the rumor, sell the news,” the major catalyst for TTPH stock to rise has now been removed, and traders who were awaiting the clinical results have now reaped all the gains they’re going to get from that particular catalyst. Hence, they’re selling the stock today.

However, B.Riley FBR analyst Madhu Kumar remains bullish on TTPH, reiterating a Buy rating, while boosting the price target from $6 to $7, which implies an upside of 126% from current levels. (To watch Kumar’s track record, click here)

Kumar noted, “We are bullish on the antibiotic’s broad label, which covers its use both in the confirmed setting (where the microbes have been identified) and the empiric setting (where the microbes are unidentified in an earlier course of the infection). As roughly 80% of cIAI antibiotic treatment occurs in the empiric setting, inclusion of these patients expands the Xerava market opportunity considerably. Consequently, we are more optimistic on the drug’s reasonable pricing with $175-$250 per day of treatment being reasonable compared to more limited antibiotics like Zemdri from Achaogen and Vabomere from Melinta Therapeutics, which are priced at roughly $1,000 per day. To us, Xerava’s broad cIAI label and modest pricing bode well for a robust U.S. launch.”

Bottom line: “We view Xerava’s U.S. approval as a key positive event for TTPH shares, as it transitions Tetraphase to a revenue-generating, commercial biopharma firm. We reiterate the 4Q18 EMA regulatory decision for Xerava in Europe is the next key upcoming TTPH catalyst.”

Net net, when it comes to Wall Street’s bet, the odds are on this biotech player, with TipRanks analytics showcasing TTPH as a Strong Buy. Out of the 7 analysts polled in the past 12 months, 5 rate Tetraphase stock a Buy, while 2 rate the stock a Hold.

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