With the speed in which Achaogen Inc (NASDAQ:AKAO) shares are crashing this morning, the 26% plunge in value could seem strange. After all, this drug maker just won a 15 to 0 unanimous vote approving plazomicin as a complicated urinary tract infection (cUTI) treatment. Yet, notably AKAO’s asset failed to win approval for the bloodstream infection (BSI) indication, losing 11 to 4 in the vote.
Cowen analyst Chris Shibutani acknowledges the BSI negative vote as a “setback,” but nonetheless, his key opinion leader consultant still anticipates prospects for plazomicin in severe CRE indications extending past cUTI, including BSI and complicated intra-abdominal infection.
The BSI indication was primed to be “the central issue for debate,” and it “unfortunately” did not result in a positive outcome for the company. However, Shibutani is taking the positive AdCom vote in stride in cUTI, expecting “timely approval” come the June 25th PDUFA date.
Therefore, the analyst reiterates an Outperform rating on AKAO stock without listing a price target. (To watch Shibutani’s track record, click here)
True, the negative BSI outcome is certainly a “disappointment,” as it “likely removes what had been hoped could be a valuable competitive label advantage for plazomicin,” notes Shibutani. The analyst continues, “The 11 panelists who voted ‘no’ believed: the data were not substantial, multiple additional analyses are needed, the sample size was too small, multiple changes in the design affect the interpretation of the data, and therapeutic drug monitoring (TDM) would be needed (regardless).”
On an upbeat note, the analyst cheers the AdCom’s positive vote on cUTI: “Clearcut support for cUTI as expected, and helps de-risk the ultimate regulatory outcome for plazomicin. […] The panelists, all of whom voted ‘yes,’ collectively noted the unmet need and the well-controlled trial. There was the expected commentary involving the recommendation that future studies (expected to be conducted on a post-marketing basis) should be done to further assess safety, dosing, renal monitoring, and microbiological activity.”
Moving forward, “C-Scape and strategic options become more significant drivers for shares,” Shibutani predicts, bullish on AKAO’s prospects even without winning the BSI indication.
TipRanks indicates this biotech player has magnetized bullish attention on the Street, with all 5 analysts polled in the last 3 months rating a Buy on AKAO stock. With a solid return potential of nearly 55%, the stock’s consensus target price stands at $22.75.