Tetraphase Pharmaceuticals Inc (NASDAQ:TTPH) massively has disappointed investors now that its lead asset designed to treat complicated urinary tract infections (UTI) missed the boat badly in a late-stage trial. The company’s drug failed to meet the key goal of non-inferiority against patients treated with Merck’s asset ertapenem.
In reaction, shares have been sent tumbling 59%, and even a bull didn’t see this failure coming.
H.C. Wainwright analyst Ed Arce is not fleeing the bullish camp just yet, still seeing potential in complicated intra-abdominal infections (cIAI) for eravacycline- the very drug that failed the pivotal Phase 3 trial IGNITE3 in cUTI.
However, with regards to the UTI program, Arce bets odds are the drug maker will halt development of eravacycline entirely.
In the IGNITE3 study, the issue boiled down to an issue of drug concentration, as Arce notes: “Poor drug concentration at the site of infection is the likely culprit.”
Ultimately, “We are as surprised as management is by this outcome, as we had come to regard the oral formulation of eravacycline, as used in the prior IGNITE2 study, as the primary driver of the drug’s first failure in cUTI […] we had believed that the IV administration, by avoiding the lower systemic exposures of the oral, would likely prove to be successful. However, we now regard the weak efficacy of eravacycline in UTI to be an issue of limited target attainment, in other words, insufficient drug concentrations in the urine. This is a common feature of the PK profiles of tetracyclines, as a class, and not readily addressed by simple approaches such a switching the mode of administration,” underscores the analyst.
Not all hope is lost though: “However, given the recently submitted NDA and MAA for eravacycline for complicated intra-abdominal infections (cIAI), we still see significant commercial value in the drug, aside from the former opportunity in cUTI,” Arce contends, wagering all odds for TTPH’s success now lie in the intra-abdominal arena.
This year, the analyst looks for eravacycline in cIAI to get an FDA nod in both the U.S. as well as the E.U.
On back of the failed Phase 3 trial, the analyst reiterates a Buy rating on TTPH stock while cutting the price target from $17 to $6, which implies a 171% upside from current levels. (To watch Ed Arce’s track record, click here)
TipRanks shows Tetraphrase has earned high analyst praise on the Street, with 4 out of 5 analysts bullish on the stock and just 1 on the sidelines. With a return potential of 236%, the stock’s consensus target price stands at $7.50.