Needham’s Alan Carr Turns Bullish on Achaogen Inc (AKAO); Here’s Why

Achaogen Inc (NASDAQ:AKAO) shares were shooting through the roof at 148% yesterday after the biotech firm pleasantly surprised investors with two Phase 3 successes for its lead product candidate, next-generation aminoglycoside plazomicin, designed to combat multidrug-resistant bacteria. The grand slam Phase 3 outcomes were in indications of CRE infections (CARE trial) and complicated Urinary Tract Infections (EPIC trial).

In reaction, Needham analyst Alan Carr sees the two trials as a game-changing one-two punch, leading him to upgrade from a Hold to a Buy rating on AKAO with a price target of $19, which represents a just under 46% increase from where the shares last closed.

The analyst notes, “Given small size of scaled-back CARE trial, we had assumed there was no realistic opportunity for plazomicin to demonstrate differentiation from colistin. However, the trial showed plazomicin was statistically superior to colistin w/ respect to mortality and nearly so w/ respect to composite endpoint of mortality and disease-related complications. Similarly, we had anticipated EPIC trial would establish non-inferiority of plazomicin to meropenem, a potent drug used for more challenging cUTI infections. Achaogen disclosed however, that plazomicin was superior to meropenem w/ 3 of 4 key assessments.”

“In our view, the combined outcome is sufficiently robust to commercially differentiate the drug in treatment of CRE. We continue to believe CRE commercial opportunity in U.S. is modest but expect Achaogen to ultimately capture $250M w/ a small 50-60 rep sales force,” Carr surmises.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Alan Carr is ranked #539 out of 4,273 analysts. Carr has a 43% success rate and gains 6.4% in his yearly returns. However, when recommending AKAO, Carr loses 47.1% in average profits on the stock.

Additionally, Ritu Baral of Cowen rates a Buy on AKAO without listing a price target and Heather Behanna of Wedbush also rates a Buy on the stock without suggesting a price target.

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