Paratek Pharmaceuticals Inc (PRTK) Scores a Home Run with Sarecycline Phase 3

Paratek Pharmaceuticals Inc (NASDAQ:PRTK) shares are rising 11% today after the biotech firm and its collaborator Allergan posted a successful Phase 3 data read-out for sarecycline in the indication of the treatment of moderate to severe acne.

Guggenheim analyst Louise Chen sees these results as a signal of a future that is suddenly “becoming clearer.” In reaction, the analyst reiterates a Buy rating on PRTK without listing a price target.

“The drug met the 12 week primary efficacy endpoints, and AGN plans to file an NDA by the end of 2017. Now that Phase 3 data supports an NDA filing, we reaffirm our belief that Paratek can monetize sarecycline by looking for business development opportunities related to the ex-U.S. rights and potential royalty stream from AGN, and reinvest the proceeds in omadacycline (Phase 3 CABP data expected early 2Q17). Furthermore, we think there could be additional value derived from pursuing a rosacea indication for sarecycline given the positive acne data,” opines Chen.

Moreover, the analyst underscores prospective monetization potential for sarecyline should the biotech firm choose to join forces with other firms for an international launch.

Pointing to forthcoming catalysts down the road, the analyst remains confident on Paratek’s prospects, concluding, “1) Potentially divest non-core assets, such as Sarecycline ex-U.S. rights, reinvest proceeds into base business, ’17+; 2) Sarecycline NDA filing, 2H17; 3) Omadacycline ABSSSI oral-only Phase 3 data, end of 2Q17/ early 3Q17 (likely ~June/July); 4) Omadacycline CABP Phase 3 data, early 2Q17 (likely ~April); 5) Submit Omadacycline NDA, 1H18; 6) Omadacycline approval end ’18 and launch late ’18/early ’19.”

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, Louise Chen is ranked #4,452 out of 4,554 analysts. Chen has a 33% success rate and faces a loss of 15.3% in her yearly returns. When recommending PRTK, Chen forfeits 15.0% in average profits on the stock.

TipRanks analytics indicate PRTK as a Buy. Based on 2 analysts polled in the last 3 months, both analysts rate a Buy on Paratek stock. The 12-month average price target stands at $29.50, marking a 72% upside from where the stock is currently trading.

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