Roth Capital Gets Bullish on Cempra Inc (CEMP) Following Phase 3 Trial Success

Cempra Inc (NASDAQ:CEMP) shares are rising close to 6% today on back of the biotech firm’s reveal that Phase 3 data read-outs in the first study of two skin infection (ABSSSI) studies with its fusidic acid pill Taksta have met both primary as well as secondary efficacy endpoints.

In reaction, Roth Capital analyst Michael Higgins upgrades to a Buy rating on shares of CEMP while boosting the price target to $8, which represents an 86% increase from current levels.

Higgins highlights, “Taksta is a pill that has been used in Europe for the last 40yrs, with increasing use in ABSSSI while its resistance has been minimal. With 100% efficacy in 99 MRSA strains, its role in ABSSSI is compelling, but in our view its value in bone and joint infections is far greater. Becomes Buy rated ahead of bone data in ‘2017’.”

“We are most impressed with the 100% efficacy in the 99 patients with MRSA infections, which demonstrates to us a strong efficacy profile and bodes well for the bone and joint infection (BJI) results expected sometime in 2017,” continues the analyst.

Overall, “Given the number of generic antibiotics treating ABSSSI, we agree with mgt that the commercial outlook for Taksta is in its use in BJIs. While we aren’t certain if and when an NDA will be filed in BJI, we believe Taksta’s potential for FDA approval in ABSSSI is likely,” Higgins surmises.

Looking ahead, CEMP posts its fourth-quarter print tomorrow evening, where the analyst anticipates an update on its bone study. Additionally, CEMP management will release further details at a conference in the spring.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, Michael Higgins is ranked #4,363 out of 4,501 analysts. Higgins has a 35% success rate and forfeits 13.7% in his annual returns. When recommending CEMP, Higgins loses 69.5% in average profits on the stock.

TipRanks analytics indicate CEMP as a Hold. Out of 12 analysts polled by TipRanks in the last 3 months, 2 are bullish on Cempra stock, 8 remain sidelined, and 2 are bearish on the stock. With a loss potential of nearly 46%, the stock’s consensus target price stands at $2.25.


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