Tuesday’s Volatile Stocks: Analysts Weigh in on Achaogen Inc (AKAO) and Proteon Therapeutics Inc (PRTO)

Achaogen Inc (NASDAQ:AKAO) investors are partying around after the company announced surprisingly positive results from both Phase 3 trials of plazomicin in CRE infections (CARE trial) and complicated Urinary Tract Infections (EPIC trial). On the other side, Proteon Therapeutics Inc (NASDAQ:PRTO) saw its shares falling over 70% today, after releasing clinical data for its failed chronic kidney disease drug. Below, analysts discuss the aspects of the results and the implications on both firms.

Achaogen Inc

Achaogen shares are raising 15%, as of this writing, after the biopharmaceutical company said a phase 3 trial of its treatment for urinary tract infections met its primary endpoints, allowing the company to proceed with regulatory submissions in the United States and Europe.

In reaction, Cowen analyst Ritu Baral reiterated an Outperform rating on shares of Achaogen, noting, “We are very pleasantly surprised at statistical superiority given how rare it is achieved statistically in antibiotics studies. The ‘discrepancy’ between non-inferiority at Day5 compositive cure vs TOC (day 10-15) could be the only perceived weak spot, but we note the Day5 data still stayed within the standard 10pt NI margin (the trial actually allowed a 15pt NI margin). Overall Day5 CC values were in-line with historical values. The meropenem drop at TOC we believe is a function of re-emergence of organisms on culture; the lack of similar re-emergence in the plz group suggested sustained, ‘real’ antimicrobial activity.”

“Given overwhelming evidence of efficacy, imbalance of resistant strains favoring the meropenem arm, and no real irregularities in the data, we have little to no doubt the EPIC data generated will satisfy US and EU approvability requirements,” the analyst concludes.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ritu Baral has a yearly average return of 1.1% and a 35% success rate. Baral has an 156.4% average return when recommending AKAO, and is ranked #1760 out of 4269 analysts.

As of this writing, the 2 analysts polled by TipRanks (in the past 3 months) rate Achaogen stock a Buy. With a return potential of 21%, the stock’s consensus target price stands at $19.

Proteon Therapeutics Inc

Baird analyst Michael Ulz downgraded shares of Proteon from Outperform to Neutral, while slashing the price target to $3.00 (from $20.00), after the company announced that vonapanitase, its only asset, failed to meet the primary endpoint in the Phase 3 PATENCY-1 trial, which was conducted in patients with chronic kidney disease (CKD).

Ulz noted, “Overall, given this disappointing data, we believe the second ongoing Phase 3 PATENCY-2 study is unlikely to be successful, and we are removing vonapanitase revenues from our model. The company plans to reduce operating spend and extend the current cash runway into 3Q18.”

The analyst continued, “In light of the results, the company intends to use findings from the PATENCY-1 study to guide vonapanitase development efforts. A meeting with the FDA to discuss the PATENCY-1 results is expected, and the company plans to expand enrollment in the PATENCY-2 study. In our view, the disappointing PATENCY-1 results do not bode well for PATENCY-2 data expected in 2Q18. Additionally, as of November 30, Proteon had $43.3M in cash, which, following reductions in operating expenses, is expected to fund operations into 3Q18, extended from 4Q17 previously.”

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks.com, analyst Michael Ulz has a yearly average return of -5.2% and a 31% success rate. Ulz is ranked #3458 out of 4269 analysts.

Out of the 6 analysts polled by TipRanks, 4 are still bullish on Proteon stock, while 2 are neutral. With a return potential of nearly 450%, the stock’s consensus target price stands at $14.75.

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