Needham Shares Two Cents on Achaogen (AKAO) Following Mixed FDA Verdict

It’s a short and dramatic plunge for Achaogen (NASDAQ:AKAO). Today, the drug maker’s shares lost nearly 24% following the news that the FDA issued a complete response letter, or CRL, for the company’s most advanced drug candidate, plazomicin, as a potential treatment option for bloodstream infection (BSI). The CRL stated that the CARE study does not provide substantial evidence of effectiveness of plazomicin for the treatment of BSI. However, the FDA did approve plazomicin for adults with complicated urinary tract infections (cUTI).

To Needham analyst Alan Carr, this is not a surprise – after all, an FDA Advisory Committee previously voted in favor of the complicated cUTI indication, but against the BSI indication.

Carr wrote, “We continue to believe that absence of Phase 3 Carbapenem-Resistant Enterobacteriaceae CARE trial data from the label will have minimal impact on use. Competing antibiotics Avycaz and Vabomere are used primarily for CRE infections and were approved w/o CRE clinical data in respective labels. Mgmt guided for commercial launch Jul 2018. Price was not disclosed, but we assume it will be approximately $1000/day, in line w/ Avycaz and Vabomere pricing […] We have concerns regarding size of the CRE market, but believe Zemdri will have an important role due to differentiated mechanism of action and strength of Phase 3 CARE data.”

Net net, Carr reiterates a Buy rating on Achaogen shares, with a price target of $20, which represents a potential upside of 117% from where the stock is currently trading. (To watch Carr’s track record, click here)

The drug maker is without question a Wall Street favorite, considering TipRanks analytics indicate AKAO as a Strong Buy. Out of 6 analysts polled in the last 3 months, 5 are bullish on Achaogen stock while 1 remains sidelined. With a return potential of nearly 100%, the stock’s consensus target price stands at $18.75.

Achaogen is a biopharmaceutical company passionately committed to the discovery, development, and commercialization of innovative antibacterial treatments for MDR gram-negative infections. 

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