Watch Out for These Pharmaceutical Players Racing Toward FDA Approvals

Will the FDA writing on the wall bode well for three pharmaceutical firms raring for a PDUFA nod this summer? Achaogen (NASDAQ:AKAO) complicated urinary tract infection cUTI asset plazomicin, Scpharmaceuticals (NASDAQ:SCPH) heart treatment Furoscix, and TherapeuticsMD (NASDAQ:TXMD) vulvar vaginal atrophy (VVA) have attracted a team of bulls rooting for the success of these candidates ahead of the big decisions due from the FDA panel. Over the course of the next two months lie make-or-break moments at the end of the long biotech pathway; the key outcome that spells out cheer or massive blow to investors is waiting in the wings. Let’s take a closer look to see why analysts across the Street are betting on AKAO, SCPH, and TXMD:

Is Achaogen Poised to Win a Go-Ahead from the Agency? 

Biotech investor anticipation will be high come Wednesday, where Achaogen’s plazomicin will be in the spotlight. With a meeting set before the FDA’s Antimicobrial Drugs Advisory Committee (AdCom) this Wednesday, can AKAO’s plazomicin win over the panel of experts? Should this AdCom go well, not much can stop AKAO from sweeping a green light on plazomicin’s June 25th PDUFA date.

H.C. Wainwright analyst Ed Arce sees a “clear path to approval” paved ahead for the drug maker. By the end of January, a key “manufacturing overhang [was] lifted. Notably, the agency’s reinspection of Pfizer’s McPherson, Kansas fill-finish facilitgy for plazomicin was upgraded to Voluntary Action Indicated status, and Arce now sees “no obvious regulatory obstacles to projected commercial launch in 3Q18.” To put it on a bullish note, “all looks in place” for the drug’s launch, from where Arce is standing.

“We view this outcome as an important risk-reducing development, as it effectively removes an overhang on the shares (that has persisted since July of last year) that manufacturing issues could delay the launch of plazomicin. Given plazomicin’s robust pivotal data (CARE and EPIC), its Breakthrough Therapy designation and its recently announced Priority Review with a PDUFA date of June 25, 2018, we now fully expect the U.S. commercial launch of plazomicin,” writes the analyst.

On a final note of confidence, the analyst concludes: “We note that with its field management team now in place, Achaogen’s MSLs, market access and reimbursement professionals are actively engaged with targeted hospital and IDN facilities to prepare for active discussions and P&T review, post-approval […] Achaogen management continues to expect approval of its assay in time for the plazomicin launch.”

As such, cheering for plazomicin’s commercial prospects, the analyst has a Buy rating on AKAO stock with a $29 price target, which implies a close to 122% upside from current levels.

Scpharmaceuticals’ Odds Look High to Score an FDA Green Light 

Scpharmaceuticals is eyeing an FDA action date June 23rd, where all eyes will be on lead asset Furoscix, designed to treat patients with worsening or decompensated heart failure outside of the inpatient setting. Is this pharmaceutical player a compelling bet as summer’s big decision approaches?

The stock is now trading at about $9.50 per share, falling from its IPO launch price of $14 for no fundamental reason- and with analysts still boasting bullish stances (and price targets over $20) on SCPH’s market opportunity at play.

Jefferies analyst David Steinberg is upbeat on Furoscix’s chances and he continues to see 75% chance of first pass approval for the treatment. Steinberg takes notice that the SCPH management team is readying for the action date between new hires and more market research, adding that “further clinical work is underway to better assess Furoscix health economics.”

Steinberg is glancing forward with bullish anticipation, noting, “scPharmaceuticals continues to build a body of data that supports the value proposition of Furoscix to patients, providers and payers: First, a planned investigator-sponsored study that will assess the relationship between Furoscix dosing and patient target weight is expected to start enrolling in 1Q18, with data expected by year end. In addition, a company-sponsored study that will assess the economics of Furoscix use in the outpatient vs inpatient setting is expected to start enrolling in 2Q18. And finally, we continue to anticipate data in 1H19 for the ongoing investigator sponsored (NHLBI) study that will assess readmission rates and healthcare cost outcomes.”

With prospective Furoscix approval just around the corner, the analyst has a Buy rating on SCPH stock with a $26 price target, which implies a monster almost 185% upside potential from current levels.

Steinberg is not the only fan of SCPH on Wall Street. Leering analyst Ami Fadia largely seems to echo Steinberg’ positive sentiment, noting, “We continue to believe that Furoscix can gain strong early adoption in hospital-based events, which drive 75% of IV furosemide use in a market where over 90% of IV diuresis is through IV furosemide. We believe that Furoscix provides a strong pharmacoeconomic incentive to move care from a high cost hospital setting to an at-home setting. We continue to see >75% odds of success of approval, where we forecast >$600M in 2025 sales.”

Worthy of note, about 42% of the company’s shares are owned by institutions and mutual funds. It is a good indicator, since institutional investors (a.k.a. the “smart money”) have access to sophisticated research and have a great deal of information on the companies they trade. For context, SCPH had an IPO back in November, attracting two healthcare hedge fund giants, Orbimed and RA Capital, who bought about 6 million shares at $14/share, a 30% above current levels.

TherapeuticsMD Investor Fatigue Could Soon Be Getting Relief 

TherapeuticsMD has a VVA asset on its hands that has one analyst seeing FDA approval for TX-004 as pivotal by the May 29 PDUFA date; and another bull eyeing a product that is both “innovative” as it is “differentiated.”

As these bulls weigh in, one corner there is Cantor analyst William Tanner seeing a chance for TXMD to make it up to some very patient long-term investors who have had to suffer through last April’s CRL. This “must have been a major disappointment to long-term investors in TXMD shares and to investors who may have viewed there being an attractive near-term trading opportunity,” notes Tanner.

Not only is TX-004 prospectively a standout VVA therapy, as the analyst wagers, but its approval could likewise alleviate “investor fatigue” for the biotech firm.

Betting that this year “could make for a breakout year” for TXMD, the analyst rates an Overweight rating on the stock with a $28 price target, which implies a close to 403% upside from current levels.

Keep in mind, “The low percentage of women with VVA who are seeking treatment (est. 7% of 30 million) and their relative dissatisfaction with current options could create receptive market conditions for the drug candidate, if approved. The evolving regulatory landscape for drug compounders should, in our opinion, position TX-001 as an attractive alternative commercial product for compounding pharmacies,” underscores Tanner, recognizing potential for an “important” treatment at play.

Investors can breathe a sigh of relief that the delay of TXMD winning approval “fortunately” has not put a dent in the company’s positioning “from a competitive standpoint,” save for those watching out for AMAG’s dyspareunia asset Intrarosa “as a direct competitor.” That said, it is “critical” from Tanner’s stance for the agency to give a nod to TXMD’s drug either on or close to its PDUFA date with destiny by the end of May.

Looking ahead, “TXMD anticipates launching TX-004 in 3Q18, and we think investors should have modest expectations for commercial performance over the rest of the year. Providing metrics that relate to payer relationships and the reimbursement landscape could highlight how well TXMD is setting the table for future growth,” contends Tanner.

In another corner is Oppenheimer analyst Jay Olson, a bull who while “pleased with FDA’s acceptance of the resubmission” noted some surprise at a class 2 designation, “which was apparently triggered by the additional endometrial safety data.”

For this reason, Tanner might be so attentive to the date the FDA approves TX-004, taking into account that a class 2 resubmission translated to a 6-month review process. Olson is mindful that with data having been submitted various months prior to the resubmission, the FDA had been given “a significant headstart to review it.”

Olson asserts, “We understand that, procedurally, FDA is entitled to take another 6 months in order to review the new data but could theoretically provide a decision on TX-004HR earlier than the 5/29/2018 PDUFA. We don’t factor the latter scenario into our model.”

Overall, “We delay the launch of TX-004HR from mid-2018 to 3Q 2018 based on the new PDUFA resulting in small changes to our revenue and EPS estimates. We maintain peak risk-adjusted revenues of $330M for TX-004HR in 2030. We continue to view TX-004HR as an innovative, differentiated product,” contends Olson.

Worthy of note, the analyst echoes the bullish conversation across the Street. Olson has an Outperform rating on TXMD with a $10 price target, which implies a close to 80% upside from current levels.


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