Tetraphase Pharmaceuticals, Inc. (NASDAQ: TTPH) is a biopharmaceutical company using its proprietary chemistry technology to create novel antibiotics for serious and life-threatening bacterial infections, including those caused by many of the MDR bacteria highlighted as urgent public health threats by the Centers for Disease Control and Prevention.
2018 is off to an excellent start at TTPH. The company reported positive data on eravacycline and has entered into an exclusive licensing agreement with Everest Medicines Limited to develop and commercialize eravacycline in mainland China and other Asian territories, advancing its goal to deliver new treatment options for serious, often life-threatening infections, to patients on a global level. The management is excited to move forward with commercial preparations to bring eravacycline to market as a treatment for cIAI in the second half of 2018, pending U.S. regulatory approval following their PDUFA date of August 28.
Key near term milestones for 2018
- Potential approval of eravacycline in cIAI in the U.S. – Q3 2018
- Potential approval of eravacycline in cIAI in Europe – 2H 2018
- The potential commercial launch of eravacycline in cIAI in the U.S. – Q4 2018
- Complete phase 1 multiple ascending dose studies for TP-271 and TP-6076 – 2H 2018
Data from pooled analysis of IGNITE1 and IGNITE4 studies of eravacycline & TP-6076: On June 11th, the Company reported positive data on eravacycline, which is currently under review by the United States Food and Drug Administration (FDA) and the European Medicines Agency (EMA) for the treatment of complicated intra-abdominal infections (cIAI), as well as data for TP-6076, its second-generation candidate targeting MDR Gram-negative bacteria, which is currently in phase 1 clinical testing. These data were presented at the American Society for Microbiology (ASM) Microbe 2018 in Atlanta, GA.
For patients with cIAI caused by Enterobacteriaceae, the overall favorable clinical and microbiological response rates among pooled eravacycline-treated subjects were 88.2% and 86.3%, respectively. Notably, in patients with infections due to ESBL-producing Enterobacteriaceae, eravacycline demonstrated a favorable microbiologic response rate of 88.9%. For patients with cIAI caused by A. baumannii, of which most strains were MDR, the overall favorable clinical and microbiological response rate among pooled eravacycline-treated subjects was 100%. Also, for TP-6076, data demonstrated that it retained potency against several emergent resistance types and support the company’ belief that it is a promising candidate for the treatment of MDR Gram-negative pathogens.
Submission of Investigational New Drug (IND) application to China’sFood and Drug Administration (CFDA): On June 4th, the company announced that Everest Medicines Limited (“Everest”), a C-Bridge Capital-backed biopharmaceutical company based in China which has the exclusive license to develop and commercialize eravacycline in China, Taiwan, Hong Kong, Macau, South Korea and Singapore (the “Territories”), has submitted an Investigational New Drug (IND) application to China’sFood and Drug Administration (CFDA) for a phase 3 clinical trial of eravacycline in complicated intra-abdominal infections (cIAI).
Everest’s IND submission to the CFDA ahead of schedule marks an important milestone in our strategy to make eravacycline available as a new antibiotic treatment option for serious, MDR infections,” said Guy Macdonald, President, and CEO of Tetraphase. We are delighted with Everest’s rapid progress, which speaks to its development expertise and our highly collaborative working relationship, and we look forward to providing future updates as the process continues.
As a result of the IND submission, Tetraphase will receive a milestone payment of $2.5 million. Under the terms of the agreement, Tetraphase may receive future clinical and regulatory milestones of up to $14 million as well as sales milestones of up to $20 million. Tetraphase is also eligible to receive double-digit tiered royalties on net sales of eravacycline in the Territories. Everest is solely responsible for the development and commercialization of eravacycline in the Territories.
As per management, this remains an exciting time for Tetraphase and the potential of eravacycline in cIAI, with a New Drug Application under review by the U.S. Food and Drug Administration and a Marketing Authorization Application under review by the European Medicines Agency. Now, with Everest’s IND submitted, they are one step closer to bringing eravacycline to patients in need on a global level.
On the liquidity front, As of March 31, 2018, Tetraphase had cash and cash equivalents of $117.7 million and 51.6 million shares outstanding. The Company expects that its cash and cash equivalents, as well as expected revenue from its U.S. government awards, will be sufficient to fund operations through the first half of 2019. According to the company, it believes that it has enough financial flexibility to sustain operations until Q2 of 2019.
Notwithstanding, Company’ announcement of failure in a different indication, TTHP’ scrip continues to be on the rapid growth trajectory, supported by expected catalysts and comfortable liquidity position. The company is positive about getting its first FDA approval, eravacycline for cIAI, by August 28, 2018.
The market believes that the Disappointing clinical data doesn’t adversely impact the other promising opportunities for the company and in fact, the current subdued price creates a favorable buying opportunity to the investors as well as momentum players trading the stock. Several brokerage firms have initiated coverage on the company, and the stock currently has a consensus rating of “Buy” and a consensus price target of $7.14.
Below are the details of most recent ratings from brokerage:
About the company: Tetraphase is a biopharmaceutical company using its proprietary chemistry technology to create novel antibiotics for serious and life-threatening bacterial infections, including those caused by many of the MDR bacteria highlighted as urgent public health threats by the CDC. The Company has created more than 3,000 novel tetracycline compounds using its proprietary technology platform. Tetraphase’s pipeline includes three antibiotic clinical candidates: eravacycline, which has completed phase 3 clinical trials and is under review for potential approval in complicated intra-abdominal infections by the FDA and the EMA, and TP-271 and TP-6076, which are in phase 1 clinical trials.
About Eravacycline: Eravacycline is a novel, fully-synthetic fluorocycline antibiotic being developed for the treatment of cIAI and other serious infections, including those caused by MDR pathogens that have been highlighted as urgent public health threats by both the World Health Organization and the CDC.
Unique differentiating factors of the company:
Pipeline and milestones:
First Quarter 2018 Results (In thousands):
Revenues: Revenues during the first quarter of 2018 were $1.9 million compared to $1.5 million for the same period in 2017. Revenues for each period consisted of contract and grant revenue under the Company’s U.S. government awards for the development of Tetraphase compounds for the treatment of diseases caused by bacterial biothreat pathogens and for certain infections caused by life-threatening multidrug-resistant bacteria. The increase was primarily due to the initiation of the CARB-X grant in the second half of 2017.
R&D Expenses: Research and development (R&D) expenses for the first quarter of 2018 were $18.1 million compared to $25.9 million for the same period in 2017. The decrease in R&D expenses was primarily due to the completion of our IGNITE phase 3 clinical studies for eravacycline.
Profitability: For the first quarter of 2018, Tetraphase reported a net loss of $21.6 million, or ($0.42) per share, compared to a net loss of $29.5 million, or ($0.79) per share, for the same period in 2017.
Liquidity and financial flexibility: As of March 31, 2018, Tetraphase had cash and cash equivalents of $117.7 million and 51.6 million shares outstanding. The Company expects that its cash and cash equivalents, as well as expected revenue from its U.S. government awards, will be sufficient to fund operations through the first half of 2019.
Key risk factors and potential stock drivers:
If one or more of their current drug candidates receive regulatory approval or gets commercialized, it would be a significant catalyst;
TTPH is a clinical-stage company and expects to incur substantial operating losses during the next stages of corporate development.
The biotech space is a high-risk sector due to uncertainties associated with the novel drug development. Any adversities related with the same could upset the stock performance significantly.
- On Friday, July 20th, 2018, TTPH closed at $3.04, on an average volume of 657,644 shares exchanging hands. Market capitalization is $156.955 million. The current RSI is steady at 29.84
- In the past 52 weeks, shares of TTPH have traded as low as $2.05 and as high as $8.75
- At $3.04, shares of TTPH are trading below its 50-day moving average (MA) at $3.73 and below its 200-day moving average (MA) at $4.66
- The present support and resistance levels for the stock are at $2.95 & $3.12 respectively.
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