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Tuesday, October 20, 2020

Cempra Inc (NASDAQ:CEMP) Shares Lift Off the Mat

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Cempra Inc (NASDAQ:CEMP) is a recently struggling pharma play pushing to develop differentiated anti-infectives in the infectious diseases space. Cempra stock got crushed in waves through November and December after the FDA put out a briefing that it was worried about potential liver damage, which is measured by liver enzyme levels. Two patients discontinued the drug due to elevated liver enzyme levels.

A host of legal and administrative obstacles ensued, leading to the beaten down stock at issue, trading as recently as the beginning of last week at around $3/share, down from $23 just a couple months ago. Ouch. However, some bright news has put a boost in shares: the company just announced positive topline results from a phase 3 study of oral fusidic acid in 716 patients with acute bacterial skin and skin structure infections (ABSSSI).

Cempra Inc (NASDAQ:CEMP) trumpets itself as a clinical-stage pharmaceutical company that focuses on developing antibiotics to meet medical needs in the treatment of bacterial infectious diseases in North America.

Its lead product candidates include solithromycin (CEM-101), which is in Phase III clinical trials for the treatment of community acquired bacterial pneumonia, as well as for uncomplicated bacterial urethritis; and Taksta, an antibiotic that has completed Phase II clinical trials for refractory bone and joint infections.

CEMP also produces novel macrolides for non-antibiotic uses, such as the treatment of chronic inflammatory diseases, endocrine diseases, and gastric motility disorders. It has collaborative research and development and license agreement with Optimer Pharmaceuticals, Inc.

The company was formerly known as Cempra Holdings, LLC and changed its name to Cempra, Inc. in February 2012. Cempra, Inc. was founded in 2005 and is headquartered in Chapel Hill, North Carolina.

According to company materials, “Fusidic acid is Cempra’s second product candidate, which has completed an initial phase 3 trial comparing fusidic acid to linezolid in patients with acute bacterial skin and skin structure infections (ABSSSI). Cempra also has an ongoing exploratory study of fusidic acid for chronic oral treatment of refractory infections in bones and joints. Both products seek to address the need for new treatments targeting drug-resistant bacterial infections in the hospital and in the community. Cempra is also studying solithromycin for ophthalmic conditions and has synthesized novel macrolides for non-antibiotic uses such as the treatment of chronic inflammatory diseases, endocrine diseases and gastric motility disorders.”

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As noted above, Cempra stock has started to show some positive action following good news on its fusidic acid research. Specific, the company’s notes that fusidic acid was well tolerated in the study and achieved the primary endpoint, demonstrating non-inferiority (NI) (10% NI margin) of oral fusidic acid compared to oral linezolid for early clinical response (ECR) in the intent to treat (ITT) patient population.

According to the release, the double-blind study was conducted at 62 sites in the United States. Patients randomized to treatment with oral fusidic acid received a loading dose of 1500 mg every 12 hours for two doses, followed by 600 mg every 12 hours thereafter, until the end of a 10 day course of therapy. Patients randomized to treatment with the active comparator, oral linezolid, received 600 mg every 12 hours for 10 days. Randomization was 1:1 and was stratified by type of infection (cellulitis, wound infection, major cutaneous abscess), by age and by prior use of an antibiotic within 36 hours prior to randomization.

“Considering complicated skin infections are one of the most rapidly growing reasons for hospitalizations and emergency department visits each year, the results with fusidic acid in this study are promising, especially for an outpatient population where there is a need for new oral drugs that are effective against MRSA,” said William O’Riordan, M.D., chief medical officer of eStudySite, leaders in evaluating new therapeutic approaches for complicated skin infections.

We’ve witnessed 29% tacked on to share pricing for the listing in the past month, a rally that has pushed up against longer standing distributive pressure in the stock. However, CEMP has evidenced sudden upward volatility on many prior occasions. What’s more, the name has registered increased average transaction volume recently, with the past month seeing a bit over 100% beyond its prior sustained average level.

Now commanding a market cap of $212.1M, CEMP has a significant war chest ($248.9M) of cash on the books, which is balanced by about $6.7M in total current liabilities. One should also note that debt has been growing over recent quarters, but remains extremely light relative to liquid assets. CEMP is pulling in trailing 12-month revenues of $15.9M. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 59.1%. You can bet we will update this one again as new information comes into view. For continuing coverage on shares of Cempra stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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