H.C. Wainwright & Co. raised its target price on Nabriva Therapeutics Plc (NBRV:NASDAQ) to $20 from $18 per share, "representing a $733M market cap," wrote analyst Ed Arce in a Nov. 1 research report.
Arce presented two primary reasons for the increase: the biotech's shares are "substantially undervalued" and data readout of the company's LEAP 2 trial, expected in spring of 2018, has been "significantly derisked," he noted.
Nabriva's Phase 3 LEAP 1 trial of lefamulin for community-acquired bacterial pneumonia (CABP) "met the primary efficacy endpoints for the U.S. Food and Drug Administration and the European Medicines Agency," Arce explained. C. difficile did not occur in either treatment arm. The incidence of diarrhea with lefamulin was "significantly lower than comparator moxifloxacin plus linezolid (0.7% versus 7.7%)."
After an initial spike in the stock upon the release of these positive data, the company's shares "have seen a steady slide down to current levels, nearly 11% below where they stood before LEAP 1 results, representing an enterprise value of less than $100M," Arce indicated.
The analyst outlined four reasons why Nabriva's stock should be higher in light of the favorable LEAP 1 trial results.
1. Lefamulin, the biologic tested in LEAP 1, "represents a novel mechanism of action with robust activity against all the key pneumonia-causing pathogens, as well as, importantly, methicillin-resistant Staphylococcus," Arce wrote.
2. In the United States, 5-6 million people contract CABP per year, and, Arce said, it's the "leading cause of death due to infection."
3. A major cause of the mortality rate from CABP is "the growing antibiotic resistance of currently available therapies, and their poor tolerability and adverse events profiles," Arce argued. About 15% of patients admitted with CABP don't survive. The rate is higher, 25–30%, for patients who wind up in an intensive care unit.
4. Treatment with lefamulin is shorter in duration than that with other available treatments, added Arce, requiring five to seven days of intravenous-to-oral monotherapy for most CABP patients.
H.C. Wainwright updated its models on Nabriva to reflect the positive LEAP 1 results and the recent $80 million equity raise, said Arce. Specifically, the financial institution increased its "point of sale for lefamulin to 87% from 55%." It raised the share count to 36.6 million from 26.8 million. Lastly, it updated expenses anticipated this year and next.
H.C. Wainwright has a Buy rating on Nabriva. The new $20 target price on this biotech compares to where its stock is currently trading, at $6.06 per share.
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