In a Nov. 9 research note, analyst Ed Arce recapped Paratek Pharmaceuticals Inc.'s (PRTK:NASDAQ) Q3/20, highlighting its sales growth, and noted that H.C. Wainwright & Co. increased its target price on the biopharma.
Arce reviewed Paratek's sales during the quarter and their implications. Continuing its momentum with NUZYRA sales, the Boston-based company generated $10.9 million in net sales, a 34% increase over those in Q2/20. Further, Paratek achieved this while antibiotic sales in the broader market declined 18%.
"We find this quarter's growth impressive and encouraging given the ongoing full or partial lockdowns and continued restricted hospital access due to the COVID-19 pandemic," Arce commented.
H.C. Wainwright and Paratek management revisited their modeling and guidance, respectively, Arce relayed. The investment bank raised its full-year 2020 net sales estimate for Paratek to $38.3 million from $35.2 million based on its stronger than expected Q3/20 and continuing demand for NUZYRA.
Similarly, Paratek estimated that its total 2020 revenue should be at the higher end of guidance of $78–83 million. This projection includes the $38 million the company is to receive from the Biomedical Advanced Research and Development Authority's initial purchase of NUZYRA. The possibility exists, however, that Paratek may not realize the $38 million until 2021.
Also positively affecting the balance sheet, the biotech again reduced its 2020 guidance for two expenses—research and development and sales, general and administrative—to about $120 million from the $135 million forecast at the end of Q2/20.
At Q3/20's end, Sept. 30, 2020, Paratek had $149.5 million in cash, enough to cover runway until January 2024, the analyst stated.
Arce reported that H.C. Wainwright raised its target price on Paratek to $22 per share from $19 after updating its model to reflect current financial guidance and updated NUZYRA revenue projections. The stock is currently trading at about $6.03 per share.
The analyst also provided what he described as "an important update." That is that Paratek should hear back from the U.S. Food and Drug Administration (FDA) around the end of January 2021 on adding to NUZYRA's label oral-only dosing for community-acquired bacterial pneumonia. The analyst expects the FDA will approve this, which should help further boost NYZRA sales. Arce noted the company could capitalize on the 2020-2021 flu season and expand, as planned, "into the community setting early in 2021."
Arce summarized his firm's stance on Paratek which it rates as a Buy. It is "on course to establishing itself as a leading, commercially successful, independent antibiotic biotech company with a pathway to cash flow break even," he wrote.[NLINSERT]
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Disclosures from H.C. Wainwright & Co., Paratek Pharmaceuticals Inc., Target Price Revision, November 9, 2020
Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.
I, Ed Arce, certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst's household has a financial interest in the securities of Paratek Pharmaceuticals, Inc. (including, without limitation, any option, right, warrant, future, long or short position).
As of October 31, 2020 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Paratek Pharmaceuticals, Inc.
Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The firm or its affiliates received compensation from Paratek Pharmaceuticals, Inc. for non-investment banking services in the previous 12 months.
The Firm or its affiliates did not receive compensation from Paratek Pharmaceuticals, Inc. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm does not make a market in Paratek Pharmaceuticals, Inc. as of the date of this research report.
H.C. Wainwright & Co., LLC and its affiliates, officers, directors, and employees, excluding its analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives (including options and warrants) thereof of covered companies referred to in this research report.