+ Watch TTPH
on My Watchlist
The company has enjoyed positive phase 3 clinical trial results for its lead drug candidate. This has removed a lot of risk from the stock. It has received the qualified infectious disease designation from the FDA. Buyout above $50 is possible.
Good profile with low risk clinical and regulatory pathways
I like the antibiotic space, and remember that Cubist Pharmaceuticals -- a Rule Breaker -- was recently bought out by Merck. I think Tetraphase, which is a proverbial "one-drug" company right now, has good prospects. Outstanding recent performance (a triple over the past year) enables the company to raise money more easily. That said, they are under the gun to do a financing, with $56m in cash left and burning, burning, burning. So I think it's likely these guys will eventually opt to be acquired, likely at a market-beating premium from today. Thanks to my colleague Karl Thiel (TMFBreakerThiel) for this perspective. Outperform.
I like it
I find antibiotic developers very hard to value on fundamentals. Some pop, some fizzle, and I don't always see the rationale. Lately though, there's been a lot more pop than fizzle with Cubist on the rise and their subsequent takeouts of Trius and Optimer. Cempra and Durata have been showing strength as well.Tetraphase has been left out of the 2013 biopharma IPO boom, and as of today their market cap is an anemic 165M with 78M of IPO cash in the kitty. Traders seem to be thinking short-term these days as biopharmas hit new highs across all ranges of market cap, and Tetraphase won't be coughing up phase III data until 2015. Because of unpredictable patterns of emerging resistance, commercial value of new antibiotics for multi-drug resistant organisms is difficult to predict. I'd probably lose interest in Tetraphase at a cap above 300M, but with an enterprise value of about 100M it's priced too competitively to ignore.
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