Five Biotech Stocks for the Next Six Months

Five Biotech Stocks for the Next Six Months

SunTrust Robinson Humphrey’s Edward Nash and team offer five biotech stocks for the next six months:

Cempra (CEMP) ($50 PT), our top pick based on near-term clinical and commercial success potential. We recently met with management and it was reiterated that the second Phase III study of solithromycin in CABP (SOLITAIRE-IV) remains on track to report top-line data by YE15. We assign a probability of success of 80% to the overall solithromycin program based on the positive data from the first Phase III clinical trial (SOLITAIRE-Oral)

Tetraphase Pharmaceuticals (TTPH) ($48 PT), an antibiotic player with an imminent data readout. Top-line data from the pivotal portion of the Phase III cUTI study is expected in 3Q15 and management plans to submit an NDA by YE15. We model a probability of success of 90% based on the positive data from the lead-in portion of the Phase III and believe eravacycline may demonstrate superiority to active comparator levofloxacin although the trial is designed for non-inferiority. The targeted indications of multi-drug resistant Gram negative bacterial infections is a major unmet medical need and eravacycline has a differentiated clinical profile as compared to existing competitors

Intra-Cellular Therapies (ITCI) ($50 PT), clinical program on track to target a Blockbuster market. The first pivotal Phase III study of ITI-007 for schizophrenia has completed patient enrollment and will report top-line data in 2H15. The first Phase III study has same ITI-007 dosage, treatment period, primary and secondary endpoints as the completed Phase II study which reported positive top-line data in December 2013, but with an increased number of patients, so stronger statistical powering

Catalyst Pharmaceuticals (CPRX) ($7 PT), competition has been over-stated. A rolling NDA submission for Firdapse will begin in 3Q15 and will be completed in 4Q15; priority review based on the Breakthrough Therapy designation. Management guided that the Chief Commercial Officer position will be filled by October 1st, if not sooner, most likely by a candidate ideal for an Orphan launch. Commercial preparation is ongoing with three MSLs hired; a fourth may be hired by fall; sales reps will be in place by end of 1Q16 preceded by sales managers. Top-line data from an Investigator sponsored study of CPP-109 for Tourette’s disorder in 2Q15 and topline data from a Phase I(b) multiple dose safety and tolerance study of CPP-115 in 3Q15, if positive, should also drive stock price appreciation

Sarepta Therapeutics (SRPT) ($33 PT), the FDA will continue to be the major influencing factor. The rolling NDA submission will be completed in mid-2015. The DMD guidelines that the FDA released last week suggests that the Agency is actively engaged in making treatment options available to patients; the comments on dystrophin as an potential surrogate endpoint are positive for Sarepta Therapeutics.

Shares of Sarepta Therapeutics have gained 3.6% to $29.33 at 11:45 a.m. today, while Catalyst Pharmaceuticals has dropped 0.8% to $3.94, Intra-Cellular Therapies has risen 3.5% to $27.48, Tetraphase Pharmaceuticals has ticked up 0.3% to $42.76, and Cempra has advanced 1.3% to $32.92.

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Five Biotech Stocks for the Next Six Months

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