Guggenheim Cuts Price Target on Tetraphase Pharma (TTPH) Following Disappointing cUTI Data.
Guggenheim reiterated a Buy rating on Tetraphase Pharmaceuticals (NASDAQ: TTPH), and cut the price target to $20.00 (from $60.00), on disappointing cUTI data.
Analyst Louise Chen commented, "Despite disappointing cUTI data, we are maintaining our BUY rating for TTPH shares, but we are lowering our price target from $60 to $20. The decrease in our PT is driven by downwards earnings revisions and multiple contraction. In our new base case scenario, we assume TTPH gets approval for cIAI only without an additional clinical trial. Three things give us confidence this could happen: 1) Similar drugs have been approved with only Phase 2 data. According to TTPH, they have more data than these drugs. 2) Based on discussions with the FDA, AKAO expects plazomicin to be approved for cUTI with only one successful trial. And, 3) in the EU new antibiotic guidance requires only one trial for approval, and IAI and UTI were two of the five target infections noted by the Agency. We also looked at an upside and downside scenario for TTPH. Our upside scenario arrives at a value of $60 per share and assumes that TTPH gets approval for cIAI and cUTI with no additional trials. In the downside case, we assume TTPH only gets approval for cIAI and this requires additional clinical data. In this scenario we arrive at a value of $8 per share. We estimate cash per share is $6.58. Therefore, if the stock trades down to $8-$9 tomorrow (indicated in aftermarket trading), we think the risk/reward is compelling. See pages 3-5 for more details of our scenario analysis."
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Shares of Tetraphase Pharmaceuticals closed at $44.78 yesterday.