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Cempra, Inc. (CEMP) Receives Mixed Ratings Following New Phase III Data

By Howard Kim

Late last week, Cempra Inc. (NASDAQ:CEMP) presented Phase III data on solithromycin, its drug for treating community-acquired bacterial pneumonia (CAPB), a common bacterial infection with 5-10 million cases each year in the US. The phase III Solitaire-IV study compared solithromycin with Moxifloxacin, a fluoroquinolone antibacterial agent developed by Bayer AG. After the announcement, Needham and Leerink weighed in on Cempra.

On October 16th, Alan Carr from Needham maintained a Buy rating on Cempra’s stock with a price target of $48. According to the Fly, the analyst is bullish on the stock because his “inclination is solithromycin will be approved in both the U.S. and Europe.” He adds, “The drug is likely to be an attractive option in community-acquired bacterial pneumonia.”

Carr is a top rated analyst with a 56% success rate recommending stocks and a 25.2% average return per rating when measured over a one-year horizon and no benchmark.

On the same day, Leerink’s Paul Matteis reduced his price target for Cempra to $21, down from $31. However, he maintained a Market Perform rating for the stock.

According to the Fly, Matteis is bearish on the data emerging from the study, noting, “Solithromycin was numerically inferior on multiple key clinical measures, and notably was 4%-5% worse than Moxifloxacin on success at follow-up on multiple data cuts, including an intent-to-treat analysis.” The analyst is confident that the drug will be approved in the U.S. However, he cut his peak gross 2032 U.S. sales estimate for the drug to $600 million from $1 billion.

Matteis has made 14 recommendations with a 14% success rate and an average loss of 33.1% per recommendation when measured over a one-year horizon and no benchmark.

According to TipRanks, out of 3 analysts who have recently rated Cempra, 2 have rated it as a Buy and 1 has rated it as Hold. The average consensus price target for Cempra is $41.67, an upside of 116.02% over current levels.