Cempra is raising nearly $100 million through a stock sale to bring its first drug, a new antibiotic called solithromycin, to market as a pneumonia treatment.
But Chapel Hill, NC-based Cempra (NASDAQ: [[ticker:CEMP]]) can’t move forward with those plans until the FDA gives its blessing. That could take a while. The firm said in a regulatory filing Wednesday that it plans to ask the agency for approval this quarter, which means the FDA’s decision should come well before the end of 2016.
The FDA’s standard review time for drugs is 10 months. But Cempra’s drug could get a faster review under FDA programs that aim to more quickly bring to market new drugs addressing unmet medical needs. The FDA last year granted the Cempra drug fast track status, which qualifies it for a priority review of six months.
Both the capsule and intravenous forms of the Cempra drug have this fast track designation from the FDA. The FDA has also designated both forms of solithromycin as “qualified infectious disease products,” which makes the drug eligible for benefits under the Generating Antibiotics Incentives Act (GAIN), a federal law that created incentives to encourage drugmakers to develop new antibiotics. Under GAIN, the Cempra drug could receive five-year extension of marketing exclusivity—if the drug is approved.
All of this sounds like good news for the antibiotic company, but investors aren’t enthused. The company’s stock dropped 6.5 percent on the news this morning, and closed at $22.15, down 10.4 percent from Wednesday’s closing price.
Cempra priced its secondary offering of 4.1 million shares at $24 per share and expects net proceeds of $93.7 million, with up to $14.1 million more if Cempra’s underwriters decide to extend the deal.
The offering follows Cempra’s October announcement that the IV version of solithromycin hit its target in a Phase 3 clinical trial for community acquired bacterial pneumonia. The goal was to see how closely the Cempra drug worked compared to an established treatment for the disease, assessing whether Cempra’s antibiotic was “noninferior.” In trial results comparing the Cempra drug against moxifloxacin, a former blockbuster sold by Bayer, Cempra’s solithromycin hit that statistical target. That’s important because the Cempra drug could offer an alternative to moxifloxacin, which comes from a class of drugs associated with a risk of tendonitis or tendon rupture. Studies showed no such injuries in patients receiving the Cempra drug.
Despite those positive results, Cempra’s stock dropped last October to a 52-week low of $15.43. Even though the intravenous version of solithromycin hit the study’s main goal, the results still fell short of those shown by a capsule form of the drug, which reported positive results in a separate late-stage study early last year. Results also showed that patients on the intravenous version had more irritation at the site of the injection compared to patients receiving the Bayer drug.
Cempra CEO Prabha Fernandes said in October she expected to present full data for the capsule and IV versions in early 2016. She also noted that solithromycin showed no harmful effects on the liver, and that the pain and rashes at the injection site are known reactions to macrolides, the class of drugs that includes solithromycin.
Cempra’s stock price had recovered from the October tumble, closing 2015 at $31.13, before this week’s dip.
The new proceeds should carry the company through the second quarter of 2017, according to the filing. In addition to its marketing plans, Cempra will spend the cash on more R&D. It is also studying solithromycin as a treatment for gonorrhea and nonalcoholic steatohepatitis (NASH), a liver disease that has no FDA-approved treatment. Next in the company’s drug pipeline is fusidic acid (Taksta), which the company is studying as a potential treatment for patients with aggressive skin infections, as well as those with prosthetic joint infections.
