It has been decades since the US has seen a new novel treatment in the antibiotics arena, creating positive sentiment surrounding the approval of Nabriva’s Contepo (fosfomycin). Antibiotics are medicines that treat bacterial infections. According to Kaiser Permanente, most illnesses caused by bacterial infections are urinary tract infections, strep throat, and pneumonia.
Nabriva (Nasdaq: NBRV) has a PDUFA date scheduled 4/30/2019. The FDA is reviewing Contepo for the potential treatment of Complicated Urinary Tract Infections (cUTI). Contepo is a new formulation of a previously oral only generic antibiotic called fosfomycin. This approval is notable as it would provide another antibiotic in the arsenal for the treatment of multi-drug resistant infections, a major concern of the CDC. Contepo provides antibacterial therapy for many heavy-hitting bugs such as methicillin resistant Staphylococcus aureus (MRSA), carbapenem resistant Enterobacteriaceae (CRE), and producers of extended-spectrum beta-lactamases (ESBL). Intravenous fosfomycin (the equivalent of Contepo) is approved for use in Europe, and has seen continued growth in use over the past several years (see below). The FDA is scheduled to rule on the NBRV’s Contepo application by the end of the day, April 30th. PDUFA’s can be high reward plays but have high risks as well due to the sell-the-news reaction commonly seen.
Investors hope that Nabriva has a potential double approval with Contepo and NBRV’s other antibiotic candidate, Lefamulin. Lefamulin is a potential treatment for community-acquired bacterial pneumonia (CABP). In total cUTI and CABP affect over 8 million patients annually in the US alone., Contepo and Lefamulin are designed to kill bacteria in a different way than other recently approved antibiotics making them attractive solutions. Unfortunately, they are not the only ones innovating new antibiotics. Paratek Pharmaceuticals (PRTK) gained FDA approval in 2018 of its own next-generation antibiotic for CABP NUZYRA.
The trajectory is based on potential FDA approval of Contepo. The share price could potentially catapult NBRV over $4. Trends indicate NBRV is in a wedge trying to complete its 3rd wave right into the PDUFA which could be construed as a bullish indicator. If I trade it, I will have a tight stop loss at the bottom end of this wedge.
I’ve found on most PDUFAs traders are in for the catalyst, implying an immediate pullback after a pop. I do not recommend trading these unless you know what you are doing. If I get in I will be quick to take profits. Keep in mind analysts are going to want to see sales projections in the long haul especially since Antibiotic market is very crowded, even with a novel therapy.
If approved by the FDA, Contepo will be the first novel intravenous antibiotic for complicated urinary tract infections introduced in the United States in about 2 decades. The antibiotic market is very crowded. If approved Contepo sales may progress slowly as physicians get educated on it and key opinion leaders vocalize their thoughts. If you have ever been involved in a PDUFA date the decision usually causes significant volatility. If I play I’ll be quick to take profits. Nine times out of ten the stock will jump 10-20% and fall back down to baseline price levels prior to the PDUFA. If you do not believe me look at the price action of PRTK, ACRX, VSTM, or ADMP before and after their respective PDUFA dates.
I have position in NBRV, but may buy and/or sell within the next 72 hours.
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