Another Crash Snuffs Out The Cempra Rally

| About: Cempra, Inc. (CEMP)

Cempra’s (NASDAQ:CEMP) mini-rally did not last long. A phase III failure of its lead antibiotic, solithromycin, in gonorrhoea has cancelled out last week's gains from positive results with its second-most advanced asset, Taksta. The company has also stopped trials of solithromycin in Nash and chronic obstructive pulmonary disease.

After complete response letters in solithromycin’s initial indication, community-acquired bacterial pneumonia, in December, Cempra's future looks uncertain. With cash running out and the possibility of two new trials looming, the company will hope that recent cost-cutting efforts will be enough to get both assets over the finish line.

Cempra’s share price fell 19% yesterday, and its stock is down around 80% since November. The long-term fall was kicked off by an FDA panel voicing safety concerns about solithromycin in community-acquired bacterial pneumonia (CABP) despite voting narrowly in its favour (Panel nod gives Cempra little solace, November 7, 2016).

New CABP study

But the company is pressing on. Last week it met the FDA to discuss the complete response letters, which covered both the oral and intravenous versions of solithromycin, and it seems that another trial is on the cards.

What form this will take depends on Cempra reaching an agreement with the agency, which apparently wants a 9,000-patient study to assess a potential liver injury signal. Cempra would prefer to get initial approval in a more limited population, based on a smaller group of patients, acting chief executive David Zaccardelli said during a conference call.

He was reluctant to specify what population the group would focus on, and how many patients it might need to study, but said it planned to address an unmet need, for example patients with limited therapeutic options. Cempra could then amass a larger post-market safety database to support label expansion, he added.

However, if a compromise cannot be reached with the FDA, “we would be very reluctant to commit further resources to the CABP programme”, Mr Zaccardelli said.

Not non-inferior

Meanwhile, the approval of solithromycin in gonorrhoea now looks like an even longer shot. The Solitaire-U study did not show non-inferiority to the standard of care, ceftriaxone plus azithromycin, on the eradication of Neisseria gonorrhoeae.

But Cempra is not giving up here either. The company plans to discuss its next steps with the US National Institute of Allergy and Infectious Diseases and FDA, highlighting a lack of resistance with solithromycin and an urgent unmet medical need in antibiotic-resistant gonorrhoea.

The company might do better to focus on its second antibiotic, Taksta, which contains fusidic acid, an agent that has been used outside the US for decades. Cempra has developed a new oral regimen for the US market, and announced on Friday that this had met its primary and secondary endpoints in a phase III trial in acute bacterial skin and skin structure infections.

A second phase III study in this indication would normally be needed for approval, but again Cempra believes that it could target a smaller indication initially, for example patients with MRSA skin infections, which might allow it to get the go-ahead with existing data. The company plans to meet the FDA before giving more details of its plans.

Taksta is also being studied in bone and joint infections, with phase II/III results due by the end of this year.

Cempra had $232m in the bank at the end of December, and has just cut its workforce by 67%, which it says should reduce its expenses by more than 70%. But this does not take into account any large additional trials.

If the group does need to carry out more extensive studies of solithromycin and Taksta – or both – it will need a plan B. As things stand it might have trouble raising more cash, and it is unclear how much more belt-tightening will be possible.

Project

Study

Trial ID

Status

Solithromycin

Solitaire-U

NCT02210325

Failed

Solithromycin

Phase II Nash trial

NCT02510599

Suspended

Solithromycin

Phase II COPD trial

NCT02628769

Terminated

Taksta

Phase III ABSSSI trial

NCT02570490

Met primary endpoint

Taksta

Phase II/III staphylococcal bone/ joint infections trial

NCT02569541

Primary completion June 2017

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