Oh, and Milano is presenting at the JMP conference in New York on Tuesday. Timing seems about right...
Tetraphase won't trade with a market cap of $100m or they will be acquired. $189m in cash, no debt on the balance sheet. Biotech's that have a reasonable shot at getting FDA approval trade at $300m market cap or more. There's about 300% upside from here to Q4 2017, price target $12. Acquisition price $15. Watch the insider buying start.
All they need to do is get one indication approved. Doctors will use this off label for many MDR bacteria.
Another way of looking at it:
Merck bought Cubist for $8.4b
Actavis bought Durata for $675m
Tetraphase is simply undervalued at these levels making it a takeover target. I see 4-6x upside.
Here's my view:
- Eravacycline works, that's already been demonstrated in multiple trials.
- There is a public health crisis with multi drug resistant pathogens.
- Data at ECCMID last month demonstrated excellent MIC against numerous carbapenem-resistant strains of gram-negative bacteria.
- They have $189m cash, and a market cap of $109 million based on after hours trades.
Today's announcement removes all uncertainly from TTPH. I suspect you'll see insider buying at these levels. I will be buying at anything under $4.
We already know the drug works. It's just a mater of paperwork at this point. Backing up the truck here...
You don't trade below cash value when you have Phase 3 drug that's already been shown to work. Approval at this point is a formality. Sales would be swift as well, there's a huge unmet need for next generation antibiotics.
This is now a value stock at these levels especially given that we already know eravacycline works against multiple resistant strains of gram positive bacteria.