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Durata rises; analyst bullish on antibiotic

NEW YORK (AP) -- Shares of Durata Therapeutics Inc. climbed Tuesday after a Credit Suisse analyst began covering the company and said he thinks its antibiotic dalbavancin could be a big success.

THE SPARK: Analyst Ravi Mehrotra started covering Durata with an "Outperform" rating and a price target of $13 per share. Mehrotra said Durata could report late-stage trial data for dalbavancin by the end of 2012, and the drug could be on the market by 2014. He said the drug could become a strong new option in treating diseases like the virulent staph infection MRSA.

"With an extended half-life and convenient once-a-week dosing, we believe that dalbavancin provides a truly differentiated alternative in an otherwise highly genericized and increasingly commoditized therapeutic area," the analyst said. Mehrotra said annual sales of dalbavancin could rise to $635 million per year in 2024.

THE BIG PICTURE: Durata says dalbavancin could be used as a treatment for skin infections including the "superbug" MRSA and other drug-resistant illnesses. The Morristown, N.J., company says dalbavancin can be given just once a week.

Mehrotra said the standard drug for those infections is vancomycin, which needs to be administered two or three times a day for two weeks and sometimes longer. He said dalbavancin, which is also given by IV, could prove to be popular because it might save hospitals money because they might be able to treat MRSA infections on an outpatient basis instead of keeping the patients hospitalized for weeks at a time.

He added that the drug might be more convenient than other available treatments, and hospitals would be able to be sure patients were taking the drug.

SHARE ACTION: Durata Therapeutics shares rose 94 cents, or 12 percent, to $8.80 in afternoon trading. The company completed its initial public offering July 20. Its IPO priced at $9 per share, and the stock has traded between $10 and $6.68 since then.