With positive late-stage clinical trial data for its lead drug now in hand, Cempra (NASDAQ: CEMP) is preparing a $100 million stock offering to finance further work on the antibiotic, which some observers say has blockbuster potential.
CEO Prabha Fernandes is not giving a timeline for filing solithromycin’s new drug application (NDA) with the Food and Drug Administration, but she is signaling why the Chapel Hill, NC, company would need to raise more money. Although Cempra’s early plan was to find a large pharmaceutical partner to commercialize the antibiotic, which it believes could help address growing antibiotic resistance, Fernandes now says the company is preparing to bring the drug to market on its own.
“We are not out there looking for partners,” she said on a Monday conference call with analysts. “Obviously, we have to do our fiduciary responsibility. If some partner wants to talk to us we will meet them and keep them informed. But we are very focused on getting the IV study done, getting the NDA done, and as you know, [Chief Commercial Officer] David Moore is getting all the pre-commercial activities … launched.”
Meanwhile, Cempra reported initial clinical Phase 3 trial results showing that solithromycin was statistically “non-inferior” compared to Bayer’s (XETRA: BAYN) antibiotic moxifloxacin (Avelox) as a treatment for community-acquired bacterial pneumonia. That trial evaluated a pill form of the drug; a second Phase 3 study testing an intravenous version is currently enrolling patients.
Solithromycin comes from a class of drugs called macrolides, which includes antibiotics used to treat bacterial infections including pneumonia and Legionnaire’s disease. But it has been years since a new macrolide has reached the market; the last was azithromycin, approved in 1988. Fernandes says Cempra’s trials could not compare its drug against azithromycin because of growing resistance to that drug.
Instead, Cempra tested its drug against the Bayer drug, which is from a class of drugs called fluoroquinolones. Fluoroquinolones have also yielded effective and commercially successful drugs, such as moxifloxacin and levofloxacin (Levaquin), a drug that was a blockbuster for Johnson & Johnson (NYSE: JNJ) until losing patent protection in 2007. But these drugs are also associated with a risk of tendonitis or tendon rupture. No such injuries were observed in the study of the Cempra drug and the company does not expect that risk from macrolides.
Cempra says it had $95.1 million in cash and equivalents as of Nov. 30, 2014. The planned $100 million stock offering follows stock sales in the last three months that raised a total of $38 million, according to securities filings. The new offering is part of a shelf registration Cempra has on file with the Securities and Exchange Commission. Cempra did not state how many shares it would sell and at what price, but when the offering starts, underwriters will have 30 days to buy additional shares valued at $15 million.
Cempra says in its filings it will use proceeds from the offering to fund R&D, including the clinical trial and regulatory work for its lead antibiotic, as well as other compounds in its pipeline. Cempra has also found opportunities overseas. A licensing deal with Toyama Chemical Co. could pay Cempra up to $60 million in milestones if Toyama can bring the drug to market in Japan.
The blockbuster expectations for solithromycin reflect the wide treatment potential of the drug. Not only is Cempra developing intravenous and pill versions of the antibiotic, which could be used in inpatient and outpatient settings, respectively, it is also creating a liquid form of the drug for children. And Fernandes says she hopes to one day test the drug on pregnant women, for whom antibiotic options are currently limited.
The Cempra antibiotic has also shown activity against an array of bugs. In addition to the pneumonia studies, a Phase 3 trial of the drug in gonorrhea and chlamydia infections is already underway. Cempra is also studying the drug in variety of pediatric infections, such as sinusitis, exacerbations from cystic fibrosis, and skin and soft tissue infections, under a $58 million contract from the Biomedical Advanced Research and Development Authority. That 2013 contract was initially awarded to research the Cempra drug as a potential treatment for infections from bioterror pathogens.
Cempra expects data from its second pneumonia Phase 3 trial in April. That study will evaluate the intravenous version of the drug against moxifloxacin. While Fernandes says that it’s hard to predict trial enrollment, she hopes the study results so far help far boost enrollment in the intravenous study, which will involve more trial sites in more countries.
“Given that the rates of pneumonia are generally much higher in the winter months, we expect to be learning a lot about our enrollment trajectory in the coming weeks,” she says.