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Achaogen Inc (NASDAQ:AKAO) Is Getting A Jump On Commercialization With Conference Appearances

Achaogen Inc (NASDAQ:AKAO) Is Getting A Jump On Commercialization With Conference Appearances
Written by
Chris Sandburg
Published on
April 3, 2017
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Achaogen Inc (NASDAQ:AKAO) is up close to 100% year to date, and around 400% if we extend the period in question to six months. We first highlighted the company as being one to watch at the start of December 2016. At the time, Achaogen went for in and around $12 a share. At last close, the company traded for a little above $25 a piece.We think this is just the start of a longer term revaluation, and that there's some near term run room on the current price. Here's what we're looking at to confirm these expectations.This company is a late stage biotechnology player with a focus on bringing drugs to market aimed at treating multi-drug resistant (MDR) gram-negative infections. The company's lead development asset is a drug called plazomicin. It's basically an established antibiotic called sisomicin that Achaogen has altered slightly to try and overcome the resistance issue that has developed on the back of extensive use of sisomicin over the past 40 years or so.We went into detail as to why this sort of drug is necessary at the moment in our previous coverage, so readers can get up to speed here. As a quick recap, there's a huge problem at the moment with antibiotics (especially those that target gram-positive bacteria, like sisomicin) losing effectiveness in large portions of the population. In many cases, the conditions that these antibiotics are designed to treat have basically no option outside of the standard of care (and in many cases now useless) asset.Achaogen has identified a couple of these conditions (as a starting point) and is using them as a Launchpad for plazomicin. The company investigated the drug as part of two phase III trials in the US and Europe – one investigating efficacy in urinary tract infections, and the other looking at efficacy in the treatment of bacterial infections on the back of what's called carbapenem-resistant Enterobacteriaceae (CRE).Both trials demonstrated a degree of efficacy of plazomicin equal to or superior to the current standard of care in the respective spaces, and as we outlined last time, the drug looks like it should have no problem picking up a regulatory green light in both Europe and the US when Achaogen submits a registration application for both.We ended our previous coverage with the following conclusion – that the company's valuation going forward is going to be rooted in how effectively it can market the drug, and how quickly it can pick up a market share in the target indications.We've been watching management closely for clues as to how it can perform against the above conclusion, and things are looking good. It looks as though the company has recognized the importance of getting a jump on a regulatory thumbs up, and is getting its asset in front of as many related-eyeballs as possible before it even submits an NDA.Management will be on stage at Needham & Company’s 16th Annual Healthcare Conference this week. The company presented at the SHEA Spring 2017 Conference last week. Both of these presentations are basically pitches to the people that are going to be prescribing this asset once (if) it's approved. The former was particularly smart, using some CRE data that basically points to a huge increase in CRE infection over the last ten years, and what this might mean going forward running parallel to increased SOC resistance, as a kicker from which to highlight the benefits of plazomicin hitting shelves.Near term, then, it’s all about raising awareness, so that when the agencies in the US and Europe green light the drug, the company can get off to a running start with revenues collection.As such, we expect more of these sorts of presentations throughout spring/summer, as Achaogen heads into submission. As awareness expands, pre-submission loading should increase. In terms of specific catalysts, we're watching a 2017 NDA submission to the FDA, and an early 2018 submission to the EMA, as value events.We will be updating our subscribers as soon as we know more. For the latest updates on AKAO, sign up below!Disclosure: We have no position in AKAO and have not been compensated for this article.

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