Ladenburg starts ContraFect at buy; PT $3

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Ladenburg Thalmann initiated coverage of ContraFect (NASDAQ:CFRX) with a “buy” rating and $3 price target. The stock closed at $2.59 on July 9.

“We view ContraFect as a biologics story with a potential first-in-class lysin therapy for treatment of serious infections,” writes analyst Kevin DeGeeter, adding that the company should publish positive Phase 2 data in the fourth quarter of 2018 for its lead program, CF-301, in the treatment of bacteremia and endocarditis.

He also expects ContraFect to enroll a Phase 3 superiority clinical trial rather than non-inferiority studies commonly used in infectious disease clinical development, which could offer a path to premium pricing power; and demonstrate activity against biolfilms, extending use into treatment of prosthetic joint infections and other complicated gram-positive infections. 

Mr. DeGeeter said that in terms of defining a positive result from the upcoming top-line Phase 2 CF-301 dataset, “we encourage investors to focus on the seven-day test of cure data for assessing rapid onset of benefit and validation of the potency profile.”

He also pointed to the anti-drug antibody profile and relationship with clinical response to assess risk of neutralizing activity; PK/PD profile for a better understanding of dose/exposure relationship of the new class prior to beginning Phase 3 development; and incidence of C. difficile. 

“On net, we are upbeat on the outlook of a positive outcome based on strong preclinical synergy with daptomycin and would be buyers of ContraFect shares prior to the top-line data,” he added.

Stephen Kilmer