HCW starts Melinta Therapeutics at buy; PT $14

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H.C. Wainwright initiated coverage of Melinta Therapeutics (NASDAQ:MLNT) with a “buy” rating and $14 price target. The stock closed at $4.30 on Sep. 10.

Melinta is focused on its four marketed drugs, especially its two recent approvals: Vabomere, which was "soft launched" by The Medicines Co. in October, and Baxdela, launched on Feb. 5.

“Management believes the peak sales potential of its combined portfolio is $1-billion, and we believe the approximate breakdown of that assessment (out eight-plus years) is about $450-million for Vabomere (dependent on growing CRE resistance to Avycaz); $400-million Baxdela; and $150-million for Orbactiv and Minocin combined,” writes analyst Ed Arce.

While we believe this scenario is a plausible projection (if perhaps near the high end), especially if Baxdela is approved for coronary-aortic by-pass, the $14 price target is based on a more conservative peak sales estimate of $706-million in 2026, he added.

Mr. Arce said Melinta’s 68.3% share price drop since March 8, versus the 4.9% gain by the NASDAQ Biotechnology Index is overdone, “and we believe, at current levels, Melinta offers a compelling risk-reward,” both in the near term and over the longer term. “We would be buyers now, before the growth trends become obvious,” he added.

Stephen Kilmer