HCW cuts Tetraphase Pharma PT to $1.50 from $7


H.C. Wainwright slashed its price target for Tetraphase Pharmaceuticals (NASDAQ:TTPH) to $1.50 from $7 after the company unveiled a sweeping corporate reorganization. The stock closed at 74 cents on June 12.

Under the plan, Tetraphase plans to realign its financial resources to focus on the sales and marketing of its lead drug XERAVA, a tetracycline antibacterial, for the treatment of adult patients with complicated intra-abdominal infections, writes analyst Ed Arce.

Among other things, Tetraphase is eliminating its internal R&D capabilities and plans to pursue out-licensing partnerships for its preclinical and clinical stage pipeline that includes antibiotics and oncology candidates. The company also promoted COO Larry Edwards to replace Guy Macdonald as president and CEO.

In light of the restructuring and disappointing net sales guidance for the second quarter, Mr. Arce said he is removing from his model projections of XERAVA net sales in the EU; removing any nominal placeholder value for pipeline assets; increasing the discount rate to 15%, from 12.5% to reflect potential risks of securing future funding; decreasing sales growth trajectory of XERAVA in the U.S.; and updating 2019 quarterly expense projections affected by the charges associated with the reorganization.

Michelle Carr