A Bug’s Death New Antibiotics for Superbugs - Gabelli Analyst Kevin Kedra (4-5-2018)

A Bug’s Death New Antibiotics for Superbugs - Gabelli Analyst Kevin Kedra (4-5-2018)

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Transcript:
The emergence of multi-drug resistant bacteria, or so-called superbugs, is becoming a global public health crisis. The CDC estimates that these superbugs infect 2 million Americans each year, leading to 23,000 deaths. New antibiotics are needed to treat these infections, and we expect to see an influx of potentially 6 new approvals over the next 18 months.

Most of these upcoming approvals, along with the two approved in 2017, are coming from a handful of small biotech companies. These companies – Achaogen, Melinta Therapeutics, Motif Bio, Nabriva Therapeutics, Paratek Pharmaceuticals, and Tetraphase Pharmaceuticals – could see a wave of consolidation and deal activity that will leverage commercial infrastructures, extract cost synergies, and de-risk product portfolios with multiple antibiotics.

Our favorite names in the antibiotic sector are Achaogen and Paratek. We expect both companies to gain FDA approval of their respective antibiotics, plazomicin and eravacycline, later this year, and believe that sales of each antibiotic could surpass $100 million by 2021. Achaogen trades at $13 per share, and we estimate a 2019 PMV of $18 per share. Paratek also trades at $13 per share and we estimate a 2019 PMV of $24 per share.



Source: Gabelli TV (via YouTube)
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