Cempra's bacterial skin infection drug clears study, shares surge

Cempra Inc said that its experimental oral drug to treat acute bacterial skin infections cleared a late-stage study, bringing the antibiotic developer one step closer to getting its first drug to market.

Shares of Cempra, whose antibiotic for pneumonia was rejected in December, surged 38 percent, setting them up for their best ever one-day percentage gain.

Cempra said the drug, fusidic acid, was found as effective as the generic oral antibiotic, linezolid, to treat patients with serious acute bacterial skin and skin structure infections (ABSSSI).

The drug has been used in Europe for decades, and Cempra had recently indicated that a second late-stage study would be required to secure U.S. approval, Morgan Stanley analysts said.

Linezolidone, originally developed by Pfizer Inc, is one of the few approved oral antibiotics to fight methicillin-resistant Staphylococcus aureus (MRSA), a type of serious gram-positive bacteria that frequently causes ABSSSI.

ABSSSI, often treated with intravenous therapies, involve deep tissue or are associated with an underlying disease such as diabetes. It leads to more than 5 million hospitalizations each year in the United States and Western Europe.

Cempra's drug, if approved, will enter a crowded market. The Medicines Co's Orbactiv, Merck & Co's Sivextro and Allergan Plc's Dalvance and Teflaro are already approved for the condition.

The need for new antibiotics is mounting as patients build up resistance to older therapies. But the pace of development has lagged as they are not as profitable as other treatments - such as cancer drugs - and because aggressive marketing tactics only serve to exacerbate their overuse.

Cempra said the rate of side effects seen in the trial was similar across both treatment arms, and that it plans to meet with the U.S. Food and Drug Administration to chart a path for fusidic acid's approval.

The company is also studying the potential to use the drug to treat refractory infections in the bones and joints.

In December, Cempra's antibiotic to treat community-acquired bacterial pneumonia was rejected by the FDA, due to manufacturing issues and inadequate data characterizing its impact on the liver.

Most analysts said Cempra would likely abandon the drug after the FDA recommended testing the drug on another 9000 patients. The company had tested it on 920 patients.

Cempra's shares were up 38.1 percent at $4.35 in morning trading on Friday.