What happened

After reporting poor results from a trial evaluating eravacycline in complicated urinary tract infections (cUTI), Tetraphase Pharmaceuticals (NASDAQ:TTPH) plummeted 60.4% on Wednesday.

So what

Last year, Tetraphase Pharmaceuticals reported that IV eravacycline was as effective as meropenem in patients with complicated intra-abdominal infections, and currently, eravacycline is awaiting regulatory approval in that indication in the U.S. and EU. Given its success in intra-abdominal infection, its failure to produce positive results in its cUTI trial is disheartening and a bit unexpected.

A man in shirt and tie has steam coming out of his ears as he looks at a laptop computer.

IMAGE SOURCE: GETTY IMAGES.

Specifically, IV eravacycline missed both co-primary endpoints of the responder rate at the end of treatment and test-of-cure visit, and thus it failed to demonstrate non-inferiority to ertapenem in a phase 3 trial in patients with cUTI.

"We are surprised and obviously very disappointed that the IGNITE3 trial did not achieve its co-primary endpoints and are fully analyzing the data to understand this outcome," CEO Guy Macdonald said. "Independent of this outcome, we continue to move forward with our registration strategy for eravacycline in complicated intra-abdominal infections."

Now what

New antibiotics that can be used interchangeably with existing antibiotics to reduce the emergence of resistant bacteria is incredibly important and unfortunately, the cUTI data suggests that there will continue to be an unmet need for new options with this type of infection.

Tetraphase Pharmaceuticals still has a shot at winning approval for IV eravacycline, but it's anyone's guess what the sales opportunity may be for it. For comparison, Allergan's Avycaz has been on the market for use in both intra-abdominal and cUTI since 2015, and its sales were $61 million in 2017. Given the smaller potential addressable market for eravacycline following this trial failure and a market cap before the news of near $300 million, it's not surprising that investors sold shares.

 

Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.