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UPDATE – FDA approves plazomicin for the complicated Urinary Tract Infection indication. Blood infections indication was rejected.

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Achaogen Inc (NASDAQ: AKAO) is gearing up for its next big catalyst with a PDUFA date just a week away and it’s likely to be a very interesting one. Here’s the deal:

AKAO PDUFA Date: 6/25/2018

The PDUFA date for Achaogen’s New Drug Application surrounding Plazomicin is just around the corner, and this one is leading to some mixed feelings. Nonetheless, we believe that getting in before next Monday is going to be a winning move.

The scary part of the application has to do with the secondary indication, which has a slim to none chance of approval. About two months ago, the United States Food and Drug Administration’s Antimicrobial Drugs Advisory Committee voted with regard to the treatment. For the secondary indication, the use of Plazomicin in the treatment of bloodstream infections, the Committee voted 11-4 against the approval citing the idea that AKAO has failed to provide substantial evidence of safety and effectiveness. So, for the blood infections indication, we can expect a rejection.

However, that doesn’t mean that there’s not a diamond in the rough here. Months ago, the stock was hammered as a result of the secondary indication, bringing it to a valuation that I believe is far below where it should be. The reason? The primary indication has a good chance of approval!

The cUTI Indication Makes All The Difference

While the news surrounding the likely rejection of the blood stream infection indication for Plazomicin was negative, the stock is likely still a strong choice, and that all has to do with the primary indication AKAO was looking for with regard to the New Drug Application for Plazomicin. Essentially, the primary goal is to get approval for the use of Plazomicin for the treatment of complicated Urinary Tract Infections (cUTI). This indication has a pretty strong chance of approval. Not only was the data surrounding the treatment of cUTI positive, the FDA’s¬†Antimicrobial Drugs Advisory Committee voted in favor of the treatment for this indication.

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At the end of the day, cUTI has an overwhelmingly high economic burden on many countries, including the United States. In fact, in the United States, these infections are considered to cause or increase hospital stays by one to three days. Also, it is expected that the UTI market will only continue to grow. The expected compound annual growth rate of the UTI market is expected to run at 2.1% through 2026 and will likely continue beyond. So, should approval come down the line for this indication, as expected, the opportunity to generate revenue from the treatment is incredible.

Final Thoughts

At the end of the day,¬†Achaogen were battered and beaten as investors learned that more clinical testing would need to be done in order to see an approval for the blood stream infection indication. However, based on data from clinical trials and the recommendatio of the FDA’s Antimicrobial Drugs Advisory Committee, we expect that Plazomicin will be approved for the cUTI indication. Considering this, at the current price of $11.71 per AKAO share, we believe that the stock is greatly undervalued and has the potential to skyrocket upon the approval of Plazomicin, making this a PDUFA date that’s well worth watching.

Don't Miss The Next FDA Approval

Subscribe to PDUFA Watch from iWatch Markets and you'll receive alerts a week before the PDUFA date. We'll tell you if the drug is likely to be approved and when to be watching!

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