Achaogen (AKAO) Files for Bankruptcy, Shares Plunge 65%
Shares of Achaogen, Inc. AKAO plunged almost 65% after the company announced that it has filed a voluntary petition under Chapter 11 of the Bankruptcy Code in a district court.
The company plans for a near-term sale and has filed a motion seeking authorization for a structured sale process through Chapter 11 of the Bankruptcy Code.
We remind investors that the stock was hit hard in mid-2018. Back then, Achaogen’s lead drug, Zemdri (plazomicin), was approved by the FDA for the treatment of adults with complicated urinary tract infections (cUTI).
However, the FDA issued a complete response letter (CRL) for another indication of Zemdri. The agency stated that the phase III CARE study, evaluating the drug for the treatment of bloodstream infection (BSI), did not provide substantial evidence regarding the effectiveness of Zemdri in the indication. In 2018, the drug could rake in sales of only $0.8 million despite being in the market for almost two quarters.
In November 2018, the company announced few strategic alternatives, which include workforce reduction, to cut down costs.
In sync with this, the board of directors and the management team thoroughly assessed the strategic options and financial situation, and unanimously agreed that this structured sale process is the best possible solution for the company. Achaogen has filed a series of motions with the district court to allow it to continue its normal operations during this process. The proposed bidding procedures and auction, if approved by the district court, is expected to conclude in mid-June this year.
Achaogen, Inc. Price
Zacks Rank & Other Stocks to Consider
Achaogen currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the same space are Eisai Co. ESALY, BioSpecifics Technologies Corp. BSTC and ASSERTIO THERAPEUTICS INC ASRT, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Eisai’s earnings per share estimates have increased from $1.86 to $1.95 and from $1.89 to $2.02 for 2019 and 2020, respectively, in the past 60 days.
BioSpecifics Technologies’ earnings per share estimates have increased from $2.78 to $3.01 for 2019 over the past 60 days. The company delivered a positive earnings surprise in two of the trailing four quarters at an average of 12.46%.
ASSERTIO’s earnings per share estimates have increased from 73 cents to 78 cents for 2019 and from 85 cents to 92 cents for 2020 over the past 60 days. The company delivered a positive earnings surprise in all of the trailing four quarters at an average of 73.86%.
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Eisai Co. (ESALY): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.