Wedbush Recommends Buying Cidara Shares After Rezafungin Deal

Cidara Therapeutics Inc CDTX announced a development and commercialization deal Tuesday for its lead antifungal investigational drug, rezafungin.

The Analyst

Wedbush analyst Robert Driscoll upgraded Cidara from Neutral to Outperform and upped the price target from $2 to $4.

The Thesis

Cidara's partnership with Mundipharma is a significant positive, given the $30-million upfront payment, $9-million equity investment and near-term payments of $42 million, Driscoll said in a Tuesday upgrade note. (See his track record here.) 

In return, Mundipharma receives global commercial rights to rezafungin excluding the U.S. and Japan, the analyst said. 

Wedbush sees the total deal value to be in excess of $534 million.

The equity investment will be enacted by way of a private placement of 4.78 million new shares issued at $1.884 each, a 20% premium to the 10-day volume weighted average price, he said. 

"Additionally, we see substantial synergies between both companies given Mundipharma already has a significant global commercial reach with annual sales over €2B in a variety of therapeutic areas including diabetes, respiratory, oncology, pain and biosimilars," Driscoll said. 

The firm recommends buying Cidara shares given the removal of the financing overhang as well as an improving reimbursement environment for antibacterials and antifungals.

Specifically, Wedbush encourages long-term investors to buy into the shares ahead of the mid-2020 Phase 3 ReSTORE data readout.

The Price Action

Following the roughly 40% rally on Tuesday, Cidara shares were giving back some of the gains, trading down 11.91% at $2.07 at the time of publication Wednesday. 

Related Links:

The Daily Biotech Pulse: Puma Leaps, Aerie Borrows, Hepion Back In Nasdaq's Good Books

Cidara Rallies On Development Deal For Lead Antifungal Medication