As FDA assesses its antibiotic, Cempra bids longtime CEO Prabha Fernandes goodbye
Just weeks after an expert panel unenthusiastically endorsed its new antibiotic solithromycin, Cempra $CEMP has chosen to switch out CEOs. Company co-founder and CEO for the last 10 years, Prabha Fernandes is out and board member David Zaccardelli is stepping in on an interim basis.
As part of the transition, David Moore was promoted to president and chief commercial officer.
Fernandes will continue to do some work for the company as a scientific consultant, which an 8-K notes will be worth $35,000 a month. She gets $45,000 for waiving her notice period provision in her contract, plus a $280,260 bonus for the year and an annual salary of $540,000 over the next 18 months. That should put the total compensation at more than $1 million.
Zaccardelli gets a three-month contract, extendable in one-month increments, at an annual rate of $540,000.
Cempra came away from its AdComm date with a squeaker vote — 7 to 6 — in its favor.
The committee frequently zeroed in on the crux of the issue: New antibiotics are badly needed and solithromycin also met the pivotal endpoint on non-inferiority. But the antimicrobial drugs advisory group had to balance that against troubling signs of liver toxicity that could harm patients. And analysts were left skeptical that Cempra, even if it gets a formal OK, would be able to effectively market it.
Baird’s Brian Skorney isn’t optimistic:
Fundamentally, we believe the value of the drug has been permanently impaired by the extent of liver toxicity risks outlined by the FDA that were previously undisclosed. The stock is likely to see a near-term boost if there is a path to solithromycin approval without additional clinical studies. But we believe it just sets up a more prolonged commercial death as the company will need to repeatedly raise capital to fund the sales of a drug that may never generate a profit. A straight up rejection may be, in the long term, the best thing for shareholders.
“With manufacturing and regulatory progress to achieve the approval of solithromycin as the company’s top priority, we believe Dave Zaccardelli’s operational and commercial pharmaceutical leadership experience will add tremendous value and direction to the Cempra team as we continue to work to bring urgently needed new antibiotics to patients,” said Garheng Kong, MD., PhD, chairman of Cempra.