Chapel Hill drug developer Cempra, which at the end of this month expects to hear from federal regulators about its bid to win regulatory approval of its first drug, has named an acting chief executive following the retirement of co-founder Prabhavathi Fernandes.
Fernandes’ retirement as president and CEO, announced Monday and effective immediately, drew a mixed reaction from Wall Street analysts.
Most said her retirement doesn’t affect their view of how the Food and Drug Administration will act on the company’s application to win approval of the experimental antibiotic Solithera. But one analyst saw it differently, viewing it as a harbinger of bad news.
Cempra has named board member David Zaccardelli as acting CEO. Zaccardelli, who joined Cempra’s board in August, previously held several senior management positions at United Therapeutics, including chief operating officer. United Therapeutics employs hundreds of workers in Research Triangle Park and generated about $1.5 billion in revenue last year.
“Though we believe investors will view new leadership appointments favorably, we do not believe this materially alters the outlook for Solithera, which faces both manufacturing and regulatory hurdles,” Morgan Stanley analyst Andrew Berens wrote in a research note. He also said that Fernandes’ retirement as CEO puts the company “in a stronger position going forward.”
Cempra’s shares plunged 61 percent last month after Food and Drug Administration staffers concluded that Solithera, which would be used to treat pneumonia, poses a potential risk of liver damage. An FDA advisory board subsequently concluded, by a 7-6 vote, that the drug’s efficacy outweighed the risks.
The agency typically follows the lead of its advisory committees but isn’t required to do so.
In addition, Cempra is in the process of switching contract manufacturers after the FDA raised concerns about the plant in India that it was planning to use to produce Soliterha.
Cempra spokesman John Bluth wrote in an e-mail that Fernandes’ retirement was of her own accord and noted that she will continue as an adviser to the company.
“Dr. Fernandes had been president and CEO since Cempra’s inception in 2006 and felt it was the right time to transition to more operationally focused leadership. We look forward to her ongoing involvement as a scientific adviser to the company.”
Bluth also said that Fernandes “has built a strong management team and laid the foundation that positions Cempra as a pioneer in antibiotic development.”
Fernandes, whose retirement was effective immediately, wasn’t available for additional comment. Cempra’s latest proxy, filed in April, lists Fernandes’ age as 67.
Robert W. Baird & Co. analyst Brian Skorney took Fernandes’ departure as a negative sign, noting that it’s “unlikely that a CEO would depart right before the most important day in the company’s history if (the Food and Drug Administration’s decision) was going to be favorable.”
Skorney, according to Bloomberg News, views rejection by the FDA of the antibiotic Solithera as the likely scenario.
Bluth declined to comment on Skorney’s research note.
The FDA is expected to act on Cempra’s application for approval of the oral version of Solithera on Dec. 27 and on the intravenous version on Dec. 28.
Several analysts expect the FDA to issue what is known as a “complete response letter” with regard to Solithera. That would be neither approval or rejection; instead, the agency would outline additional steps the company must take to win approval.
Cempra has not developed a timetable for naming a permanent successor to Fernandes, Bluth said.
In addition to naming Zaccardelli acting CEO, David Moore, who joined Cempra as chief commercial officer in 2014, was promoted to president and chief commercial officer.