Recently, Optimer Pharmaceuticals, Inc. (OPTR) received a boost with the European Medicines Agency accepting the Marketing Authorization Application (MAA) filed by the company for its candidate fidaxomicin. Optimer is seeking marketing approval of the drug for treating patients suffering from clostridium difficile infection (CDI) and for the prevention of the recurrence of the infection in the European Union. The announcement of the submission of the MAA was made by Optimer on August 2, 2010.
 
We note that CDI is the most common nosocomial or hospital-acquired diarrhea. CDI is a serious illness caused by infection of the inner lining of the colon by C. difficile bacteria that produces toxins resulting in inflammation, severe diarrhea and sometimes death. CDI accounts for approximately 20% of the antibiotic-associated diarrhea incidences as well as many cases of antibiotic-associated colitis. The anti-infective market is one of the largest therapeutic categories worldwide.
 
Optimer also intends to file a New Drug Application (NDA)with the US Food and Drug Administration (FDA)later in the year. The FDA has granted fast track status to fidaxomicin for the treatment of CDI. The drug was also chosen to be the only investigational new drug in the Continuous Marketing Applications (CMA) Pilot 2 Program in the Division of Anti-Infective and Ophthalmology Products. The CMA designation offers several potential benefits, including a continuous FDA feedback for streamlining the development process.
 
While the company currently holds worldwide rights to fidaxomicin, it is on the lookout for a suitable partnership deal for the commercialization of fidaxomicin in Europe. Leading financial holding company, JP Morgan (JPM) has been engaged to help Optimer find a partner in Europe.
 
Optimer stated that according to data from an independent survey conducted by Decision Resources the incidence of CDI is on the rise and the antibiotic candidate would target a market with a huge unmet need on approval as treatment options for the disease are limited in Europe. The survey further indicated that approximately 70% of infectious disease specialists and internists would use fidaxomicin in first- and second-line therapy for treating CDI.
 
We remind investors that the company reported positive data from the second phase III trial conducted with the candidate in May 2010. Both phase III trials compared fidaxomicin to Vancocin, the only FDA approved antibiotic for the treatment of CDI. Fidaxomicin scored better than Vancocin on both recurrence and global cure rates.
 
We note that fidaxomicin offers some advantages over oral vancomycin and metronidazole–the two standard therapies used to treat CDI. It has a low C. difficile resistance, minimal systemic exposure resulting in a favorable safety profile, limited disruption of normal gut flora resulting in a lower likelihood of inducement of CDI and a convenient twice daily dosing regimen.
 
Our Take
 
Apart from fidaxomicin, Pruvel, an antibiotic currently in phase III trials for the treatment of travelers’ diarrhea (a form of infectious diarrhea), is another interesting candidate at Optimer. Although we are optimistic about the prospect of both these drugs in terms of their clinical trial results and regulatory approvals, we are very concerned about the competition in this area. We believe the initial sales ramp for these products will be slow. Furthermore, the excessive dependence of the company on these two candidates also concerns us.
 
Our Recommendation
 
Optimer currently has a Zacks #3 Rank, which translates into a short-term Hold rating. We are also Neutral on the stock in the long term. Our Neutral stance indicates that the stock is expected to perform in line with the US equity market over the next 6+ months. We advise investors to retain the stock over the time period.

 
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