$THRX
Piper Jaffray
C O M P A N Y N O T E
D e c e m b e r 1 3 , 2 0 1 2
Trius Therapeutics, Inc. (TSRX) Overweight
Top Pick for 2013 Ahead of Pivotal ESTABLISH-2 Data in 1H:13
PRICE: US$4.58
TARGET: US$13.00
Changes Previous Current
Rating — Overweight
Price Tgt — US$13.00
C O N C L U S I O N
2012 has been a memorable year for biotech. Recently though investors have become
more defensive, locking in gains and taking year-end profits. We look to hit the "reset"
button on January 1st. Despite macro issues such as the fiscal cliff taking center stage,
we expect the robust productivity of the biotech sector to result in new drug approvals
and launches, driving profitability and continued M&A. Trius is one of our Top Picks
for 2013. The primary value driver for Trius remains data from the ESTABLISH-2 trial
by early 2Q:13. Trius remains on track to file an NDA in 3Q:13 and GAIN accelerated
approval by mid'14. We see tedizolid as a differentiated MRSA drug and Trius as a
potential acquisition candidate. We reiterate our Overweight rating and $13 price target.
• Derisked Tedizolid Data Only Months Away. The primary value driver for Trius
remains data from the ESTABLISH-2 trial (n=~667) by early 2Q:13 comparing
tedizolid to Zyvox in ABSSSI. Enrollment will be more evenly balanced between the
U.S. and Europe, likely benefiting tedizolid, which does better in patients with cellulitis
and larger lesions. Assuming positive results, Trius intends to file an NDA in 3Q:13
and tedizolid could be approved under the GAIN Act by mid-2014, at least 12 months
ahead of Zyvox going generic. We now expect Trius to seek a partner for tedizolid in
Europe after ESTABLISH-2 data, bringing in non-dilutive funding and sharing future
development costs.
• Differentiated MRSA Drug. Tedizolid is administered 200mg QD x 6 days while Zyvox
is 600mg BID x 10 days. This lower pill burden and shorter duration should benefit
compliance. In ESTABLISH-1, tedizolid had less of an impact on platelets (9.2% vs.
14.9%), and fewer GI disorders (16.3% vs 25.4%, p=0.004). Tedizolid appears well
positioned against Zyvox and Cubicin, making Trius a likely take-out candidate by
either Pfizer (PFE) or Cubist (CBST) to defend their franchises.
• Other Near-term Milestones. We look for partner Bayer to begin Phase III trials of
tedizolid in Japan in January and Trius to begin Phase III pneumonia trials in 2013.
• New Gyrase Program Represents Huge Potential. Trius is developing a preclinical
dual DNA Gyrase B (GyrB) and Topoisomerase IV E (ParE) program representing an
entirely new class of drugs with broad gram-positive and gram-negative activity. The
program is fully funded through Phase I under a $28 million NIAID contract, and
could enter the clinic in 2013.
R I S K S T O A C H I E V E M E N T O F P R I C E TA R G E T
Tedizolid may fail in pivotal trials or to gain approval. Trius may not partner tedizolid
and require additional capital.
C O M P A N Y D E S C R I P T I O N
Trius is developing antibiotic drugs including tedizolid for gram+ infections.
