It’s going to be a good start to the week for a few companies in the biotech space, after a raft of positive news hit the wires on Friday. Here’s a look at two of the biggest movers, what the news tells us about each, and what we are looking for going forward as indicative of the companies in question being able to carry the run forward. The two companies we are looking at today are Cempra Inc (NASDAQ:CEMP) and IntelliPharmaCeutics Intl Inc (USA) (NASDAQ:IPCI).

So, first up, Cempra.

This one is one we’ve covered on a number of occasions over the last few months, with our previous coverage rooted primarily in the company’s Solithera asset. At the end of last year (December), the FDA issued a complete response letter (CRL) to Cempra regarding Solithera, and the company took a real hit on the back of the news. This comes on the back of a previous collapse, which saw the company trade down from a PPS of nearly $30 a share to in and around the $5 mark.

Well, as per the latest announcement, it looks as though Cempra is due a little reprieve. The company just put out news relating to (what I guess we could now refer to as its lead asset) Fusidic acid. The company is investigating the safety and efficacy of the drug in an oral formulation, targeting an indication of acute bacterial skin and skin structure infections (ABSSSI). The current standard of care in this indication is a drug called linezolid, which is also an oral administration drug, and the trial was set up to demonstrate non inferiority as a primary endpoint.

With these sorts of anti infection assets, it’s not generally about showing that a new drug is better than an established one, but more about proving that it can work to the same end. Bacterial resistance is a major issue, and the older, more established drugs (such as the linezolid drug used as control in this study) are quickly becoming less effective (or to put this another way, effective in a smaller number of people).

Oral Fusidic acid managed to hit its endpoints, and demonstrated non-inferiority (NI) (10% NI margin) compared to oral linezolid for early clinical response (ECR) in the intent to treat (ITT) patient population.

So, Cempra gained just short of 30% on the news of the endpoint hit, and the company currently trades for a little over $4 a share. That’s still a steep discount to last year’s highs, but it’s something for shareholders to cheer about finally, and it looks as though sentiment is going to remain strong as we move forward. We’re looking to this data forming the basis of a registration application with the FDA as the next major catalyst for the company.

Next up, IntelliPharmaCeutics.

This one is a step ahead of Cempra in the development pathway, having just announced an FDA approval of its lead development asset, Glucophage. The drug is a generic version of its already approved namesake, and IntelliPharmaCeutics has picked up approval for two formulations – one 500 mg and one 750 mg.

The currently available version (the original marketed version) of Glucophage was developed and is now marketed by Bristol-Myers Squibb Co (NYSE:BMY) in a diabetes type 2 management indication.

IntelliPharmaCeutics is up around 20% on this news, and we think that’s about right. However, it’s not a guaranteed revenues generator. Sure, this drug generates circa $600 million in wholesale revenues alone annually, but there are already a number of approved formulations on the generic market, and so IntelliPharmaCeutics is going to be competing not only with the BMY named product, but also an already established generic pool.

With that said, a small portion of the market (and we’re talking single digit percentage points here) would be enough to warrant a considerable upside revaluation for the company, so that’s what we are looking for going forward. If management can execute on a strong rollout strategy, there’s no reason this one can’t keep running. Competition risk exists, but as a standalone concern, it’s an easily justifiable on-take.

Looking at the news from a more macro perspective, it represents the seeming increase in willingness from the FDA to accept more of these ANDA-type assets for commercialization. In an environment where pricing is a very hot topic, this willingness should bode well for some of the smaller generics manufacturers going forward.