NEW YORK (TheStreet) -- Tetraphase (TTPH) - Get Report is getting ready to report data from the lead-in stage of a phase III study of eravacycline in which the experimental antibiotic is first given by intravenous infusion and then transitioned to an oral form. The study enrolls patients with complicated urinary tract infections (cUTI). Tetraphase has told investors to expect results in September.

The most significant issue surrounding the study, known as IGNITE 2, is that the oral formulation of eravacycline has a relatively low bioavailability (at most 30% but more likely in the 20% to 25% range) compared to other oral antibiotics that range from 50% to 90% plus. This means the oral dose requires more drug to generate the serum concentrations needed to produce the desired effect. The unabsorbed drug also sits in the gastrointestinal tract with the potential to affect the natural bacterial flora of the gut and create tolerability issues.

Tetraphase designed the lead-in stage of the IGNITE 2 study for two primary reasons: 1) Determine if a low or high dose of eravacycline offers the best efficacy/side effect profile; and 2) Provide safety and tolerability data to make a decision about further developing eravacycline as an oral antibiotic. If an oral dose of eravacycline doesn't work or isn't adequately tolerated, Tetraphase will just continue developing an intravenous formulation of the antibiotic.

While it is unclear what the data would need to look like to axe the trial, I suspect it will depend on the rate of patient drop outs. In other words, you would expect GI discomfort to be an issue, but are the patients able to soldier on to complete the treatments? Too many patients dropping out of the study will lower the intent-to-treat efficacy because they will count as failures. Tetraphase can still analyze the study for efficacy on a per-protocol basis using patients who completed treatment. A less likely but more significant red flag would be the development of c. difficile infections.

I do not think there is an overwhelmingly clear view of how the eravacycline trial will read out but I would lean towards the oral formulation showing GI tolerability issues but not enough for the company to end the trial. At its current valuation, I would also add that the market is taking the potential risks seriously, so the risk/reward may be skewed for the bullish view. That being said, bad data would certainly send Tetraphase's stock price lower.

As I have noted before, eravacycline still has a decent commercial prospect as an intravenous-only antibiotic so a sell off on bad data from the intravenous-to-poral study could provide a compelling long-term entry point. If the data are positive, however, then this de-risks the oral formulation greatly and increases the commercial potential. 

Sobek has no position in Tetraphase.

David Sobek has been writing on biotech for a number of years through various outlets with a general focus on small cap oncology and antibiotics companies. He received his PhD in political science from Pennsylvania State University in 2003 and a BA in international relations from The College of William and Mary in 1997.