Cempra (CEMP) announced that the European Medicines Agency (EMA) validated its Marketing Authorization Application (MAA) seeking approval of oral capsule and intravenous formulations of solithromycin for the treatment of community-acquired bacterial pneumonia. The review process is now underway. CEMP has already filed an NDA in the U.S., which is currently under review.

I initiated coverage on CEMP recently, highlighting the fact that the company is a long-term buy. My fair value for CEMP is $45, which implies substantial upside from current levels. I believe CEMP has a favorable risk/reward profile, given that there is no near-term dilution risk.