Shares of Tetraphase Pharmaceuticals Inc. (NASDAQ:TTPH) have gained almost 40% in the past one month and had reached an all time high of $32.93 On December 10, 2014. The stock has been outperforming the broader market on the buyout buzz. 

After the announcement of takeover of its competitor Cubist Pharmaceuticals Inc by Merck & Co. Inc., there are predictions that the antibiotic drug-maker Tetraphase Pharmaceuticals Inc may put itself up for sale. The Merck-Cubist merger has led the investors to believe that pharmaceutical giants may be looking to add bacteria-resistant drugs to their portfolios, and Tetraphase could make a good option.

Tetraphase is a developmental-stage company focused on antibiotics for the treatment of diseases caused by multi-drug resistance (MDR), similar to Cubist’s portfolio. MDR refers to a condition where infections do not respond to generally used medications as the viruses, bacteria, and other organisms that cause those infections evolve and become resistant to the drugs. These organisms are often referred to as superbugs.

So far, this segment has been neglected by the large pharmaceuticals due to lesser scope for high profit margins, as is the case for other rare diseases or deadly conditions. However, over time, the incidence of MDRs as well as associated costs is believed to be on a rise due to doctors overprescribing antibiotics. In 2013, the US Centers for Disease Control and Prevention estimated that two million people in the US develop MDR infections annually, leading to 23,000 deaths each year. Hence, as the market gets lucrative, companies with antibiotics for MDR infections seem to be becoming attractive targets for larger players.

The Massachusetts-based company released positive results for the first stage of the Phase III study for the cUTI indication in September, where Eravacycline showed greater efficacy compared to Johnson & Johnson’s oral antibiotic Levaquin, the commonly prescribed drug for the disease.