Ocular Therapeutix Inc (OCUL) Gets A Bullish Vote Following 2Q:17 Update


Ocular Therapeutix Inc (NASDAQ:OCUL) shares are on a roughly 4% dip today after the biotech firm released second-quarter financial results- a quarter that has resulted in an 8-K filing with the OCUL team turning to a strategic restructuring that will see 19% of the total workforce cut from the roots. However, the bulls look ahead to potential savings gained from this restructuring, where the firm believes it’s cash on hand can fund operations through the third quarter of 2018.

H.C. Wainwright analyst Ram Selvaraju sees no reason to sway away from his bullish case for the firm, even if he notes there certainly is “still work to be done” when looking at the outlook (or rather, lack thereof) for leading eye drug Dextenza, designed to treat post-surgical ocular pain and inflammation and OTX-TP (travoprost insert) for the treatment of glaucoma and ocular hypertension. Ocular’s management team has its eyes set on advancing its pipeline, with Dextenza in tow, leading the analyst to forecast a net loss of about $64 million for this year, or ($2.18) per share.

Even with manufacturing challenges nipping at Dextenza’s heels, leading OCUL to receive a second complete response letter (CRL) for the drug, despite no guidance or development timeline put forward quite yet, Selvaraju maintains “manufacturing deficiencies could be resolved in six months,” approval could be secured domestically by the back half of 2018, and revenue could kickstart by 2019.

As such, the analyst reiterates a Buy rating on shares of OCUL with a $10 price target, which represents a 74% increase from where the stock is currently trading. (To watch Selvaraju’s track record, click here)

For the second quarter, Ocular posted $438,000 in sales of ReSure Sealant, hydrogel-based treatment designed to seal clear corneal incisions following cataract surgery. ReSure Sealant’s performance aligned with Selvararju’s expectations and hit flat when considering the previous quarter’s sales. Meanwhile, OCUL posted a net loss of $18.7 million, or ($0.64) per share.

Selvaraju underscores, “The company plans to produce additional commercial batches of Dextenza and submit data from these batches to the FDA with the resubmission of its new drug application (NDA). […] The company expects to apply for a transitional pass-through reimbursement status code, or C code, from the Centers for Medicare and Medicaid Services (CMS) for Dextenza to treat post-surgical ocular pain. The passthrough reimbursement status should remain in effect for three years if approved. An application to the CMS for a J-code for Dextenza has also been submitted. Of note, it is not unprecedented that a J-code application may be approved for an indication that is still in the process of clinical development.”

Moving ahead, the data read-out for the first pivotal Phase 3 trial for OTX-TP is set for the back half of 2018, with a second Phase 3 trial to commence by the second half of this year.

TipRanks analytics showcase OCUL as a Buy. Out of 5 analysts polled by TipRanks in the last 3 months, 3 are bullish on Ocular stock while 2 remain sidelined. With a return potential of nearly 176%, the stock’s consensus target price stands at $16.00.