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Why Analysts See Solid Upside Potential for Ocular Therapeutix (OCUL), Catalyst Pharmaceuticals (CPRX), and AcelRx (ACRX)


Ocular Therapeutix (OCUL), Catalyst Pharmaceuticals (CPRX) and AcelRx Pharmaceuticals (ACRX) look forward to important regulatory approval decisions this year. Could these catalysts give these small biotechs bigger market caps? Let’s take a closer look.

Ocular Therapeutix: Third Time’s a Charm

On July 19, Ocular announced that the FDA had accepted its New Drug Application (NDA) for Dextenza for the treatment of ocular pain following ophthalmic surgery. The resubmission is considered a class 2 response and a Prescription Drug User Fee Act (PDUFA) has been set on December 28, 2018.

An initial NDA was filed in 2015 for an ocular pain indication following ophthalmic surgery, which resulted in a July 2016 Complete Response Letter citing issues with manufacturing and control deficiencies. Per an inspection that occurred in early 2017, it had appeared that those original deficiencies were resolved and Ocular submitted a second NDA. However, in May 2017 an FDA re-inspection resulted in new deficiencies, and a subsequent second Complete Response Letter in July 2017 related specifically for particulate aluminum matter in the product.

Since the second CRL there was complete transition to new leadership who engaged veteran industry consultants to address the issues cited by the FDA. The management emphasized that the CRLs largely centered around the fact that Dextenza was being manufactured at device standards, which was not appropriate for Dextenza. Thus, a team with experience manufacturing pharmaceutical grade products was brought in and 50 quality control systems were identified to be upgraded. Tier 1 was considered critical and implemented ahead of the NDA re-submission.

H.C. Wainwright analyst Ram Selvaraju commented, “The company has made substantial improvements in the manufacturing processes and quality oversight. The FDA inspection of the manufacturing facility could occur any day now, in our view. If the inspection results are positive and Dextenza obtains marketing approval on or before the PDUFA date, we believe the drug should start generating revenue around mid-2019. The potential approval of Dextenza would validate the hydrogel platform, and the company could then start to explore new products and indications outside the field of ophthalmology, in our view.”

Selvaraju sees 80% probability of FDA Approval for Dextenza in post-surgical ocular pain and, as such, reiterates a Buy rating on Ocular shares, with a price target of $10, which implies an upside of 70% from current levels.

Wall Street agrees with Selvaraju that this biotech player is one to watch, as TipRanks analytics exhibit OCUL as a Strong Buy. Out of 5 analysts polled in the last 3 months, all 5 are bullish on Ocular stock. With a return potential of 125%, the stock’s consensus target price stands at $13.20. (See OCUL’s price targets and analyst ratings on TipRanks)

Why Catalyst Pharmaceuticals Is a $6 Stock

Investors in Catalyst Pharmaceuticals have been waiting for two-and-a-half years since its marketing application was originally submitted to see the company’s flagship candidate Firdapse approved, but they may not have to wait much longer — the FDA is expected to make a decision by November 28.

Catalyst had previously submitted an NDA for Firdapse off one positive pivotal trial in Lambert-Eaton myasthenic syndrome (LEMS). While the company believed this single trial, together with other information, would be adequate for approval, the FDA issued a Refuse-to-File letter in early 2016. Following an FDA meeting, Catalyst successfully completed a second Phase 3 trial of Firdapse in LEMS, this time under an SPA. Also per the FDA’s request, the company completed three pre-clinical abuse liability studies which indicated that Firdapse does not carry abuse potential. The company included these items as part of an updated NDA package, and reported that minutes from an FDA meeting to discuss the package noted that the proposed filing would be sufficient for resubmission.

H.C. Wainwright’s Andrew Fein opined, “As we believe Firdapse is on the cusp of an approval for LEMS, and two Phase 3 trials in congenital myasthenic syndrome (CMS) and MuSK with topline readout in the1H19 and 2H19 respectively, we think the pipeline in a drug thesis may very well materialize in the near future […] Once approved, Firdapse should have a first-to-market, seven-year exclusivity period to prevent any compounding of the same compound. As we think that Firdapse should have a straight shot for an approval and a potential launch of Firdapse for LEMS in early 2019, we note that the steady progressing of the CMS and MuSK programs could provide near-term inflection points to expand the label.”

Fein rates CPRX a Buy with $6.00 price target, which implies nearly 80% upside potential from current levels. (To watch Fein’s track record, click here)

Wall Street likes the risk/reward factor at play here, as TipRanks showcases a strong buy consensus rooting for CPRX’s success. Out of 5 analysts polled in the last 3 months, all 5 are bullish on Catalyst stock. With a whopping return potential of nearly 104%, the stock’s consensus target price stands at $6.80.

AcelRx Pharmaceuticals: All Eyes on Upcoming AdCom Meeting

It’s a very rewarding trading day for investors in AcelRx Pharmaceuticals with shares up over 35%, making the stock Wall Street’s bull of the day. Why the excitement? The FDA released its briefing document for the October 12 meeting of the Anesthetic and Analgesic Drug Products Advisory Committee (AADPAC) to review the resubmitted NDA of DSUVIA for “the management of moderate-to-severe acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate, in adult patients in a medically supervised setting.” The agency has concluded that the re-submitted NDA package supports safe and effective use as intended.

In reaction, H.C. Wainwright analyst Ed Arce reiterates a Buy rating on ACRX shares, with a price target of $7.00, which implies a potential upside of 93% from where the stock is currently trading.

Arce noted, “The Agency asks the panel to consider five draft questions two of which, overall efficacy and safety, are outside the scope of the CRL and we believe the Agency itself is comfortable with. The other three questions relate to: (1) concerns of abuse or misuse; (2) mitigation of accidental exposure by the proposed REMS, and (3) overall risk-benefit. As described below, we believe the statements and tone of the FDA reviewers are broadly supportive of approval, and as such we expect a positive AdCom panel vote (we are attending) this Friday afternoon.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ed Arce has a yearly average return of 17.0% and a 41% success rate. Arce has a -12.4% average return when recommending ACRX, and is ranked #348 out of 4909 analysts.