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Ocular Therapeutix (OCUL): ReSure Warning Letter Insignificant to Pipeline, Says Analyst


Last Friday, Ocular Therapeutix (OCUL) announced that the company had received a warning letter from the FDA. The letter relates to the company’s compliance with data collection and reporting obligations in a post-approval registry study required as a condition for clearance of the premarket approval (PMA) application for ReSure Sealant.

In a research note issued to clients today, H.C. Wainwright analyst Ram Selvaraju noted that “the study was agreed upon by the previous management team and has been found to be impractical to implement in its current design. The current management has already been in discussion with the FDA before receiving the letter. We expect the company to work with the FDA to resolve this issue, while ReSure remains on the market.”

As such, the analyst reiterates his bullish call on OCUL with a Buy rating and $10 price target, which implies an upside of 70% from current levels.

Ocular’s lead product candidate Dextenza has a Prescription Drug User Fee Act (PDUFA) date of December 28, 2018 for the treatment of ocular pain following ophthalmic surgery. Importantly, Selvaraju points out that “the warning letter has no impact on the ongoing regulatory review process of Dextenza.”

“As we roll forward the DCF analysis, our estimated market value of the firm has increased from $435M to $456M. Assuming 46.7M shares outstanding at the end of 3Q19, this translates to a per share value of roughly $10,” Selvaraju concluded.

Overall, when it comes to Wall Street’s bet, the odds are on this biotech player, with TipRanks analytics showcasing OCUL as a Strong Buy. Out of 6 analysts polled in the last 3 months, all 6 are bullish on Ocular stock. With a return potential of nearly 128%, the stock’s consensus target price stands at $13.33. (See OCUL’s price targets and analyst ratings on TipRanks)