What happened to Omeros Corporation (NASDAQ:OMER) stock that shares are falling nearly 4% despite what on the surface should have been an FDA win? The biotech company just garnered approval for its Phase 3 protocol for its trial evaluating OMS721 in patients with IgA nephropathy (IgAN), also called Berger’s disease. The kidney study should see enrollment early February, all of which should be amazing news for Omeros shareholders. Why the sudden sell-off today?
Keep in mind, in the name of the Wall Street game, long-term investors like to operate by the rule of ‘buy the rumor, sell the news.’ Now that a key share driver has been taken off the table, positive news or not, for investors waiting for this agreement, all earnings to be captured have been gained for this specific catalyst.
Therefore, traders are shedding loose Omeros today even though a bull like Maxim analyst Jason Kolbert commends the potential for the company’s kidney drug as meaningful.”
Kolbert notes, “Recall that Omeros announced that OMS721 (MASP-2 targeting antibody) has been granted breakthrough therapy designation for the treatment of IgA nephropathy. Breakthrough therapy designation was granted based on the P2 data demonstrating statistically significant improvements in proteinuria (urine protein levels), a marker of disease progression. Omeros currently has applications pending for orphan designation and PRIME status from the EMA as well. The potential for OMS721 is substantial, and the case x case data is building that shows a superior product profile that can save lives.”
Ultimately, as far as the analyst is concerned, the path looks compelling ahead for this drug maker: “Omidria continues to be a cash engine (the means) and while concerns on pricing will remain an issue (at least through January) remember that it’s the means, not the ends—which for us, is pipeline development and specifically OMS721.”
In reaction to the FDA Phase 3 protocol approval, the analyst reiterates a Buy rating on OMER stock with a $24 price target, which implies a 28% upside from current levels. (To watch Kolbert’s track record, click here)
TipRanks highlights a strong bullish camp backing this biotech player, with 3 out of 4 analysts polled in the last 3 months rating a Buy on OMER stock and just 1 maintaining a Hold. The 12-month average price target stands at $30.00, boasting a solid return potential of 56%.