Raymond James Downgrades Ocular Therapeutix, Remains Bullish On Pipeline

Ocular Therapeutix Inc OCUL's failure to ace a late-stage study of its glaucoma treatment candidate has tempered Raymond James' optimism, although the firm is still bullish.

The Analyst

Dane Leone downgraded Ocular from Strong Buy to Outperform and reduced the price target from $11 to $5.

The Thesis

Following the failure of OTX-TP in the late-stage study and uncertain path forward, Raymond James removed all revenues for the candidate in its financial model, Leone said in the Tuesday downgrade note. (See his track record here.) 

Instead of moving ahead with a confirmatory Phase 3 study, the company has now put the study on hold until the data can be analyzed and a meeting can be held with the FDA, the analyst said. 

Raymond James expects the company to have a follow-up meeting with the FDA by the third quarter of this year. 

Ocular said the study failure may have been due to certain design changes between the Phase 2 and Phase 3 studies, Leone said. 

The average lowering of interocular pressure with OTX-TP across weeks six and 12 was 0.59 and 0.87 mmHg, respectively, compared to the 1.5 and 1.8 mmHg achieved with Aerie Pharmaceuticals Inc AERI's Roclatan, according to RayJay. 

Roclatan, a once-daily fixed dose combination of netarsudil and latanoprost, was approved by the FDA in March to reduce elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension.

Raymond James rates Ocular an Outperform despite the setback on the belief the company can drive significant value from deeper pipeline projects such as OTX-TXI, the analyst said. 

The Price Action

At last check, Ocular shares were sliding by 27.3 percent to $2.45. 

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