Saturday, November 11, 2017

Omeros Corporation: Strong Earnings And Further Upsides


  • Omeros reported strong Q3 sales growth for Omidria.
  • The FDA granted orphan drug designation for OMX-721, a highly promising molecule that can be a key growth driver.
  • With improving prospects, the company can continue to deliver substantial further upsides.

We recently interviewed the stellar trader scientist, Biotech Beast (“BB”) in our Integrated BioSci Investing interview series. In the discussion, BB recommended Omeros Corporation (NASDAQ:OMER) to investors. Based in Seattle, WA, the company is focusing on the development and commercialization of small-molecule and protein therapeutics for larger as well as orphan markets (targeting inflammation, complement-mediated diseases, and disorders of the central nervous system).
Source: StockCharts
Today, the stock popped over 32% due to strong Q3 earnings. Shares traded up $4.44 at $18.53 as of 3:30 pm ET. Accordingly, sales of lead eyes product, Omidria (indicated for use during cataract and lens replacement surgeries) came in at $21.7M. The aforesaid figure represents 26% and 125% improvement versus last quarter and the same quarter a year prior, respectively. Moreover, cash position improved to $86.8M plus the ability to borrow an additional $45M from existing lenders. Furthermore, the company also settled the patent infringement lawsuit against Par Pharmaceutical Companies (NYSE:PRX) on the favorable term in Oct. 2017.
Of note, we asked BB in the interview, 
Back in August, you published a balanced and insightful research on Omeros Corporation (NASDAQ:OMER). Notably, their lead ophthalmologic drug, Omidria, doesn’t generate robust sales. Would sales significantly increase in the future? And, are there other catalysts (or molecules in the pipeline) that can substantially improve the company’s prospects?
The expert, BB, stated that sales of Omidria might increase. Better yet, we are most interested in his response regarding a stellar molecule-in-development, OMS-721.
OMS-721 is the pipeline member which has attracted attention from investors and traders. We should be seeing more data from additional patients in the phase 2 IgA nephropathy trial of OMS-721 in early 2018 (and soon after results from a phase 3 trial in the same indication). Positive results from these additional patients in the phase 2 study will surely be well received (and bode well for the outcomes of the phase 3 study). Of note, data from the first cohort of patients in phase 2 were positive.

Notably, OMS-721, a molecule used to treat the kidney disease IgA nephropathy. Based on the company’s recent meeting with the FDA, approval can be achieved with only a single phase 3 trial: this will reduce significant expenses and expedite the approval. More importantly, the agency designated OMX-721 as an orphan drug (which will enable the company to charge a premium pricing, thus increasing its prospects substantially). Despite the risks of negative trial data, the increasing sales of Omidria and the orphan designation for OMS-721 are certainly promising developments. And, it is not far from the truth that much value remains in this company. Time will unfold more truth. 
Stay tuned for our analysis of this exciting bioscience winner. And, be sure to check out our Marketplace, Integrated BioSci Investing for the latest bioscience trading catalysts.