Biopharmaceutical company Ocular Therapeutix (NASDAQ:OCUL) recently announced encouraging progress in the Phase 3 trials of its leading treatment candidate, Axpaxli, for wet age-related macular degeneration (wet AMD). The potential success of Axpaxli could revolutionize wet AMD treatment by reducing the frequency of injections needed, thus opening the door to a significant market. This potential upside makes the stock an intriguing opportunity for growth-oriented investors interested in biopharma.
Ocular Shifting Focus to New Retina Treatment
Ocular Therapeutix is a biopharmaceutical company developing and commercializing therapies for eye diseases and conditions. With a robust product pipeline, the company aims to streamline complex treatment routines and position itself as a key player in the ophthalmic market.
The company’s current offerings include a range of FDA-approved drugs, such as DEXTENZA, for treating ocular inflammation, pain, itching, and allergic conjunctivitis. However, Ocular is now focusing its resources on the clinical development of AXPAXLI (OTX-TKI) for treating wet age-related macular degeneration.
The company demonstrated positive progress with accelerated patient enrollment for SOL-1 ahead of the projected timeframes. With phase 3 trials underway for Axpaxli in treating wet age-related macular degeneration and phase 1/2 trials for diabetic retinopathy, the company is confident in its potential to disrupt the existing treatment paradigm. Wet AMD remains undertreated today due to the treatment burden for a total addressable U.S. market of 9.2 million people.
Analysis of Ocular’s Financial Results
Ocular Therapeutix’s first quarter 2024 results fell short of analysts’ expectations. The company reported a revenue of $14.77 million, which fell short of the expected $15.41 million. Despite missing estimates, Ocular Therapeutix saw an increase in total net revenue of 10.4% over the previous year. An increase in sales of DEXTENZA primarily fueled this growth.
However, the company’s net loss widened signiifcantly in Q1 2024 to $64.8 million previous year’s Q1 net loss of $30.3 million. Earnings per share (EPS) of -$0.49 also missed consensus expectations of -$0.19.
The company finished the quarter with cash and cash equivalents at $482.9 million. This was boosted significantly by a private placement of common stocks and pre-funded warrants in February 2024, which generated gross proceeds of $325 million. Given the projected cash inflows, Ocular Therapeutix is confident its current cash reserves are adequate to cover its planned expenditure until 2028.
What is the Price Target for OCUL Stock?
Analysts following Ocular Therapeutix have been bullish on the stock. For example, Piper Sandler analyst Biren Amin recently initiated coverage of the stock with an Overweight rating and a $15 price target, noting that Axpaxli is positioned for success.
Overall, Ocular Therapeutix is rated a Strong Buy based on five Buys versus one Hold recommendation. The average price target for OCUL stock is $15.17, which represents a potential upside of 176.32% from current levels.
With a beta of 1.46, OCUL stock has been volatile, moving from $4 to over $10, then back to $4 over the past six months. It trades at the lower end of its 52-week price range of $2.00 to $11.31 and shows positive price momentum, trading above its 20-day (5.48) and 50-day (5.97) moving averages. With a P/S (price-to-sales) ratio of 8.84x, it appears relatively undervalued to peers in the Biotechnology industry, which has an average P/S ratio of 10.77x
Final Analysis on OCUL
Despite a challenging Q1 2024 performance, with revenues missing estimates and a widened net loss, Ocular Therapeutix’s focus on developing and commercializing Axpaxli for treating wet age-related macular degeneration offers significant potential. Additionally, the company’s strong financial position, supported by the recent private placement, ensures continued investment in its product pipeline. The stock represents an intriguing opportunity with potential upside for growth-oriented investors.
