Oculis (OCS), a global biopharmaceutical company dedicated to eye care treatments, recently reported disappointing results for the most recent quarter, missing earnings expectations. Yet, it has reported substantial progress in product pipeline development. The company has seen solid recruitment for its Phase 3 DIAMOND trials for OCS-01, a candidate for treating diabetic macular edema. Furthermore, insights into the safety and potential of OCS-05, a neuroprotective candidate for acute optic neuritis, are anticipated at the end of 2024.
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With an enhanced leadership team and a refreshed balance sheet, Oculis is positioned to continue its clinical work well into 2026. The company’s significant advances make it an interesting potential target for investors interested in high-risk, high-reward biopharma stocks.
Momentum in Pipeline Development
Oculis is a global biopharmaceutical company focused on enhancing eye care and preventing sight loss. The company’s product pipeline features multiple candidates in development, including OCS-01 for diabetic macular edema and post-cataract surgery inflammation and pain, OCS-02 for dry eye disease and non-infectious anterior uveitis, and OCS-05 for acute optic neuritis.
The company has reported progress on enrollment for Phase 3 DIAMOND-1 and DIAMOND-2 trials of OCS-01 therapy for DME, with nearly 70% and 40% of patients participating respectively. The DIAMOND program has also been expanded to incorporate the expertise of leading retina experts.
The company plans to make further progress on OCS-01, such as submitting a New Drug Application (NDA)to the FDA in Q1 2025 for post-operative pain and inflammation. With positive results from the Phase 2b RELIEF trial, Oculis also plans to discuss the development of OCS-02 (licaminlimab) with the FDA in Q1 2025.
The company is also making strides with OCS-05, a novel mechanism for neuro-ophthalmic diseases. It is currently in a Phase 2 trial to treat AON, a rare disease of an acute inflammation of the optic nerve that can lead to permanent visual impairment that remains a critical unmet medical need. Initial safety results are expected by the year-end of 2024. In previous animal models of neuroinflammation and neurodegeneration, OCS-05 has shown evidence of neuroprotective activity. The Phase 1 trial saw no drug-related side effects with OCS-05, completing its trial with 48 healthy adult volunteers in the U.K.
Cash Burn, But Room to Run
The company announced results for Q3 FY2024, reporting a net loss of $23.3 million for the quarter and $64.8 million for the year-to-date, driven mainly by increases in clinical development-related expenses. Research and development costs increased to $15.0 million due to increased clinical trial expenses, notably the OCS-01 DIAMOND Stage 2 and OCS-05 ACUITY trials. General and administrative expenses also grew to $6.2 million, primarily attributed to stock-based compensation expenses.
Interestingly, the year-to-date net loss decreased compared to the previous year, primarily due to a non-recurring and non-cash merger and listing expense recorded in 2023. The non-IFRS net loss was $64.8 million or $1.63 per share, driven mainly by the advancement of the company’s clinical development programs.
As of the quarter’s end, the company reported a solid financial position with a total of $125.0 million in cash, cash equivalents, and short-term investments—an increase from the previous year’s $109.0 million – a result of proceeds from a direct offering in the second quarter of 2024. It anticipates this level of liquidity will be sufficient to support operations into the second half of 2026.
Analysts Remain Bullish
The stock has enjoyed a sustained uptrend, climbing over 75% in the past three years. It trades near the top of its 52-week price range of $10.11 – $18.00 and shows ongoing positive momentum as it trades above most major moving averages.
Analysts following the company have been bullish on the stock. For example, H.C. Wainwright’s Yi Chen recently reiterated a Buy rating on the shares with a price target of $30.00, noting promising pipeline developments and strong market potential for OCS-01 as a transformative eye drop treatment.
Oculis Holding is rated a Strong Buy overall, based on the recent recommendations from three analysts. Their average price target for OCS stock is $33.50, representing a potential upside of 97.17% from current levels.
OCS in Summary
Oculis continues to make significant strides in its product pipeline, with progress in its Phase 3 DIAMOND trials for OCS-01 and the forthcoming insights about OCS-05’s potential for treating acute optic neuritis. Its financial loss for Q3 FY2024 is balanced by its secure cash position of $125.0 million, which is expected to sustain operations into H2 2026. Boosted by continued price momentum in its shares and analysts’ bullish outlook, OCS shows promise with high-risk, high-potential returns for investors.
