When investing, it’s not always “what you see is what you get”. There are often many underlying factors that allow a business to succeed or fail, regardless of current earnings or the stock price. But in ophthalmology – the treatment of the eyes and the visual pathways – seeing is everything.

Ocular therapy (NASDAQ: OCUL) is a biopharmaceutical company focused on innovative therapies, using its hydrogel technology to treat diseases and conditions affecting the eyes. The company has seen a lot of positive news lately, but will it be the kind of news that will translate into a big payoff for investors?

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Under the surface figures

In early August, the company released second quarter financial results which highlighted the sales success; these were led by its best-selling product, Dextenza, which is used to treat postoperative inflammation and pain. Total net product sales for the quarter were $ 11.7 million, growing 631% from the same quarter last year.

But when you dig a little deeper, the numbers may not be exactly what they appear to be year over year. It’s important to note that the second quarter of 2020 was the lowest total quarterly revenue the company has generated in the past seven quarters.

So if you only look at the growth over the period of a year ago, it may seem larger than it actually is. A more significant measure could be sequential quarterly growth, comparing the second quarter of this year to the first quarter, which (like the fourth quarter of 2020) was $ 7.3 million, which gives a percentage of still impressive growth of 60%.

It’s also worth noting that $ 11.1 million of Ocular’s $ 11.7 million in total sales in the second quarter came from Dextenza, with an additional $ 0.2 million coming from the only other commercial product from the company. company, ReSure Sealant.

With such reliance on a single product for the majority of income, cash and expense management plays an even greater role in financial stability. Overall, the company spent more in the second quarter compared to the same period last year. Research and development (R&D) expenditure increased by 50%; selling, general and administrative (SG&A) expenses increased by 69%; and marketing and sales expenses increased by 33%. Meanwhile, cash flow fell slightly by 10% between the first quarter of this year and the second, leaving the company $ 191 million at the end of June.

Impact on share price

The positive second quarter numbers have caught the attention of analysts who follow Ocular. HC Wainwright analyst Yi Chen (one of the Top 100 analysts according to TipRanks.com, with an average return of 59%) took Ocular from neutral to buy and set a price target of $ 17 on the action. Jonathan Wolleben, of JMP Securities, reiterated a buy note with a price target of $ 30.

These two goals follow on from a $ 28 price goal provided by Piper sandler July 23. Four analysts in total cover Ocular, giving it an average price target of $ 24, with the previously mentioned $ 30 and $ 17 being the highest and lowest.

This initial spike was supported by positive news from Phase 3 clinical trials related to Ocular’s flagship product, Dextenza, for new use in the fight against allergic conjunctivitis, and a first patient dosage for a Phase 2 trial of its product OTX-CSI, to treat dry eye. This news was quickly followed by an excellent third quarter earnings report, highlighting revenue growth of 250% from the previous quarter.

A future in perspective

Ocular may sound like a major product-based business, but the real key to a future of growth is what’s in the works. In a presentation on August 17 at the HC Wainwright Ophthalmology Virtual Conference, Ocular Chief Medical Officer Michael Goldstein shared the company’s pipeline milestones. He focused on four main areas: diseases of the retina, glaucoma, diseases of the ocular surface (dry eye) and the surgical space.

In the second quarter of this year, Ocular confirmed that a study in Australia showed positive results in Phase 1 trials of its intravitreal implant to help stop retinal fluid buildup for up to six months. (Products currently on the market are injected every four to eight weeks.)

Longer-term in 2021, the company anticipates an active fourth quarter, with first-rate data from phase 2 clinical trials in the treatment of dry eye disease and the launch of phase 2 implant treatment trials for glaucoma . And October 18, Ocular has a PDUFA date for OTX-DP to treat allergic conjunctivitis. The company also expects continued strong sales growth from Dextenza. In the first quarter of 2022, Ocular awaits first-order data from Phase 2 trials for the treatment of episodic dry eye.

The company has a strong portfolio of products which it believes are well suited to meet unmet needs, given the durability, tolerance and compliance issues among current products on the market; it plans to provide implant-based solutions as alternatives to self-applied droplets or physician-supplied injections. A sales growth model for its flagship product Dextenza, and a global market value totaling $ 24 billion in its four main focus areas, could give investors enough reason to buy Ocular Therapeutix.

Its current stock price hovers around $ 10, 54% of its 52-week high. When you consider the potential for a 55% gain based on the lower of analysts’ price targets at $ 17, this may be the extra boost needed. If you are a high risk, high return investor, this might be the perfect time to get started. If you’re a little more conservative, you might just have to wait a few months for additional data and the PDUFA Date in Q4.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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