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Ocular Therapeutix: Cantor remains confident

July 13, 2017

Despite a more than 20 percent plunge in Ocular Therapeutix Inc OCUL‘s stock Wednesday morning, analysts at Cantor Fitzgerald continue to see tremendous upside in the stock.

Cantor Fitzgerald’s Elemer Piros maintains an Overweight rating on Ocular’s stock but with a price target lowered from $35 to $21 after the U.S. Food and Drug Administration delivered a major setback to the company by rejecting its application for Dextenza, a therapy used for the treatment of post-surgical ocular pain.

 

The FDA cited in its complete response letter (RCL) manufacturing issues and isn’t related to any clinical safety or efficacy concerns, the analyst noted. As such, investors should be confident that the company will be able to take the necessary steps to resolve the issues and will resubmit its approval request for Dextenza in the future.

In fact, the FDA’s action merely places a 12-month delay on the potential launch of Dextenza, Piros continued. Ocular can resolve its outstanding manufacturing issues in three to six months and will be followed up with a “conservative” six-month review period after a resubmission request.

Nevertheless, a delay in the therapy’s timeline has financial implications to the company. Specifically, management’s focus on re-submitting its approval request will require additional cash resources and could shift other pipeline resources.

As such, the analyst’s prior estimate of Ocular’s technology platform value was lowered from $250 million to $100 million and a net present value model to derive a price target now assumes revenue from Dextenza will be generated in 2019 instead of 2018.

 

Latest Ratings for OCUL

Date Firm Action From To
Jun 2017 Morgan Stanley Downgrades Overweight Equal-Weight
May 2017 BTIG Research Downgrades Buy Neutral
Feb 2017 Cantor Fitzgerald Initiates Coverage On Overweight

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