Of course, setbacks are common in every walk of life but are often less forgiven in the highly volatile biotech space. A fact that last week would not have gone by unnoticed by investors of Omeros (OMER).
Last Friday, Omeros shares cratered by 39% after the company reported a disappointing development for narsoplimab (OMS721), the company’s therapy for thrombotic microangiopathies (TMAs). The company said the BLA (Biologics License Application) for narsoplimab for the treatment of hematopoietic stem cell transplant-associated thrombotic microangiopathy (HSCT-TMA) was deemed by the FDA to contain deficiencies. As such, all discussions around labeling and post-marketing requirements/commitments have been indefinitely halted.
Wedbush’s Liana Moussatos is “disappointed,” admitting she initially thought the drug had potential to address this patient population’s “considerable unmet need,” given the single-arm, open-label pivotal trial’s “positive results” and the noises made by management following its “interactions” with the regulatory body.
However, the latest development adds to a previously apprehensive view, as the company’s approach of providing “selective pieces of data” has raised warning signs in the past.
“While we acknowledge Omeros is working with the FDA to resolve these issues as soon as possible, we are concerned with the implications of persistent delays,” the analyst went on to say. “The lack of additional details on the reason for the delay or a potential time to resolution creates undue uncertainty for shareholders in our opinion.”
Heeding caution, Moussatos has remained on the sidelines until now, but the latest development is reason enough to downgrade OMER stock to Sell and slash the price target from $18 to $5. Investors are facing further share losses of 29% from current levels. (To watch Moussatos’ track record, click here)
Not all on the Street are quite as bearish, with 1 Buy and 3 Holds also added into the mix, the stock has a Hold consensus rating. It will be interesting to see whether other analysts review the situation over the coming days, but for now, big gains are still projected here by most; going by the $17.33 average price target, shares are expected to appreciate by 144% over the next 12 months. (See Omeros stock analysis)
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