Ophthotech (OPHT) Q1 Loss Narrower Than Expected, Sales Miss

Ophthotech Corporation (NASDAQ:OPHT) reported first-quarter 2017 loss of $1.20 per share, narrower than the Zacks Consensus Estimate of a loss of $1.31 but wider than the year-ago loss of $1.03.

Shares of the biotech company were up almost 4% in aftermarket hours on Wednesday. However, Ophthotech’s shares have underperformed the Zacks classified Medical-Biomedical and Genetics so far this year. Specifically, the company’s shares lost 43.1%, whereas the industry registered an increase of 5.2%.

Given that Ophthotech does not have any approved product in its portfolio yet, its top line solely comprises collaboration revenues. The company earns collaboration revenues under its licensing and commercialization agreement with Novartis AG (NYSE:NVS) .

Collaboration revenues decreased 89.2% year over year to $1.7 million, primarily due to decrease in shipment of Fovista active pharmaceutical ingredients (API) to Novartis. Reported revenues missed the Zacks Consensus Estimate of $1.94 million.

Quarter in Detail

Research and development expenses decreased 15.3% to $32 million, mainly due decrease in expenses related to the phase III program on Fovista, which includes manufacturing expenses.

General and administrative expenses decreased 10.2% from the year-ago period to $13.2 million due to cost control initiatives undertaken by the company.

Pipeline Update

In Dec 2016, Ophthotech along with Novartis, announced disappointing results from two pivotal phase III studies – OPH1002 and OPH1003 – evaluating Fovista, in combination with Lucentis, for the treatment of wet age-related macular degeneration (AMD). Both the studies failed to meet the primary endpoint. These results were not found to be statistically significant, thereby leading to the conclusion that adding Fovista to a monthly Lucentis regimen did not result in any improvement in vision in patients suffering from wet AMD.

As a part of restructuring activities following the failure, in Jan 2017, the company implemented a plan that it will cut its workforce by 80%, terminate and wind down the failed Fovista studies and Fovista expansion studies and cancel manufacturing commitments related to the same.

In Feb 2017, Ophthotech announced a strategic review process to acquire assets in the ophthalmology space. It will also review the scientific rationale for studying Fovista and Zimura in one or new ophthalmic indications.

Meanwhile initial top-line data from a third phase III study evaluating Fovista in combination with either Regeneron Pharmaceuticals, Inc.’s (NASDAQ:REGN) Eylea or Roche Holding (SIX:ROG) AG’s (OTC:RHHBY) Avastin is expected to be released in the second half of 2017.

Apart from Fovista, Ophthotech has Zimura in its pipeline being developed for treating patients with geographic atrophy, an advanced form of dry AMD. The company is enrolling patients in a phase II/III study on Zimura (an inhibitor of complement factor C5).

Cash Balance

The company had cash balance of $227.6 million as of Mar 31, 2017. Cash of $45 million to $55 million has been committed to implementation of reduction in workforce, winding down of Fovista phase III studies and cancellation fees related to manufacturing commitments. A portion of this cash is also allocated for the ongoing phase III study of Fovista.

The company expects to have cash balance in the range of $140 million to $160 million by the end of fiscal year 2017.

Zacks Rank

Ophthotech currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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