Ophthotech's (OPHT) Q4 Loss Wider, Gene Therapy In Focus

Ophthotech Corporation (NASDAQ:OPHT) reported adjusted loss of 53 cents per share in fourth-quarter 2018, wider than the Zacks Consensus Estimate of 37 cents and the year-ago figure of 26 cents. The adjusted loss excluded gain on extinguishment of royalty purchase liability due to the termination of the company’s royalty purchase and sale agreement in December 2018 with Novo Holdings A/S, a holding company for Novo Nordisk (NYSE:NVO) .

With no approved products in its portfolio, Ophthotech derives revenues from milestone and other payments under collaborations. However, there were no such revenues in the quarter.

In full-year 2018, the company did not generate any revenues from collaboration versus $210 million in 2017. The company had earned collaboration revenues under the licensing and commercialization agreement with Novartis (NYSE:NVS) that ended in October 2017, following the failure of Fovista development program.

Quarter in Detail

Research and development expenses in the fourth quarter increased a mammoth 103.7% from the prior-year quarter to $16.1 million, mainly due to expenses related to the acquisition of Inception 4, its HtrA1 inhibitor program, along with costs associated with the ongoing Zimura and gene therapy development programs.

General and administrative expenses decreased 17.4% from the year-ago period to $5.7 million due to lower personnel, infrastructure and operational costs.

Pipeline and Other Updates

Ophthotech’s lead pipeline candidate Zimura is being evaluated in several mid-stage clinical studies for the treatment of dry and wet AMD, Stargardt disease, geographic atrophy and idiopathic choroidal vasculopathy (“IPCV”).

Last November, Ophthotech announced preliminary safety data from the phase IIb study evaluating Zimura in combination with Roche’s (OTC:RHHBY) Lucentis in patients with wet AMD, who were previously not treated with an anti-VEGF drug. Data showed that the combination was well tolerated in patients after six months of treatment.

In October 2018, the company completed patient enrollment in the phase IIb study evaluating Zimura in geographic atrophy and secondary to dry AMD, with initial top-line data expected in fourth-quarter 2019.

Ophthotech is currently enrolling patients in a phase IIb study evaluating Zimura in Stargardt disease. Initial top-line data is expected in the second half of 2020.

Importantly, in 2018, the company initiated several innovative gene therapy collaborations to discover and develop next-generation therapies for the treatment of inherited retinal diseases.

Ophthotech has a global license agreement with the University of Florida Research Foundation, Incorporated and the University of Pennsylvania for a novel adeno-associated virus (AAV) gene therapy candidate for the treatment of rhodopsin-mediated autosomal dominant retinitis pigmentosa (RHO-adRP). The company plans to initiate a phase I/II on the same in 2020.

In October 2018, Ophthotech announced its second series of gene therapy agreements with the Universities of Pennsylvania and Florida to gain rights to another adeno-associated virus (“AAV”) gene therapy for treating Best vitelliform macular dystrophy, also known as Best disease. The company plans to initiate a phase I/II on the same in 2021.

In October 2018, Ophthotech acquired privately-held Inception 4, Inc. With this acquisition, Ophthotech gained worldwide development and commercialization rights to the retinal therapy candidate, as well as $6.1 million in cash. Versant Ventures, which owned Inception Inc., now owns a stake of approximately 12.5% in Ophthotech.

Cash Balance

Ophthotech’s cash balance was $131.2 million as of Dec 31, 2018 compared with $135.2 million on Sep 30, 2018.

The company expects cash and cash equivalents in the range of $80-$85 million in 2019 (versus previous expectation of $125-$130 million), taking into account the impact of Inception acquisition, along with gene therapy pipeline expansion and continuation of Zimura development.

Zacks Rank

Ophthotech currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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