Omeros’ (NASDAQ:OMER) second candidate has come through. The Washington group’s anti-inflammatory agent used during lens replacement surgery, OMS302, met its primary endpoint in a big way in a phase III trial, sending shares in the young public company up by one-third to a record high of $10.22 on Tuesday.
The results need to be confirmed in a second phase III trial, but given the highly significant nature of the data executives have started talking confidently of regulatory filings later this year and a commercial strategy. With sensory organs a lucrative therapy area for developers looking to strike licensing deals, partners may not wait long to bring the Omeros drug on board.
OMS302 is a surgical irrigation solution that aims to assist surgeons during lens replacement surgeries by maintaining pupil dilation, as well as reduce post-operative pain. Maintenance of pupil dilation is important for lens replacement surgery; a pupil that shrinks during surgery increases the amount of time necessary to complete the procedure and risks damage to structures in the eye.
The 405-patient phase III US study found a significantly greater pupil diameter in those patients treated with OMS302, the primary endpoint, with equally impressive results in measurement of post-operative pain. Omeros will repeat the work with the pupil dilation maintenance and post-operative pain measures as co-primary endpoints in a trial that will include some European centres, chief executive Gregory Demopulos told investors yesterday in a conference call.
That trial will begin enrolling early next month, with data in the fourth quarter. The company expects to file for US and European regulatory approval in the first part of 2013.
It was a better result than the company’s last late-stage trial, which saw its knee-surgery irrigation solution OMS103HP fall at the last fence in anterior cruciate ligament reconstruction surgery, knocking 40% of its market capitalisation. That drug is now in a second trial, in meniscectomy procedures, results of which are due in the second half of 2012.
The results for OMS302 should heighten interest in the solution, a combination of the NSAID ketorolac and the vasoconstrictor phenylephrine. With p values well below the 0.05 for results to be considered significant potential partners could take the view that the compound has little clinical risk left and substantial commercial promise.
Ophthalmology is considered an attractive sector as an aging population virtually assures a growing number of procedures such as cataract surgery. According to EvaluatePharma data, worldwide prescription sales of eye drugs will grow from $14.6bn this year to $18.8bn in 2016, an annual growth rate of 7% , not far off the 8% growth projected in oncology.
Analysts from Wedbush Morgan Securities, one of the few analysts to cover Omeros, have now pencilled in global sales of $125m for OMS302 in 2015, although others presume that the candidate will be outlicensed. In the investor call, Dr Demopulos would not commit to a commercialisation strategy, saying the company was willing to hire an outside sales force if necessary to target the relatively small number of ophthalmologists and specialised clinics working in eye surgery.
The company ended the third quarter of 2011 – it has not reported year-end figures – with $32.9m cash. Analysts from Wedbush believe this will only be sufficient to last into mid-2012, meaning a partnership or new round of financing will be needed in coming months.
With shares having nearly tripled in the past six months, the company may want to strike with a fundraising regardless of the partnership outlook, and indeed may want to do so to strengthen its hand in licensing negotiations. The last time it raised money was in October 2010, when it sold $20m in warrants to Vulcan Capital to purchase stock at $20, $30 and $40 a share.
Analysts have also put high hopes on Omeros striking deals for its work to identify “orphan” G-protein coupled receptors through its screening platform, so even if the out-licensing negotiations on OMS302 - and OMS103HP if the second phase III is successful – are strung out, Omeros may have a third opportunity to turn on a partnership income spigot.
Omeros has produced a candidate that, while not a blockbuster, could be a tidy earner if all goes well. A partnership with one of the eye drug specialist companies may come even before the second trial can report results.