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Ophthotech (OPHT) Q3 Earnings Beat, Gene Therapy in Focus

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Ophthotech Corporation (OPHT - Free Report) incurred a loss of 41 cents per share for the third quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of 43 cents. The company had recorded net income of $5.25 per share in the year-ago quarter.

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. The company had reported $206.7 million in revenues in the year-ago period. The company had earned collaboration revenues under the licensing and commercialization agreement with Novartis (NVS - Free Report) that ended in October 2017, following the failure of Fovista development program.

Ophthotech’s shares have underperformed the industry so far this year. The stock has lost 27.6% compared with the industry’s decrease of 19.6%.

Quarter in Detail

Research and development expenses in the third quarter decreased 12.1% to $9.4 million, mainly due to termination of the Fovista development programs in wet age-related macular degeneration (“AMD”) and lower personnel costs.

General and administrative expenses decreased 15.5% from the year-ago period to $6 million due to lower personnel, operational and infrastructure cost.

Concurrent with earnings release, Ophthotech announced its second series of gene therapy agreements with the University of Pennsylvania and the University of Florida to gain rights to another adeno-associated virus (“AAV”) gene therapy for treating Best vitelliform macular dystrophy, also known as Best disease.

Ophthotech also announced the acquisition of privately-held Inception 4, Inc through share issuance. With this acquisition, Ophthotech added Inception’s small molecule inhibitors of HtrA1 (high temperature requirement A serine peptidase 1 protein), to its pipeline.

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, is now the major shareholder of Ophthotech. Versant Ventures has substantial geographic reach. It will help Ophthotech in exploring new opportunities for its pipeline.

Pipeline Update

The company’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”).

In April 2018, the company announced the completion of enrollment of patients in a phase IIa study, evaluating Zimura in combination with Roche’s (RHHBY - Free Report) Lucentis, an anti-vascular endothelial growth factor (“VEGF”) agent for treating wet AMD patients who did not receive prior anti-VEGF treatment. The company remains on track to announce top-line data by the year end.

In October 2018, the company completed patient enrollment in the phase IIb study evaluating Zimura in geographic atrophy with top-line data expected in fourth quarter of 2019.

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

Apart from Zimura, Ophthotech is also focusing on other gene therapy programs. In June, the company obtained a license for rights to develop and commercialize an AAV gene therapy candidate. The candidate will be developed for treating rhodopsin-mediated autosomal dominant retinitis pigmentosa, a genetic disorder causing difficulty in night vision or a loss of side (peripheral) vision due to loss of cells in the retina.

Cash Balance

Ophthotech’s cash balance was $135.2 million as of Sep 30, 2018 compared to $146 million as of Jun 30, 2018.

However, the company increased its expectation for cash balance at 2018 end to be in the range of $125 million to $130 million (previously $112 million to $117 million), taking into account the impact of Inception acquisition along with gene therapy pipeline expansion and continuation of Zimura development.

Ophthotech Corporation Price, Consensus and EPS Surprise

 

Ophthotech Corporation Price, Consensus and EPS Surprise | Ophthotech Corporation Quote

Zacks Rank & Stock to Consider

Ophthotech currently carries a Zacks Rank #3 (Hold).

A better-ranked stock from the same space is CRISPR Therapeutics (CRSP - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CRISPR Therapeutics’ loss per share estimates have narrowed from $2.95 to $2.92 for 2018 and from $3.08 to $3.17 for 2019 over the past 60 days. The company delivered a positive earnings surprise in two of the trailing four quarters with an average beat of 19.50%. Share price of the company has increased 39.6% year to date.

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