Shares of Omeros (OMER) were falling more than 11% in recent trading, following news late Thursday that the drug maker�s OMS103HP treatment missed some trial targets.
Omeros said that patients undergoing arthroscopic knee surgery did demonstrate some positive results in its Phase 3 clinical trial, noting that its plans for future study in the first half of 2013 are on track.
Nonetheless, it noted that some significant recovery benefits seen in a Phase 2 trial did not occur, even as it did show �statistically significant reduction of postoperative pain.�
OMS103HP is being closely watched as it is one of the company�s two most promising potential products.
Needham analyst Adam Carr expects that Omeros may need to do two more trials, focusing on pain as �the primary endpoint� to gain approval from the Food and Drug Administration.
In a note out today, he writes �We believe OMS103HP has utility in knee surgery, given the known anti-inflammatory activity of its three components. The absence of a consistent, comprehensive positive signal from the Phase 2 and 3 trials, however, suggests that the overall impact may be modest. We nevertheless reiterate our Buy rating based primarily on success of the OMS302 ophthalmology program, which may reach the market in early 2014.”
His target price of $10 is nearly double the stock�s current level.
Cowen & Co�s Simos Simeonidis also reiterated a Buy rating on the stock: �Following the release of positive data from the second Phase III trial of OMS302 a few weeks ago, OMER is moving towards commercialization and risk reduction and from a purely R&D company to a mix of R&D and revenue generation. Omeros plans to file a new drug application for OMS302 in 1Q13, followed by a marketing authorization application in mid-2013: we expect OMS302 to be approved and in the market, generating revenues in 2014. Our thesis on OMER, which is based on the near-term clinical and commercial milestones of the pharmacosurgery products, coupled with the potential for upside from the small molecule pipeline and the G protein-coupled receptors (GPCRs) and antibody platforms, remains unchanged.�
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