Ocular Therapeutix Inc. (NASDAQ:OCUL)
Shares of Ocular Therapeutix Inc. (NASDAQ:OCUL) plunged 25.05% in Friday’s trading session as investors reacted to concerns raised by the U.S. Food and Drug Administration (FDA) about the company’s manufacturing processes. The resignation of the entire management team also continues to fuel a selloff of the stock – a problem that has since attracted a wave of class action lawsuits.
The biopharmaceutical company bills itself as a leading developer of innovative therapies, using the hydrogel platform technology, for diseases and conditions affecting the eye. The company’s lead candidate product DEXTENZA has already completed its Phase 3 clinical trial as a novel treatment for ocular pain after ophthalmic surgery.
Ocular Therapeutix Inc. (NASDAQ:OCUL) has filed an NDA resubmission for DEXTENZA awaiting the final FDA stance on the product. The company is also evaluating a number of injectable drug delivery depots for back-of-the-eye diseases.
Ocular Therapeutix Inc. (NASDAQ:OCUL) appears to be facing serious manufacturing issues after the Food and Drug’s Administration raised concerns in a second 483 statement. The agency, after carrying out an inspection of the company’s manufacturing plant, says it discovered an unknown matter in the company’s candidate product DEXTENZA.
The FDA has since accused the biopharmaceutical company of releasing the product without carrying out a risk assessment on its quality or safety. In one of the observations, the FDA raises concerns about the company’s laboratory controls which it says does not include scientifically sound and appropriate test procedures that can guarantee high-quality products.
The company has also been taken to task for not providing written procedures for production and process controls that can affirm products and drugs have the strength and quality they purport to have.
Many observers believe the management has yet to grasp the magnitude of the matter if remarks by the chief executive officer, Amar Shawnee, during Q1 earnings call is anything to go by.
“We were pleased during the re-inspection that the FDA investigator was able to confirm our corrective action plan from prior observations, and indicated that there was no further follow-up necessary to close out those issues. So I think that’s a strong sign that the manufacturing process has moved forward significantly, and is in a fully developed mode,” said Mr. Shawnee.
Ocular Therapeutix Inc. (NASDAQ:OCUL) maintains that its manufacturing process is fully developed and that the concerns raised can be resolved quickly. However, the company needs to revamp the manufacturing process if its lead product DEXTENZA is to stand a chance of gaining the much needed FDA approval.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms