Oculis is an “under-the-radar” biotech stock that is off to a strong start thanks to a lead drug candidate that could offer hope for diabetic macular edema (DME), according to Baird.
Analysts are initiating coverage on the European-based company with an Outperform rating and a US$58 price target on the Nasdaq-listed stock.
“Yes, an eye drop for DME,” Baird analysts declared.
“Oculis's lead drug OCS-01 uses proprietary technology to encapsulate dexamethasone, and Phase 2 and early Phase 3 data are supportive of the drug getting to the back of the eye and generating a significant efficacy response with a well-tolerated profile in diabetic macular edema (DME).”
According to Baird, the DME market is valued around $3 billion worldwide, but nearly half of the DME patients do not receive treatment due to the invasive nature of the standard of care. The most commonly used treatments are VEGF inhibitors, also known as vascular endothelial growth factor inhibitors, are administered through intravitreal injections directly into the eye. By introducing a less-invasive treatment, such as a topical eye drop, the market for DME could expand.
While VEGF inhibitors are effective treatments for DME, the need for frequent intravitreal injections results in approximately 50% of patients not receiving treatment. Baird analysts suggest that a topical eye drop could address this gap and significantly increase the market size.
Additionally, around 40% of patients on VEGF inhibitors do not respond optimally to the treatment. These non-responders may benefit from a topical eye drop that targets inflammation rather than angiogenesis, offering a different mechanism of action.
“While an eye drop for retinal diseases has never been successful before, Oculis's unique Optireach technology is able to deliver topical drug to the back of the eye,” Baird analysts wrote. “Part of what gives us confidence is the on-off effect seen in the Phase 2 study on CST, which returns to baseline following drug discontinuation.”
Oculis is prepping to launch two large Phase 3 studies in the second half of the year, a catalyst that Baird analysts believe have a “reasonably high likelihood of success.”
Oculis shares were trading 11.9% higher at $11.21 in New York on Friday.
Contact Angela at angela@proactiveinvestors.com
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