Ophthotech Corporation (NASDAQ:OPHT)

On Monday, Ophthotech stock tumbled lower by 86% after it announced that its phase 3 trial in patients with wet age-related macular degeneration (Wet AMD) failed to meet the primary endpoint of the study. The stock was slaughtered immediately, causing a lot of panic selling, but for good reason. The key thing to keep in mind is that there were two different phase 3 trials treating these patients with Wet AMD. The results were quite disappointing, as they did not show statistical significance whatsoever. Investors were really looking forward to good results, because a prior phase 2 trial showed that the drug did achieve statistical significance.

OPHT Phase 3 Results

The two phase 3 trials were known as OPH1002 and OPH1003 respectively. Neither one of them achieved statistical significance, and that's why the stock was crushed on Monday. Both trials were testing the company's drug, Fovista, in combination with Novartis' Lucentis. This combination was being tested against Lucentis alone. The reason for that was to determine if adding Fovista to Lucentis would boost efficacy. Unfortunately, this was not the case. Adding Fovista to Lucentis was no better than Lucentis alone. How, exactly, were the results calculated to determine if Fovista together with Lucentis was better than Lucentis alone? It was done by patients having to undergo a standardized eye chart. This eye chart would be where patients could determine how many letters they were able to read up to with the vision they had after receiving treatment. The patients in the Fovista/Lucentis combination therapy achieved a mean gain of 10.24 letters. That is really good, however, compared to Lucentis alone it's not a lot. Patients that took Lucentis alone achieved a mean gain of 10.01 letters. Comparing the two numbers, it is obvious that it is not statistically significant. Thus, the main reason why the stock crashed down to $5.29 per share at the bell.

One Failure Too Many

With this failure in the Wet AMD arena, that is one failure too many. That is because now OPHT only has one other drug left in the pipeline. That drug candidate is known as Zimura, and it's being developed for patients with dry age-related macular degeneration (dry AMD). This is still a large patient population of at least 8 million patients, but losing the ability to get Fovista to market is a big missed opportunity. The hope is that the last drug in the pipeline can make it to the finish line. There is, however, one problem. That problem is that both Fovista and Zimura are based on the aptamer technology. The only hope is that the drug may work in the dry AMD population.

Moving Forward

The way to trade the OPHT stock now is to wait a few days for a possible bounce. It might be a good stab once the stock has found a bottom. If one is attempting to try a risky stock such as this, that would be the best time to buy. The Zimura indication might actually work out, but the downside is that it will take years for that to happen. A phase 2/3 trial could take years to run, and even then, there is no guarantee that the drug will be successful in the Dry AMD patient population. Ophthotech's failure was a huge gain for Regeneron Pharmaceuticals, which already has a large foothold in the Wet AMD market. The Regeneron stock was higher in morning trading on the failed OPHT news, and eventually ended higher by 3.83 for the day. It seems that Regeneron will keep its place as king in the Wet AMD market, and unfortunately, OPHT will continue to feel the pain of this trial failure.

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