Ocular Therapeutix reboots; investors hope to do the same


What’s happened over the past month at Bedford-based Ocular Therapeutix is a textbook example for the theory that putting money into the shares of biotech startups is not in any way investing. It’s gambling.

I mean, there’s nothing in the fundamental financials that suggests that such companies are in any way fit to absorb your hard-earned money. You’re just hoping that whatever secret potion is being developed gets a nod from the almighty Food and Drug Administration. Failing that, it is likely that the value of  your investment shrinks, perhaps considerably.

And so, Ocular (OCUL on the Nasdaq).  The company, as best I understand it, is developing products that heal wounds incurred during various eye procedures. Pretty niche, but certainly not unimportant.

Ocular has been around for more than a decade, but it’s still not close to profitability. For 2016, it posted a net loss of $43.3 million on revenues of nearly $1.9 million. See what I mean? Quite a gap there. The first quarter of this year (net loss of $15.7 million on revs of $475,000) suggests little headway in this area.

Nevertheless, shares began 2017 at $8.37 and moved into double digits by springtime. They topped out (in terms of daily closing price anyway) at $11.54 on June 22.

Approximately a month ago, Ocular learned that one of its flagship drugs, Dextenza, was rejected by the FDA. The Boston Business Journal reported that the reason was because some manufacturing issues caused some batches to become contaminated (the drug is designed to treat pain following eye surgeries).

Uh-oh. Goodbye, double-digit stock price. Shares nosedived below $6.50, where they have percolated in a fairly narrow range for the past couple of weeks.

And today (Tuesday), after the markets closed, Ocular announced that it was cutting about a fifth of its roster, believed to be some 25 workers. This is going to cost the company about $1.5 million, including severance and benefits, but will save money going forward (obviously) in the form of a slimmer payroll. And so, after gaining 13 cents during regular trading, shares of Ocular edged up another 13 cents, to $6.59, in after-hours activity.

Oh, and the usual legal procedures have ensued as well. Lawyers have been busy filing claims that the company knew more than it let on about the aforementioned manufacturing issues.  

And did we mention there’s a new CEO? To be fair, Ocular announced this was coming before the FDA rejection, but now that the cuts have been made, it’s official: In is Anthony Mattessich, and moving to executive chairman is outgoing CEO and co-founder Amar Sawhney.   

With all that said, if you were among those who bid shares up this spring in hopes of an FDA approval, you have been certainly disappointed. Furthermore, you likely know by now that getting shares back up to prior levels is highly unlikely to be accomplished with cost-cutting.

No, this company has to get you excited again. For what it’s worth, it’s not giving up on getting FDA approval for Dextenza. But next week, you get a second-quarter earnings announcement. And that’s probably not going to provide much cheer.

Buying shares of companies like this can be a rush, especially if a few clinical trials go the right way. But face it: Unless you are a insider among insiders, you really have no way of knowing how that will go (and even then you likely don’t). That’s not investing; it’s gambling.


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