Why Is Ophthotech (OPHT) Up 7.4% Since the Last Earnings Report?
It has been about a month since the last earnings report for Ophthotech Corporation OPHT. Shares have added about 7.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Ophthotech Q2 Loss Narrows, Focus Shifts to Zimura
Ophthotech reported second-quarter 2017 loss of $0.62 per share, narrower than the Zacks Consensus Estimate of a loss of $1.07 and the year-ago loss of $0.85.
The company also outlined plans to initiate a number of studies with Zimura in multiple orphan ophthalmic diseases – including Stargardt disease, idiopathic choroidal vasculopathy (IPCV), and intermediate/posterior uveitis.
Ophthotech derives revenues from milestone and other payments under collaborations as there is no approved product in its portfolio yet. The company has a licensing and commercialization agreement with Novartis, which provides it with collaboration revenues.
Collaboration revenues decreased almost 94% to $1.7 million on unfavorable year-over-year comparisons. It had recorded a milestone payment of $28.2 million from Novartis following final enrolment in a phase III study of Fovista in the year-ago quarter. Reported revenues however beat the Zacks Consensus Estimate of $1.44 million.
Quarter in Detail
Research and development expenses decreased 67.5% to $15.7 million, mainly due to lower expenses related to the phase III program on Fovista and lower personnel costs due to workforce reduction.
General and administrative expenses decreased 18.1% from the year-ago period to $8.6 million due to cost control initiatives undertaken by the company including lower personnel costs due to workforce reduction.
Pipeline Update
A phase III study, OPH1004 is currently ongoing and is evaluating Fovista in combination with either Regeneron Pharmaceuticals, Inc.’s Eylea or Roche Holding AG’s Avastin versus Eylea or Avastin monotherapy for treating wet AMD. Data from the study is expected in the third quarter of 2017. The company believes that there is a low likelihood of success for OPH1004.
Cash Balance
Ophthotech’s cash balance was $196.4 million as of Jun 30, 2017. Cash of $20 million to $35 million has been committed toward the implementation of reduction in workforce, winding down of Fovista phase III studies and termination of Fovista expansion studies. A portion of this cash is also allocated for the remaining phase III study of Fovista, OPH1004.
The company expects cash balance in the range of $145 million to $160 million (previously $140 million to $160 million) by the end of fiscal year 2017.
The company also expects to recognize collaboration revenues between $175 million and $195 million in the third quarter of 2017 due to the revision of its agreement with Novartis. However, it will not impact the company’s expected cash position.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the past month as none of them issued any earnings estimate revisions.
Ophthotech Corporation Price and Consensus
Ophthotech Corporation Price and Consensus | Ophthotech Corporation Quote
VGM Scores
At this time, Ophthotech's stock has a subpar Growth Score of D, however its Momentum is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for momentum investors than value investors.
Outlook
Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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