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Outlook Therapeutics initiated with an Outperform rating, $12 price target at Oppenheimer

Shares in the biopharma doubled after Oppenheimer analyst Leland Gershell saw promise in the company’s ONS-5010 eye medicine
An eye under examination
Outlook Therapeutics is a late clinical-stage biopharmaceutical company focused on developing monoclonal antibodies for eye diseases

Oppenheimer initiated coverage Thursday for Outlook Therapeutics (NASDAQ:OTLK) with an Outperform rating and a target price of $12 per share.

The Cranbury, New Jersey-based late clinical-stage biopharmaceutical company rocketed 54.6% to $2.36 on the new analyst coverage.

Analysts at Oppenheimer saw immense potential in the development of Outlook Therapeutics’ ONS-5010, a monoclonal antibody, or mAb, for various eye diseases.

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Outlook’s ONS-5010 is a proprietary formulation of bevacizumab injected into the eye for the treatment of wet age-related macular degeneration (AMD), and other retina diseases. AMD manifests itself through the appearance of abnormal blood vessels under the retina growing toward the macula, obstructing vision.

“Assuming a late 2021-22 FDA approval in wet AMD that we view as low-risk, ONS-5010 stands to take Avastin's approximately 50% unit share in this multibillion-dollar indication as physicians and payors adopt it,” wrote Oppenheimer analysts Leland Gershell and Aryeh Gold in a note to clients.

Genetech Inc’s bestselling cancer drug Avastin is used off label to treat wet AMD, and is popular among providers and payers because it’s cheaper than other drugs like Lucentis and Eylea. Avastin is also injected into the eye to treat diabetic eye disease and other problems of the retina to slow loss of vision.

ONS-5010 to relieve a pressure point for the FDA

If approved by regulators, ONS-5010 has the potential to mitigate the risks associated with off-label use of Avastin. Off-label use of Avastin is currently estimated to account for approximately 50% of all wet age-related macular degeneration prescriptions in the US.

However, risk of contamination has been a concern for the FDA, and Oppenheimer thinks ONS-5010 could one day end up taking over Avastin's large share of the AMD space.

“Avastin is one of the most widely compounded injectables. The compounding of sterile injectable drugs has become an intense agency focus following cases of patient harm from contamination, and enforcement has increased,” wrote the analysts. “Per agency guidance, the approval of ONS-5010 would make it illegal to use compounded Avastin.”

In an expeditious registration program informed by FDA input, ONS-5010 is being evaluated in two Phase 3 non-inferiority trials versus Lucentis on visual acuity, from which topline data will be reported in the first quarter of 2020 and third quarter of 2020.

“Avastin and Lucentis have already demonstrated equivalent efficacy on this endpoint in a large landmark trial,” noted the analysts.

The analysts added that with just an approximately $70 million enterprise value, they viewed Outlook Therapeutics shares as undervalued.

Commercial plans already taking form

“Outlook will maximize ONS-5010's opportunity to subsume Avastin's place in the wet AMD treatment paradigm, including intelligent pricing, payor collaboration, and an eventual pre-filled syringe,” wrote the analysts.

“We believe that the EU, where off-label Avastin has been restricted, also provides a fertile market opportunity,” they added.

The analysts also noted that Outlook Therapeutic's leadership brings extensive experience developing and commercializing globally marketed treatments for wet AMD and other retinal diseases at large companies, with depth in product development, regulatory affairs, and payor strategy in the area of ophthalmology.

—(Updates with fresh details from Oppenheimer note)—

Contact Uttara Choudhury at [email protected]

Follow her on Twitter@UttaraProactive 

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