Ophthotech (OPHT) Down 2.1% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Ophthotech (OPHT). Shares have lost about 2.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ophthotech due for a breakout? 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 drivers.

Ophthotech Q4 Loss Wider, Gene Therapy in Focus

Ophthotech incurred adjusted loss of 53 cents per share in the fourth quarter of 2018, which was wider than the Zacks Consensus Estimate of a loss of 37 cents and the year-ago quarter’s loss of 26 cents per share. Notably, the adjusted loss excluded a gain on extinguishment of royalty purchase liability due to the termination of the company’s royalty purchase and sale agreement with Novo Holdings A/S, holding company for Novo Nordisk (NVO), signed in December 2018.

With no approved products in its portfolio, Ophthotech derives revenues from milestone and other payments under collaborations. However, the company generated on revenues in the quarter under review.

For 2018, the company did not generate any collaboration revenues but realized $210 million as 2017 revenues. Markedly, Ophthotech had earned collaboration revenues under the licensing and commercialization agreement with Novartis (NVS) that ended in October 2017, following the failure of the Fovista development program.

Quarter in Detail

Research and development expenses in the fourth quarter increased a mammoth 103.7% to $16.1 million, mainly due to expenses related to the acquisition of Inception 4 and its HtrA1 inhibitor program as well as costs associated with the ongoing Zimura and gene therapy development programs.

Meanwhile, general and administrative expenses decreased 17.4% from the year-ago period number to $5.7 million on lower personnel, infrastructure and operational cost.

Cash Balance

Ophthotech’s cash balance was $131.2 million as of Dec 31, 2018, compared with $135.2 million as of Sep 30, 2018.

The company expects cash and cash equivalents to be in the range of $80-$85 million in 2019 (previously the projected range was $125-$130 million) taking into account the impact of Inception acquisition along with gene therapy pipeline expansion and continuation of Zimura development.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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