Here’s What You Need to Know About Omeros’ Rise

Omeros Corporation (NASDAQ:OMER) ended the up nearly 15%, after the U.S. Food and Drug Administration (FDA) granted breakthrough therapy designation today. Let’s get right into the catalyst and discuss some reasons why some traders may be bearish, while some may be bullish on OMER.

FDA Grants Breakthrough Therapy Designation to Omeros Treatment

Omeros announced that the U.S. FDA granted breakthrough therapy designation to OMS721 for the treatment of Immunoglobulin nephropathy. That in mind, OMS721 is the company’s lead human monoclonal antibody targeting mannan-binding lectin-associated serine protease-2.

The U.S. FDA’s breakthrough therapy designation allows for the expedited development and review of a drug candidate used to treat a serious or life-threatening disease. Since OMS721 was granted breakthrough therapy designation, the treatment would be eligible for priority review of the application and rolling submission of parts of the application.

The U.S. FDA granted the treatment breakthrough therapy designation based on the data from the company’s Phase II clinical trial evaluating OMS721 for the treatment of Immunoglobulin A nephropathy, as well as other kidney diseases. That said, the clinical trial data indicated that patients showed an improvement in proteinuria after only 12 weeks of the treatment, with a 77% mean reduction in 24-hour protein levels, which was statistically significant.

According to Gregory A. Demopulos, M.D., Chairman and Chief Executive Officer (CEO) of Omeros, “We are pleased that FDA has granted breakthrough designation to OMS721 for IgA nephropathy and appreciate the Agency’s recognition of the potential importance of OMS721 in the treatment of this disease.”

Demopulos concluded, “OMS721 appears to be helping IgA nephropathy patients with a rapidity and magnitude not previously seen with any other therapy, and we look forward to working closely with the FDA to accelerate its development.”

Now, the reason for the significant rise may be due to the fact that there is currently no approved treatment for Immunoglobulin A (IgA) nephropathy, and the illness accounts for up to 10% of all dialysis patients.

What You Need to Know About Omeros

  • Omeros shares were up 14.50% today, as of June 13, 2017. The stock has been up nearly 50% over the past three months, as of June 12, 2017.
  • The U.S. FDA granted Omeros’ OMS621 breakthrough therapy designation, which could potentially cause the company to generate higher revenues and earnings.
  • OMER is currently operating at a loss and has a negative book value per share. Consequently, it may be considered overvalued in relation to the biotechnology industry, which has a trailing 12-month price-to-earnings of 64 and a price-to-book ratio of 6.
  • Omeros has 43.94M shares outstanding, 36.11M shares floating, and 8.62M shares short. Consequently, OMER had a short float of 23.87%, as of May 31, 2017.

Check out the daily chart on OMER.


Source: TradingView

Bull Case

Since Omeros gained breakthrough therapy designation for one of its treatments, this would be considered a positive catalyst, potentially causing some traders to be bullish on the name. Additionally, the stock was up 14.50%, and some momentum traders might be bullish on the stock due to its high short interest and low float, which could be an indication that OMER is prime for a short squeeze.

Bear Case

Although there was positive news in OMER today, some traders may still be bearish on the stock. One of the primary reasons for one to be bearish on the name is mean reversion. OMER soared by nearly 15% and closed above its upper Bollinger Band, as shown in the chart above, and therefore, some traders might be looking for the stock to revert back to the mean.


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