What happened

Shares of Omeros Corporation (NASDAQ:OMER) were up 10.2% as of 3:20 p.m. EDT on Tuesday after dropping 43% on Monday. The biotech announced yesterday what it described as "additional positive data" from an ongoing phase 2 clinical study of experimental drug OMS721 in treating IgA nephropathy, a rare kidney disease. However, patients receiving OMS721 in the study experienced only slightly higher median reduction in proteinuria (protein in urine) than did patients in the placebo group.

The primary efficacy measure of this phase 2 study focused on reduction in proteinuria. Investors were understandably concerned that Omeros' drug wasn't significantly more effective than placebo. In addition, 3 of the 12 patients receiving OMS721 were excluded from the analysis due to complications experienced during the study. 

Businessman pulling red line upward from its downward trajectory

Image source: Getty Images.

All of this explains why Omeros stock plunged on Monday. But why did the biotech's shares bounce back partially today? The most likely reason is that some investors felt the sell-off yesterday was overdone a bit.  

So what

There's no sugarcoating the news from Omeros' phase 2 study targeting IgA nephropathy. Unlike the biotech's press release headline stated, the results weren't positive. However, the rebound today underscores that some investors remain relatively optimistic about Omeros overall.

Omeros also has hopes for OMS721 in treating other kidney diseases. The company is working with U.S. and European regulators on preparing for a filing for approval of the drug in treating high-risk hematopoietic stem cell transplant-associated thrombotic microangiopathy (HSCT-TMA), a disease in which small blood vessels clot following a stem cell transplant.

The biotech is also evaluating OMS721 in a phase 3 study for treating atypical hemolytic uremic syndrome (aHUS). aHUS is a rare genetic disease that causes red blood cells to be destroyed prematurely. In addition, Omeros is conducting a phase 2 study of OMS721 in treating inflammatory disease lupus nephritis. 

Now what

Omeros CEO Gregory Demopulos said that the company is "exploring ways to streamline our active Phase 3 development program in IgA nephropathy" in light of the phase 2 results announced on Monday. He didn't provide more details about what that streamlining would involve.

Investors might need to focus more on the biotech's opportunities in HSCT-TMA and aHUS for now. However, despite the bounce today, it seems unlikely that Omeros will completely claw back its big loss from Monday anytime soon.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.