What happened

Shares of Ocular Therapeutix (OCUL -0.79%) are up 31% at 11:45 a.m. EST, continuing yesterday's rally after the company's announcement of preliminary fourth-quarter revenue and interim data for a phase 1 clinical trial testing its wet age-related macular degeneration treatment, OTX-TKI, at the Cowen 40th Annual Health Care Conference yesterday. All told, shares of Ocular Therapeutix are up over 50% since Monday's close.

So what

Total net product revenue was $2.3 million, up 172% sequentially, although that's obviously off a fairly small base. Sales of Dextenza, the company's new treatment for eye inflammation and pain following eye surgery, brought in $1.6 million. Ocular Therapeutix's older ReSure Sealant, which seals incisions after cataract surgery, brought in the other $0.7 million.

For the first quarter of 2020, Ocular Therapeutix's management is looking for Dextenza sales of $2.4 million to $2.6 million and ReSure Sealant sales of $0.6 million.

Doctor examining a patient's eye

Image source: Getty Images.

Preliminary results from the phase 1 study showed OTX-TKI was able in some patients to decrease fluid in the eye, a sign of improvement. Ocular Therapeutix is hoping that in addition to treating wet age-related macular degeneration, the ocular insert will be able to extend the use of current treatments so patients don't have to have eye injections as often.

Now what

While it's nice to see the launch of Dextenza paying off, investors should keep in mind that the sales are still paltry. No mater what quarter-over-quarter growth is, a few million dollars per quarter doesn't make the company a growth stock. The OTX-TKI results are promising, but it's years away from generating revenue.

Investors may be jumping in now because the company expects to release data from a late-stage study of Dextenza in patients with allergic conjunctivitis in the second quarter. Its use for dry eye disease is in phase 2 development. Ocular Therapeutix thinks the potential market for Dextenza is substantially larger than the current market for eye surgery pain alone, with potential sales of $500 million to more than $1 billion.