Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Omeros Stock Is Tanking Today

By Cory Renauer – Oct 1, 2021 at 12:11PM

Key Points

  • Omeros disclosed bad news from the FDA regarding narsoplimab, an experimental treatment for a side effect associated with stem cell transplants.
  • The FDA identified deficiencies that prevent it from approving narsoplimab at this time.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The narsoplimab program hasn't proceeded as swimmingly as investors thought.

What happened

Shares of Omeros (OMER 1.75%), a biopharmaceutical company, are falling today after the company made a disclosure regarding narsoplimab, an experimental treatment to address side effects of stem cell transplants. Shares of the biotech were down 43.7% as of 11:25 a.m. EDT on Friday.

So what 

Omeros has just one revenue stream at the moment, Omidria, an expensive eye-drop solution that gets added to the bill when Medicare patients go under the knife for lens replacements and cataract removals. Omidria is convenient but hardly necessary for these procedures.

That's why investors are eager to see the company launch narsoplimab, an experimental treatment for thrombotic microangiopathy caused by hematopoietic stem cell transplants, or HSCT-TMA. The Food and Drug Administration has been reviewing an application from Omeros since January and was expected to issue a decision later this month.

Frustated investors in front of their computer.

Image source: Getty Images.

Omeros stock is sinking today because the company told investors the FDA identified deficiencies that prevent the agency from taking the next step toward approving narsoplimab. This could be a minor case that isn't related to the drug candidate itself, but investors aren't taking any chances.

Now what

The FDA most likely asked Omeros to run another trial. The company submitted a biologics license application based on data from an open-label study that enrolled 28 adult HSCT-TMA patients.

Omeros could have included a control group in its attempt to prove narsoplimab was truly effective at treating HSCT-TMA but chose not to. That was a red flag that investors probably should have spotted a mile away. It was three years ago today that Omeros posted results from narsoplimab's first placebo-controlled study, and it was a total dud

Investors will want to watch this company from a safe distance until we see one of its experimental drugs achieve unequivocal success in a well-controlled study.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.