What: After Roche Holdings' (RHHBY 1.45%) announcement that it has exercised an option to participate with Novartis (NVS 1.07%) on overseas rights to Ophthotech Corporation's (ISEE) lead drug candidate, Fovista, shares in Ophthotech Corporation jumped 27.3% last month.

So what: Roche's Genentech unit is the developer of Lucentis, a widely used therapy for the treatment of wet age-related macular degeneration (AMD). Roche markets Lucentis in the United States and Novartis has ex-U.S. rights to Lucentis.

Ophthotech Corporation is the developer of a novel wet AMD drug, Fovista, that is designed to improve efficacy when used alongside anti-VEGF drugs, including Lucentis.

In phase 2 trials, combining Fovista with Lucentis increased the number of letters that a wet AMD patient could read on a standard eye chart by 10.6 letters. That outperformed the 6.5-letter improvement experienced by patients only taking Lucentis.

In the wake of those trial results, Novartis licensed ex-U.S. rights to Fovista from Ophthotech in a deal worth approximately $1 billion, including $200 million in cash upfront and roughly $800 million in milestones.

Novartis' decision to obtain those rights to Fovista indicates that it believes that there's the potential to create a new standard of care in overseas markets that includes Fovista -- an important revelation given that the market for anti-VEGF drugs is valued at $6 billion and growing annually. 

Roche's decision to share in Novartis' ex-U.S. rights to Fovista further validates Fovista's market potential, and significantly, it does not affect Novartis' deal with Ophthotech. Opthothech can still receive the same milestones and it will still collect mid-30% royalties on any sales of Fovista outside the United States.

Image source: Flickr user Ali T.

Now what: In October, Ophthotech Corporation announced that it has fully enrolled a second phase 3 trial of Fovista for use in combination with Lucentis. Results from both of these two trials are expected in the fourth quarter of 2016.

Since Ophthotech Corporation has yet to license U.S. rights to Fovista, the million-dollar question is whether or not Roche would be interested in increasing its exposure to Fovista by inking a deal with Opthotech Corporation for those rights. Roche appears to be a natural fit for Ophthotech Corporation given it controls the rights to Lucentis in the U.S. market.

However, Roche isn't the only company that could be interested in Opthotech Corporation. Ophthotech is also studying Fovista for use alongside Regeneron's (REGN 1.69%) Eylea, another multibillion-dollar therapy for wet AMD. Regeneron maintains exclusive rights to Eylea in the United States and given a Novartis plus Fovista couplet could shift market share in this market, it may want to lock up Fovista too.

Of course, there's always the possibility that Ophthotech decides to hold onto its U.S. rights, rather than license them or sell itself outright. If so, then investors could still be handsomely rewarded given that Regeneron's decision to keep its U.S. rights to Eylea has allowed it to keep 100% of the billions of dollars in sales that Eylea is generating in U.S. every year. 

Because Ophthotech Corporation appears to be in the driver's seat, it can take its time in making a final decision. However, investors should remember that anything can (and often does) happen in late-stage trials and that means that it's far from a lock that Fovista will duplicate its mid-stage results in these phase 3 trials.