Source: Flickr user Luis Gustavo Zamudio A.

What: Despite kicking off new trials in dry age-related macular degeneration, shares in Ophthotech Corporation (ISEE) dropped 31% in January, according to S&P Capital IQ.

So what: In January, Ophthotech Corporation initiated mid-stage clinical studies for Zimura, a novel drug that targets geographic atrophy, a common form of dry age-related macular degeneration (AMD). Globally, 8 million people suffer from vision loss tied to geographic atrophy, which happens when large areas of the retina stop functioning because of a buildup of yellow deposits called drusen. Currently, treatment options are limited and inadequate, consisting primarily of dietary changes.

Given the size and unmet need associated with the dry AMD market, Zimura expands Ophthotech's potential opportunity beyond its lead drug, Fovista, a therapy for the wet form of AMD. Wet AMD occurs when new blood vessels grow behind the retina and leak fluid into the retina, causing scarring.

Currently, Novartis' (NVS 1.09%) Lucentis, Regeneron's (REGN 1.83%) Eylea, and off-label use of Roche's (RHHBY 1.51%) Avastin are used to treat wet AMD in a market valued at $7.1 billion annually, and growing.

In phase 2 trials, combining Fovista with Lucentis boosted the number of letters patients could read on a standard eye chart by 62% versus Lucentis monotherapy, and additional trials could show a similar improvement in patient outcomes when Fovista is used alongside Eylea and Avastin.

Now what: Ophthotech has locked up Novartis as their ex-U.S. partner. Under that licensing pact, Ophthotech has already received $330 million of a potential total of $1 billion in upfront money and milestones. If phase 3 results that are expected in the fourth quarter of this year are good enough to support an approval, then Ophthotech will be paid royalties in excess of 30% on ex-U.S. sales.

As a result of the global population getting older, cases of AMD are becoming more common. Fovista's agnostic approach to current anti-VEGF therapies could turn it into a billion-dollar blockbuster.

Zimura's market potential could also be big, but Zimura trial results aren't likely to be available until 2018, so investors will need to be patient. 

Overall, since Fovista and Zimura could both be needle-moving drugs, investors may want to view the recent sell-off in Ophthotech's shares as a chance to add this company to portfolios. Obviously, there's a risk that Fovista and Zimura's trials fail; but if they don't, then owning shares could prove profit friendly.