Why Omeros Shares Vaulted Higher

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Omeros , a clinical-stage biopharmaceutical company focused on developing therapies to treat inflammation and central nervous system disorders, advanced as much as 11% today after announcing the initiation of a mid-stage trial for OMS824, the company's phosphodiesterase 10, or PDE10, inhibitor for the treatment of stable schizophrenia.

So what: To understand why shareholders are so excited today, we have to look back exactly a week ago to when Omeros reported positive early stage results from OMS824, pointing to the drug being well-tolerated in even its highest dosage and with only mild side effects. The early-stage trial results, according to Omeros' press release, would predict that OMS824 would effectively inhibit PDE10 -- an enzyme found in the brain that can affect cognition in conjunction with diseases like Hungtinton's disease and schizophrenia -- in the brain. The current phase 2 study will examine dosing over a two-week period for the experimental drug as a monotherapy and a combination therapy in schizophrenic patients.

Now what: Another factor playing into Omeros' recent pop was a huge price target upgrade to $28 from $18 by Wedbush Securities on Monday. By this token, Wedbush expects Omeros' share price to more than triple from its current levels! The more immediate factor on investors' minds, though, is OMS302, the company's experimental ophthalmic drug that combines pain relief and pupil dilation to treat patients that have undergone intraocular lens replacement surgery. Omeros has already submitted a new drug application filing for OMS302 and could have word of its approval or rejection by mid-2014. Based on the fact that OMS302 met its primary co-endpoints in a November late-stage study, an approval seems more likely than not. This, more than OMS824, appears to be the catalyst you'll want to keep your eye on. Definitely keep OMS824 on your radar, but I wouldn't get too excited until we have some concrete phase 2 data in our hands.

A tried-and-true strategy you can get excited about
It's no secret that biotech stocks like Omeros have been soaring recently, but the best investment strategy is to pick great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" not only shares stocks that could help you build long-term wealth, but also winning strategies that every investor should know. Click here to grab your free copy today.

The article Why Omeros Shares Vaulted Higher originally appeared on Fool.com.

Fool contributor  Sean Williams  has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle  @TMFUltraLong . Try any of our Foolish newsletter services free for 30 days . We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights  makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading