Outlook Therapeutics Stock Plummets After Third FDA Rejection of Eye Drug
Agency demands additional 'confirmatory evidence' for wet AMD drug Lytenava, placing the company's lead asset and financial future in jeopardy.
Shares of Outlook Therapeutics (NASDAQ: OTLK) plunged in morning trading after the company announced it had received a third Complete Response Letter (CRL) from the U.S. Food and Drug Administration for its lead drug candidate, ONS-5010, also known as Lytenava.
The stock fell sharply on the news, dropping by as much as 60% in pre-market activity before settling to trade around $1.58, a decline of over 15% during the regular session. The rejection marks a significant regulatory setback for the biopharmaceutical company, which is seeking approval for Lytenava as a treatment for wet age-related macular degeneration (wet AMD), a leading cause of vision loss in older Americans.
According to an official company statement, the FDA acknowledged the company's single adequate and well-controlled study but concluded that it requires further "confirmatory evidence" to approve the Biologics License Application (BLA). The agency did not specify what type of evidence would be required, leaving the path forward uncertain but strongly implying the need for at least one additional clinical trial.
This latest rejection is the third CRL issued for Lytenava, creating a substantial obstacle for Outlook and its plans to commercialize the ophthalmic formulation of bevacizumab. In its press release, the company's management expressed its disappointment and disagreement with the agency's conclusion.
"We are disappointed with this decision and disagree with the FDA’s conclusion," the company stated, reiterating its commitment to pursuing U.S. approval for the drug. The response signals a potential confrontation with the regulator as the company evaluates its next steps.
The market reaction was swift and severe, erasing significant shareholder value and cutting the company's market capitalization to just over $100 million. The trading day saw the stock price fall toward its 52-week low of $0.79, a stark contrast to its 52-week high of $3.39, highlighting the high-stakes, binary nature of biotech drug development.
A successful approval would have positioned Lytenava to compete in the multi-billion dollar market for wet AMD treatments, which includes blockbuster drugs like Regeneron's Eylea and Roche's Lucentis. Outlook's strategy was to offer a more cost-effective, FDA-approved version of bevacizumab, a compound already used off-label to treat the condition.
The financial implications of the FDA's decision are critical. As a late-stage biopharmaceutical company with no products on the market, Outlook's value is almost entirely tied to the future prospects of Lytenava. Funding an entirely new confirmatory clinical trial could cost tens, if not hundreds, of millions of dollars—a difficult proposition for a company with a depleted market capitalization and a history of regulatory failures. Company financials show a negative book value per share, underscoring its financial fragility.
The path forward for Outlook Therapeutics is now unclear. Management must decide whether to fund a costly new trial, a move that would likely require significant and potentially dilutive financing, or to abandon its efforts in the U.S. market. For investors, the third rejection of its lead asset injects a high degree of uncertainty into the company's future.