BofA starts Oculis at buy rating, bullish on lead eye drug OCS-01

BofA Securities has initiated coverage of Oculis (NASDAQ:OCS) with a buy rating, citing the market potential of its topical treatment for diabetic macular edema, or DME. 

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The investment bank said that it is “bullish” that the product, codenamed OCS-01, can “overcome topical drug delivery challenge of reaching the back of the eye.” It noted that OCS-01 could appeal to less severe patients who delay treatment in part due to the invasiveness of current DME therapies, which often involve injections into the eye.

BofA said that a “key” catalyst will be a Phase 3 readout for DME slated for the second half of 2025. Nearer term, the bank expects a Q3 2023 readout for OCS-01 in the treatment of post-ocular surgery pain/inflammation to “de-risk” the product.

“While the indication is relatively small, the lead indication will allow Oculis to expedite commercial buildout ahead of a DME launch, the company’s biggest value driver,” BoA said, which has a price objective of $22 for the stock. 

BofA said that it sees peak sales of around $500M for OCS-01 in the treatment of DME, which assumes a market share of 8%. It added that it believes the therapy could be used as both as an early-intervention monotherapy and as an add-on product for moderate-to-severe cases.

The bank added that it views a Phase 2b data readout for Oculis’s drug candidate OCS-02 in the treatment of dry eye as “high risk/high reward.” The readout is expected in the second half of 2024. 

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