Biotech company Ocular Therapeutix is imploding after announcing disappointing trial results

Shares of $US875 million biotech company Ocular Therapeutix were down as much as 30% in after hours trade on Monday after the company reported clinical trial results that disappointed.

The company announced Monday that topline data for its lead drug candidate, a treatment for ocular inflammation following cataract surgery, met one of its two primary endpoints.

The company said both endpoints needed to be met for the trial to be considered successful.

In a statement, Ocular CEO Amar Sawhney said, “Following the favourable results from our first Phase 3 trial, we are disappointed that the second Phase 3 clinical results for resolution of inflammation did not have the same magnitude of differential as what OTX-DP achieved in the first trial.”

Sawhney added that the company plans to meet with the FDA to discuss the results and “chart the appropriate path forward.”

During regular trading hours on Monday, shares of Ocular were down more than 6%, and shares of the company are down about 10% over the last 5 trading days. Year-to-date, however, shares of Ocular were up a staggering 62% excluding Monday’s after hours implosion.

The takeaway from Ocular’s after hours plunge on Monday, however, is that people who are asking if there is a biotech bubble will see this latest blow up as further evidence of a sector that has become overheated, as investors are fleeing for the exits at the first sign of bad news.

But the thing to keep in mind is that investing in biotech stocks isn’t like buying a share of Apple or General Motors. These stocks have the potential to go to the moon… or quickly head towards zero when trial results don’t go their way.

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