Shares of Oculus Explode on FDA Approval of New Scar Therapy

Andrew Klips  |

There’s a really good reason that some traders LOVE playing biotechnology stocks:  FDA approval.  Things can certainly go wrong and there is no shortage of statistics showing low success rates and the high risk because of years of research and hundreds of millions (or even billions) of dollars spent that could end up with a failed trial or FDA rejection.   On the other side of the coin, the FDA is always approving new therapeutics or technologies and it can pay off handsomely for those that got in at the right time.

Such is the case for shareholders of Oculus Innovative Solutions (OCLS) , especially for those that initiated positions in the last six months – or anytime really in the last year as long as it wasn’t at one year highs of $6.43 in May.

The Petaluma, California-based company, which makes a wide array of prescription and non-prescription products, reported on Wednesday that it has received 510(k) marketing clearance from the Food and Drug Administration for its new Microcyn Scar Management Hydrogel.  The prescription product is used for the management of old and new hypertrophic (raised above the skin) and keloid (red colored) scarring caused by burns, trauma wounds and surgical procedures.  The FDA approval marks the eighth for Oculus’ Microcyn franchise.

Oculus says that about 93 million people in the U.S. are suffering from scars, of which about 169 million scars are characterized as either hypertrophic or keloid.

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In a 16-week, double blind clinical trial of 40 patients across four U.S. investigative sites, Oculus evaluated its new scar product against a predicate device in scar management.  The age of target scars were between three months and one year.  After treatment, the researchers assessed the scars for things such as scar vascularity, height/thickness, pliability, pain and itchiness, amongst other things.  The data at the end of the study visit showed scars in both groups to have improved, with the Oculus therapy clearly outperforming the comparator arm of the study.

Quinnova Pharmaceuticals, Oculus’ U.S. dermatology partner, plans to commercialize Microcyn HydroGel in the first half of next year.  Oculus is already collaborating with international distributors and partners to begin marketing the product as soon as possible also.  Through More Pharma, commercialization in Mexico is anticipated for 2014.  In Asia and in the Middle East, the company expects the product on the market sometime after April.

"We believe that Quinnova's dermatology sales and marketing expertise, and our strong supporting clinical data for this new product, is a winning combination for doctors and their patients,” said Jim Schutz, chief executive at Oculus, in a statement today.

Shares of OCLS have been channeling between $2.20 and $3.10 since falling from the aforementioned 52-week high in June, including closing Tuesday at $2.33.  In pre-market activity on Wednesday, shares have leapt ahead to print $6.50, representing gains of 179 percent from the previous day.

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