Some Good News After a Harsh Selloff for Our Small-Cap Pharma Name
We’re buying more shares after a harsh day for the position.
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OK, on Monday, we spent the morning, if not a decent-sized portion of the day, trying to figure out why portfolio holding Ocular Therapeutix (OCUL) was being taken out to the woodshed.
There was nothing about the company on the newswires. There still is nothing firm specific. The AI chatbots had nothing either. In fact, Anthropic’s Claude was still denying that the stock was even trading lower from Friday’s close when it was down 25% on the day.
The good news is that the selloff had nothing to do with the firm’s NDA candidate, AXPAXLI, which is Therapeutix investigational treatment meant to target wet age-related macular degeneration. AXPAXLI is a bioresorbable intravitreal hydrogel containing axitinib and is designed for sustained delivery. Clinical testing has provided positive results so far. An NDA filing is expected at some point in Q4 2026 with a potential commercial launch in 2027. The portfolio tried to defend the position on Monday, laying out a buy that was never hot and offering a call that was never taken.
So, what was the news? OCUL traded down 207% on Monday, closing at $7.66. The news came not from Ocular Therapeutix, but from outside the firm. Competitor Kodiak Sciences (KOD) saw those shares rise 178% in response to two of its candidates meeting their primary endpoints in the phase III DAYBREAK trial for wet age-related macular degeneration.
Kodiak said that Zenkuda matched or exceeded Regeneron’s (REGN) aflibercept’s clinical effect during the initial loading phase. Tabirafusp-ted also met the trial’s key secondary anatomical endpoint, alongside its primary vision endpoint. Kodiak announced that both experimental drugs demonstrated safety consistent with aflibercept’s established safety profile.
In addition, another competitor, 4D Molecular Therapeutics (FDMT) announced Phase 3 clinical testing results for its wet age-related macular degeneration drug candidate, 4D-150. 4D-150 is a one-time gene-focused therapeutic meant to target diabetic macular edema. That candidate apparently performed well in those trials. This also impacted OCUL.
Wall Street Unfazed
In response, on Monday, analyst Serge Belanger of Needham reiterated his “buy” rating on OCUL as well as his $18 target price. Belanger is rated at five stars out of five by TipRanks. He has compiled a 51% success rate over the past two years while posting an average return of 28.8%.
On Tuesday morning, analyst Biren Amin reiterated his “buy” rating on OCUL along with his $31 target price. Amin is rated at three stars out of five by TipRanks. He has compiled a 42% success rate over the past two years while posting an average return of 1.4%.
Trading
The portfolio entered a limited $7.60 bid for 40 shares of OCUL after publication on Monday as the stock had rallied in between the writing of the material and the time the article became public information. The stock never traded below $7.62 after that, closing at $7.66. The portfolio also offered one OCUL December 18 $9 call at $0.95. Both of those offers were left at “nothing done.” We’ll try again on Tuesday, with perhaps a little more wiggle room.
Monday’s Intentions vs Actual Trades
Intention: Purchase 40 shares of OCUL at or close to the last sale of $7.60
Actual trade: Nothing done
Intention: Sell one OCUL December 18 $9 call for $0.75 (limited) or better
Actual trade: Nothing done
Tuesday’s Intentions
Purchase 40 shares of OCUL at $7.85 (limited) or better.
Sell one OCUL December 18 $9 call for $0.80 (limited) or better.
Current Positions
Long 60 shares of (ASPN) at $5.1083. Target price: $10. Last sale: $5.11.
Long 100 shares of (EVLV) at $5.7883. Target price: $8.50. Last sale: $4.64.
Long 110 shares of (OCUL) at $8.6209. Target price: $14. Last sale: $7.64.
Long 250 shares of (ONDS) at $8.0932. Target price: $12. Last sale: $7.80.
Long 100 shares of (PL) at $20.3367. Target price: $26. Last sale: $16.63.
Long 60 shares of (PTON) at $5.0263. Target price: $9. Last sale: $4.79.
Long 7 shares of (RKLB) at $73.8629. Target price $97. Last sale: $72.05.
Long 120 shares of (SOFI) at $16.0609. Target price: $24. Last sale: $16.20.
Short one SOFI $22 November 19 call at $1.20, Last sale: $0.20.
Long 50 shares of (SWBI) at $14.0414. Target price: $19. Last sale: $14.04.
Long 50 shares of (VELO) at $10.265. Target price: $18. Last sale: $11.15.
Cash: $322.10.
Portfolio Value: $9,532.16, -4.7% from inception on March 24.
At the time of publication, Guilfoyle was long ASPN, EVLV, OCUL, ONDS, PL, PTON, RKLB, SOFI, SWBI and VELO.
