The Probable Reason Behind OptiNose, Inc.'s Plunge Today

What happened

In response to announcing second-quarter results, shares of OptiNose (NASDAQ: OPTN), a pharmaceutical company focused on diseases of the ear, nose, and throat, dropped 24% as of 11:15 a.m. EDT on Tuesday.

So what

Here's a review of the key financial numbers from the period:

• Revenue was $1.3 million. While small in absolute terms, this number came in ahead of the $1.2 million in revenue that market watchers had predicted.
• Net loss was $24.6 million, or $0.64 per share. This was lower than the $0.77 loss Wall Street was expecting.
• Cash balance at quarter's end was $245 million.

Management also lowered its total operating expense guidance for the year. The company now expects to spend between $117 million and $121 million in 2018. That's lower than its prior outlook of $119 million to $125 million.

So, if the news was good, what can explain today's drop? My best guess is that traders are worried management is ending its early launch program -- called "the Xhance Xperience program" -- in June. That could cause problems because management admitted that the bulk of its $1.3 million in revenue generated during the period came as a direct result of its Xperience program. Traders could be worried that the termination of the program might cause demand to stall.

Now what

It's still early days in the Xhance launch, so it's too soon to tell whether or not the company has a hit drug on its hands. On the plus side, the company reported that more than 2,600 physicians have prescribed the drug since launch. That's an impressive number, and it shows that the company's decision to offer a launch program helped to get the word out.

Will Xhance's usage continue to climb now that the Xperience program has been terminated? That remains an unknown at this point. When factoring in the probability of continued losses moving forward, my plan is to keep OptiNose on my wait-and-see list.

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