Why Opthotech Corporation Shares Skyrocketed by 75% in 2015

Source: National Eye Institute.

What:A new adjunct therapy under development that could improve outcomes for people suffering from a form of age-related vision loss caused shares inOphthotech Corporation to soar higher by 75% in 2015, according to Capital IQ.

So what: An increasingly larger and longer-living population means more people are being diagnosed with age-related macular degeneration, and that's creating massive demand for Novartis' Lucentis and Regeneron's Eylea, two drugs that are widely used to address this condition.

Sales of Lucentis and Eylea exited the third quarter selling at a combined annualized clip of roughly $8 billion, andthat market potential has investors licking their chops over the possibility that Ophthotech's phase 3 stage drug, Fovista, could become a top seller that's used alongside Lucentis and Eylea.

So far, the data would seem to back-up optimism. In trials, patients administered Fovista plus Lucentis saw their vision improve by 10.6 letters on a standard eye chart. That compares favorably with the 6.5-letter improvement seen in patients taking Lucentis alone.

Now what: The strong mid-stage trial results prompted Novartis to lock up international rights to Fovista in 2014. In that deal, Novartis handed Ophthotech Corp. over $200 million up front and agreed to pay Ophthotech up to $800 million more in milestones, plus potential royalties, if the drug pans out.

In October, Ophthotech reported that it had fully enrolled its phase 3 trials of Fovista plus Lucentis, and results from those trials are expected in Q4 2016. The company is also studying Fovista alongside Eylea and Avastin, a variation of Lucentis that's also used to treat wet-AMD.

If trials succeed, then an FDA filing should follow shortly thereafter, and that could mean revenue begins rolling in to Ophthotech from prescriptions by the end of 2017. Since the market for vision-restoring drugs is massive and growing, it wouldn't shock me if the allure of positive data from its ongoing trials has Ophthotech's shares finishing higher this year, too.

The article Why Opthotech Corporation Shares Skyrocketed by 75% in 2015 originally appeared on Fool.com.

Todd Campbell owns shares of Ophthotech. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.