Biotech Catalyst Play: Ocular Therapeutix Inc (NASDAQ:OCUL) PDUFA

In a few weeks, the Food and Drug Administration (FDA) in the US will deliver its final decision on Ocular Therapeutix Inc (NASDAQ:OCUL)'s Dextenza. This one has been a bit of a rollercoaster for the company and its shareholders, having been pushed back a couple of times based on various deficiencies (that we'll look at in detail shortly).Ocular is up a little over 22% year to date, but the company has dipped close to 10% this week. If the decision goes the company's way, the stock is going to run. With this in mind, the current dip may be a nice opportunity to load up ahead of decision day.Of course, this thesis falls apart if the drug fails to win approval.Here's our take on its chances.As noted, the drug in question is called Dextenza and the application is an attempt to get it approved in a target indication of the reduction of ocular pain, and specifically, pain following ophthalmic surgery. Right now, if a patient has ocular surgery (cataracts, that sort of thing) they need to administer steroids by way of eye drops to stay on top of post-surgical pain. It's a few-times-a-day administration and, for many (remember lots of these patients are elderly) it's a real hassle.Dextenza is an attempt to achieve the same clinical outcome as eye drop administration steroids but through what's called an intracanalicular insert. Basically, it’s a tiny tube that positions in the canals next to the tear duct and slowly releases the steroids that would otherwise be self-administered.It's a neat idea, and the trials that underpin the registration application that's up for consideration next month suggest it works. In a phase III study that pitched the drug against placebo (just a sham insert), 52% of patients receiving the Dextenza had no AC cells (these are a surrogate measure of inflammation) at two weeks post treatment compared to 31.1% of placebo subjects. Additionally, 79% of patients in the active group of the trial reported no pain eight days after treatment, compared to 61.3% of the placebo group.These were stat sig results, and with a relatively clean safety profile and a positive patient satisfaction rate (late 90s%), the drug looked like a sure thing.So what went wrong?Well, the company got a CRL that cited certain manufacturing deficiencies as the driver behind the knockback. While this sort of setback is always frustrating, it suggests there's no issue with safety or tolerability, which in turn suggests that all the company needs to do is resolve the manufacturing issues to pick up approval.Management resubmitted the NDA pretty quickly and – alongside the resubmission – we got a bit of insight into the resolution. Take a look at the following quote, lifted from this 8K detailing the resubmission:

"The Company’s resubmission of the NDA included a letter from the New England District Office accepting that the Company’s responses satisfactorily addressed the remaining corrective actions in the Form 483 and manufacturing records from three recently completed commercial batches of DEXTENZA. Adequate resolution of the Form 483 manufacturing deficiencies with the New England District Office is a prerequisite to the approval of the NDA for DEXTENZA"

These sorts of district offices are responsible for checking out the facilities associated manufacturing in this type of scenario. Think of it as an FBI field office reporting back to Quantico. FBI central doesn’t travel to New England, it gets its field office to check things out and then the latter informs the former as to it's finding.Now think of this field office as a sort of advisory panel in a committee meeting. When a committee votes on a drug's approval or not, it's making a recommendation to the FDA. The FDA isn’t obliged to follow the recommendation, but on the majority of occasions, it does.So here we've got the field office (the New England District Office of the FDA) advising the agency that it believes the issues are resolved and that the drug should be go for approval.For us, this is a key point and one that feeds into a conclusion that there's a great chance of approval for Dextenza come PDUFA.So what's next?Well, PDUFA is July 19. We think we'll get some loading ahead of this date, so current prices are probably going to be the lowest we’ll see pre-decision.Take a look at our most recent Biotech Catalyst Play winner, ADMP, here.We will be updating our subscribers as soon as we know more. For the latest updates on OCUL, sign up below!Disclosure: We have no position in OCUL and have not been compensated for this article.