Oculis Holding AG (Nasdaq: OCUL) saw its stock price collapse on Friday after the Swiss drug developer announced that two Phase 3 clinical trials of its OCS-01 eye drops failed to achieve the primary endpoint in patients with diabetic macular edema (DME). The company confirmed it will not pursue a U.S. Food and Drug Administration filing for OCS-01 in this indication at this time.
Shares closed regular trading on the Nasdaq at $22.70, down 23.4% from the previous close, with trading volume surging to 2.76 million shares, far above the average of about 473,000. In after-hours trading, the stock extended its decline, falling 19.2% to $18.35 as of 4:50 p.m. EDT, according to MarketWatch.
The trial failure represents a significant setback for Oculis, as OCS-01 was one of the company's most advanced pipeline candidates. The DIAMOND-1 and DIAMOND-2 studies were designed to evaluate the efficacy of OCS-01 in improving vision in patients with DME, a diabetes-related swelling of the retina that can lead to vision loss and blindness. The primary endpoint was the mean change in best-corrected visual acuity (BCVA) at week 52, a standard measure of how well a patient can read an eye chart after correction. Neither study met this goal.
While the trials did show some anatomical benefit, with OCS-01 significantly reducing retinal thickness compared to vehicle, the key secondary endpoint of at least a 15-letter BCVA improvement was also not achieved in either study. This lack of functional vision improvement undermined the case for an FDA submission, despite the positive structural changes.
CEO Riad Sherif expressed disappointment that the reduction in retinal swelling did not translate into better vision for patients. He said the company will now focus its resources on advancing its other late-stage programs, including Privosegtor for optic neuropathies and Licaminlimab for dry eye disease. Oculis reported $278 million in cash, cash equivalents, and short-term investments as of March 31, which it said is sufficient to fund operations into the second half of 2029, giving management financial flexibility to pivot.
The broader market context was mixed on Friday. The Nasdaq Composite rose 0.2%, and the S&P 500 also gained 0.2%, while the Nasdaq Biotechnology Index slipped 0.1% to 5,989.8. This indicates that Oculis' decline was company-specific rather than part of a broader biotech selloff.
The DME treatment landscape is highly competitive, dominated by injected anti-VEGF therapies such as Regeneron and Bayer's Eylea and Roche's Vabysmo. OCS-01 had been closely watched by analysts and investors as a potential non-invasive alternative to these injections. Analyst expectations had been elevated ahead of the data release, with H.C. Wainwright raising its price target to $47 from $44 earlier this month and Stifel lifting its target to $50, both maintaining Buy ratings.
Looking ahead, investors will focus on potential subgroup analyses from the DIAMOND studies, any remaining opportunities for OCS-01, and the speed at which Oculis shifts spending toward Privosegtor and Licaminlimab. The market has clearly treated the DIAMOND results as a significant setback, and the stock's further decline in after-hours trading suggests continued selling pressure.
