FourWorld Capital Issues Eye-Opening Research Report on Drugmaker Omeros; Concludes Company Faces Perilous Future Following Loss of Medicare Support…
FourWorld Capital Issues Eye-Opening Research Report on Drugmaker Omeros; Concludes Company Faces Perilous Future Following Loss of Medicare Support for Propping up Price of its Sole Commercial Product
By a
FourWorld believes all regulatory and legislative options to extend pass-through Medicare reimbursement status past
Blinded by reality: costly drug that may be a 'nice to have' but not a 'need to have'
FourWorld lays out its concerns for the company in a new report entitled
In its report, FourWorld notes that Medicare, describing Omidria as a "nice-to-have" but not a "need-to-have" product, ended "pass-through" reimbursement for the drug as of
Loss of the Medicare safety net and exposure of its sole commercial product to potentially lethal competition has placed Omeros in a triple bind: even as it plies providers with free samples of Omidria to retain them as customers, channel checks indicate that eye surgeons and wholesalers are cutting back on their procurement of the drug now that the cost charged by Omeros is no longer covered by taxpayers.
Simultaneously, FourWorld explains that Omeros has been repurchasing, at full price, unused Omidria inventory from customers. Additionally, the company's own OmidriaAssure program pays providers the difference between their cost for Omidria and patient insurance.
FourWorld's conclusion: it doesn't take 20/20 vision to recognize that a financial model such as this is unsustainable.
Throughout 2017 Omeros affirmed its optimism that a pass-through extension would be forthcoming. But reality may have caught Omeros investors by surprise. The company has pinned its hopes on two pieces of legislation - HR 4679 and HR 4683 - that conceivably provided a path back to Medicare support for Omidria. But the Bipartisan Budget Act of 2018 - signed into law on
Based on FourWorld's interviews with cataract surgeons, the report says, "Omidria would need to reprice at a 90% discount to start being of interest. We believe these cost cuts represent the bare minimum cut to Omidria's price for OMER to have any chance of defending its current market share."
The report goes on to forecast an 80% year-over-year revenue decline for Omidria, given that "Omeros has exhausted all viable regulatory and legislative options to extend reimbursement status."
"Omeros markets a single commercial product that has little clinical benefit which surgeons we've consulted are unwilling to pay for,"
He continued, "Investors should have a clear understanding that Omeros is facing massive cash flow burn and resulting credit risk under its term loan agreement. The situation might be arguably brighter if there were viable therapies in the company's pipeline, but our research indicates that the pipeline is highly uncertain, pledged to creditors, and at best years away."
Too clear not to see: Omeros' shaky finances
As outlined by FourWorld's research, Omeros is subject to challenging covenants and possible termination provisions under its
The company's debt capacity presents a formidable dilemma. FourWorld's research shows that Omeros has
According to FourWorld's report, Omeros disclosed to investors that, irrespective of
"To address the near-term liquidity needs we forecast above," the report concludes, "we estimate that Omeros will need to do a
Keywords for this news article include: Health Policy, Health and Medicine, Medicare and Medicaid, Investment and Finance, FourWorld Capital Management Llc.
Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2018, NewsRx LLC
Manufacturers Life Insurance Company, The Files SEC Form 13F-HR, Quarterly Report Filed By Institutional Managers, Holdings: (Feb. 8, 2018)
Reinsurance Group of America Inc. Files SEC Form 4, Statement of Changes in Beneficial Ownership of Securities: (Feb. 12, 2018)
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News