What happened

Shares of Ocular Therapeutix (OCUL 0.23%), a biopharmaceutical company, are getting hammered today in response to lousy clinical trial data. The company's experimental insert for the treatment of dry-eye disease, OTX-CSI, failed to boost tear production. Disappointed investors had beaten the stock 35.5% lower as of 10:57 a.m. on Friday. 

So what 

Ocular Therapeutix's only revenue-generating product, Dextenza, isn't making ends meet yet. Investors had been looking forward to the potential launch of a second product, but the results presented today suggest the company's attempt to package cyclosporine into its proprietary hydrogel insert is a bust. Patients given OTX-CSI exhibited a little less tear production after 12 weeks than patients randomized to receive an empty insert.

Frustrated investor with head in hands.

Image source: Getty Images.

Tear production was measured by the Schirmer test, which involves sticking tiny strips of paper to trial participants' eyelids, then measuring how far the tears travel. Patients given a short-duration formulation improved by 1.98 millimeters while the placebo group improved by 2.24 millimeters on average. Patients given the longer-duration formula improved by 1.91 millimeters compared to an improvement of 3.08 millimeters for those given a placebo.

Now what

Dextenza sales have been a little disappointing since its launch in 2019. This biotech stock would be in a lot more trouble if the Food and Drug Administration hadn't recently approved Dextenza to treat itching associated with allergic conjunctivitis.

The label expansion to allergic conjunctivitis makes Dextenza a lot more accessible. Now that Dextenza is no longer limited to the post-surgical setting, sales could put Ocular Therapeutix on a path to profitability.