Ocera Therapeutics Shares Could Rally To $10

Ocera Therapeutics Inc OCRX's lead drug, OCR-002, has “the potential to become the gold standard” for the treatment as well as prevention of overt hepatic encephalopathy in patients with liver cirrhosis, H.C. Wainwright’s Ed Arce said in a report. He initiated coverage of the company with a Buy rating and a price target of $10.

HE is the primary complication of liver cirrhosis and is prevalent in most patients. Cirrhosis is a condition with no approved treatment options and can progress to coma and death.

Ocera’s OCR-002 “directly treats the underlying cause of HE by acting as an ammonia scavenger (the most physiologically sound approach) to rid the body of toxic hyperammonemia (too much ammonia in the blood), rapidly correcting the decline in consciousness and mental awareness, characteristic of an acute episode of HE,” analyst Arce wrote.

Performance Of OCR-002

Ravicti is an earlier ammonia scavenger that has been approved for urea cycle disorders. However, it works only via the liver, while OCR-002 also removes ammonia from muscle tissue, “offering not only a more complete (and likely more efficacious) mechanism, but also one appropriate in patients with hepatic insufficiency,” Arce mentioned.

The analyst said that the positive thesis on Ocera’s stock was based on the following key features of OCR-002:

1. It is the only ammonia scavenger available, or in development, for treating HE.
2. Its positive efficacy in key STOP-HE trial is “substantially de-risked,” given prior Ravicti data.
3. Availability in both intravenous and oral formulations.

“We view the Phase 2b data readout of the STOP-HE study, expected in 1Q17, as a likely substantial stock catalyst,” Arce commented.

In Wednesday's pre-market session, Ocera shares were up 13.64 percent at $2.50.