Ohr Pharmaceutical Inc said its experimental eye drop showed no significant benefit over a placebo in reducing the number of injections of another drug directly into the eye, but improved patients' visual clarity.
The company's shares were down 3.5 percent at $11 in heavy premarket trading after gaining as much as 14 percent.
The drug, Squalamine, is Ohr's lead product and was being tested in a mid-stage trial in patients with age-related macular degeneration (AMD), the leading cause of blindness among the elderly.
An interim analysis of trial data showed patients getting Squalamine needed an average of 6.2 eye injections, while those on placebo needed 6.4.
The main goal was to reduce the number of required injections of Roche Holding AG's Lucentis, which is approved for treating AMD.
However, the study showed that Squalamine improved patients' visual clarity compared to the placebo. Patients getting the drug experienced an average change of about 10.4 letters, compared to 6.3 for those on placebo.
"We believe that showing visual acuity improvements is far more meaningful to a wet AMD patient than reducing the number of injections, especially when the frequency of injections is already low," Brean Capital analyst Jonathan Aschoff wrote in a note.
Aschoff, who has a "buy" rating on the stock, raised his price target on Ohr to $34 from $21.
AMD has proved to be a lucrative market for Roche and Regeneron Pharmaceuticals Inc. Regeneron's Eylea, another eye injection, is considered to be one of the fastest growing biotechnology drugs with about $838 million in sales in its first full year on the market.
(Reporting by Esha Dey in Bangalore; Editing by Saumyadeb Chakrabarty and Sriraj Kalluvila)