Over the past few weeks, I've been contemplating increasing my investment in OPT to about 10% of my portfolio, with a particular focus on quantifying the risks associated with progressing from Phase 2b to Phase 3 clinical trials. It appears that only 40-50% of drugs that succeed in Phase 2b continue to succeed in Phase 3, which highlights significant risks. Many here in HC indicate a greater confidence in OPT, estimating success rates between 60~90%. How do others consider these statistics when evaluating OPT versus other clinical trial investments, such as the seemingly riskier MSB?
Currently, OPT is priced at $0.64 per share. Assuming a 50% chance of success past Phase 2b and a potential conservative increase to $3.50 per share if successful (with a 50% conditional probability and considering a 30% CR dilution), the expected value per share would still calculate to about $1.25. This suggests that buying shares at 60-70 cents is very rational.
Risks
Bigger TrialMaths Based on Phase 2b results with a p-value of 0.0107 (2.5 sigma), there's just over a 1% chance that our observed effects could be due to chance. This is significantly less stringent than the 5 sigma used in major scientific discoveries, such as the proof of the Higgs boson, but it still denotes a relatively strong statistical significance. With an increase to over 900 participants, could we expect the p-value to decrease, potentially below the FDA's standard requirement of p < 0.05? This seems
highly unlike likely if the Phase 3 SHoRe study closely follows the protocols of Phase 2b.
So I don't think the math is an issue; if the protocol remains the same, we will almost certainly achieve a statistically positive outcome.
Non Maths
Ultimate approval will depend heavily not just on statistical proof versus the null hypothesis but also on effectiveness considerations include:
- Placebo Effect: Given that the Phase 2b trial involves 366 participants and is based on a subjective reading of eye charts, I believe the placebo effect is minimized. You can either read extra lines on the eye chart or not, so placebo could be an issue but very unlikely IMHO
- Short-term Improvements: If the effect is statistically significant but only shifts the curve of decline a few months forward at the cost of twice as many injections, many billions, is it worth it?
- All-Cause Mortality Increases: Hypothetically, if the drug works as intended and sight improves, could that group then be more likely to engage in potentially more dangerous activities like climbing ladders, driving, skiing, packour, lion taming because they are enjoying life more actively? Could all-cause mortality skew as a result?
- Do another Study: While Phase 3b trials effectively demonstrate a drug’s therapeutic value, there remains the possibility that the FDA might identify concerns necessitating further investigation. For instance, could the FDA discover aspects of the drug’s profile that lead them to request an additional 12-month trial? This further study could focus on optimizing dosage, adjusting the frequency of treatment, or revising the inclusion and exclusion criteria to better account for contraindicated groups.
As someone new to following pharmaceutical companies through their trial phases, I'm eager to hear how others assess and quantify these risks.
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