Ocular Therapeutix’s (NASDAQ:$OCUL) stock fell again on July 12 by 20.5% as of 12:55 PM EDT. The stock fell after news broke out that Ocular received a complete response letter (CRL) for its lead drug candidate Dextenza. The CRL is essentially a rejection from the FDA, barring the drug from receiving a marketing application. The letter states what next steps Ocular has to take in order to get Dextenza approved.

What happened

The news was probably incredibly disappointing to investors and shareholders of Ocular as well as damaging for the company. This is because the FDA rejection wasn’t the first for Dextenza — back in 2016, Dextenza was rejected due to manufacturing concerns.

This time around, Dextenza was also rejected for the same reasons. In May, an inspection of Ocular’s facilities was done to check whether or not issues identified in the first inspection had been corrected. According to management, the old issues had been resolved, but the inspector — different than the previous one who identified the old issues — found additional issues to Ocular’s manufacturing.

The pharmaceutical company responded to the issues within 15 days, and also gave a close-out response to the FDA on Monday, July 10, requesting a change in manufacturing equipment. Ocular even issued an amendment for Dextenza and requested for an extension to Dextenza’s marketing application just yesterday on July 11 — making many investors hopeful for Dextenza to gain FDA approval. Unfortunately, much to the dismay of both the company and its investors, the FDA did not consider the close-out response or Ocular’s request for an extension before issuing the CRL for Dextenza.

Now what?

Because the FDA did not extend Ocular’s application, it may take the company a while before the FDA can review Dextenza again. However, investors should keep in mind that this is now Ocular’s third attempt at fixing its manufacturing issues. As well, it is important to note that for many pharmaceutical companies, manufacturing is a black box for investors. As a result, investors won’t know for sure if Ocular’s third attempt will meet FDA expectations if another inspection will take place, and whether or not more issues will be identified.

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