OPTR Under Pressure; Analyst Downgrade Fans The Fire

Shares of Optimer Pharmaceuticals (NASDAQ:OPTR) are off 6% from their peak earlier this month, and have fallen nearly 15% from their 52-week high, as investors are closely eyeing prescription trends for the company’s lead value driver Dificid. Dificid is a next generation antibiotic indicated for the treatment of C. difficile infection, which can cause severe and life threatening diarrhea. The new treatment was launched in July 2011, and a report out today from Bank of America Merrill Lynch is highlighting slowing script trends, noting a flattening of the launch curve. The brokerage firm has downgraded OPTR as a result, from Buy to Underperform.

Treatments for C. difficile include effective and cheaper generic drugs like metronidazole and vancomycin, and physicians believe that these less expensive therapies can handle most cases of C. difficile infection. In fact, many doctors start patients off with one of these older products (1st line), and will reserve treatment with Dificid for when the patient shows resistance or recurrence (2nd or 3rd line). Furthermore, combinations of the older therapies may also be used before doctors move to treatment with Dificid. While Dificid has gained a foothold in the market, prescription trends may be indicating that the overall share that can be gained by this product could fall short of expectations. Analysts estimate that the product could peak at ~$500M. Shares of OPTR are now highly sensitive to the prescription trend data, and are likely to be volatile in the coming weeks as the numbers roll in. Expect OPTR to weaken today on the downgrade and some nervousness that other analysts could reduce estimates.