Here's Why Omeros Corporation Is Gaining More Ground Today

What happened

Shares of Omeros Corporation (NASDAQ: OMER) rose as high as 10.8% this morning after the biotech announced a U.S. Food and Drug Administration approval that expands its commercial-stage drug to the pediatric population, extending its period of market exclusivity in the process. The stock has since settled down to a more modest gain of 3.2% as of 11:20 a.m. EST on Tuesday.

So what

Each year eye surgeons perform millions of cataract removal and lens replacement procedures that would probably go much more smoothly with the use of Omeros Corporation's Omidria. It's the first drug specifically approved to prevent pupils from contracting during these common procedures, and today's announcement means it's also available for U.S. pediatric patients.

Upward sloping chart drawn on a chalkboard.

Image source: Getty Images.

Today's stock movement has a lot more to do with exclusivity periods than patient populations. Patents can be disputed, but the FDA pediatric exclusivity extension is an ironclad guarantee the regulator won't approve a generic competitor for any of the drug's approved indications until a specified time.

Now what

Omeros recently fought off a patent challenge for Omidria, and the settlement agreement will probably result in limited generic competition from privately held Par Pharmaceutical entering the U.S. market in April 2032. With the freshly granted pediatric extension, it looks like all others will have to wait until April 2034.

Third-quarter Omidria sales surged 92% higher than the same period last year, but they still have a lot of room to grow as they march toward the $1 billion mark. At an annualized run rate of around $87 million, there's still a lot of room to grow.

Today's pediatric extension increases the odds this revenue stream will continue growing into the long term. Add a potential blockbuster in clinical-stage development and this stock looks like the best buy in biotech right now.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.