Why Did Outlook Therapeutics (OTLK) Shares Crash Today?

Outlook Therapeutics (NASDAQ: OTLK) shares plummeted 70% in premarket trading on Thursday, August 28, 2025, following a devastating regulatory setback from the U.S. Food and Drug Administration. The biotech company received a Complete Response Letter (CRL) rejecting its resubmitted application for ONS-5010/LYTENAVA, an experimental treatment for wet age-related macular degeneration. The FDA cited “lack of substantial evidence of effectiveness” as the primary reason for denial, marking another significant blow to the company’s prolonged efforts to enter the U.S. market.

This rejection represents a critical setback for Outlook Therapeutics, which has been working for years to bring its bevacizumab-based eye treatment to American patients.

Outlook Therapeutics’ Shares Crash After FDA Rejection

The FDA’s rejection centers on Outlook Therapeutics’ failure to demonstrate substantial evidence of effectiveness in its NORSE EIGHT clinical trial, where ONS-5010 failed to meet its primary endpoint. This setback is particularly frustrating given that the company’s earlier NORSE TWO trial had successfully met its primary effectiveness endpoint, which the FDA acknowledged in the CRL. The regulatory agency has recommended that Outlook submit additional confirmatory efficacy data to support any future application, creating uncertainty about the timeline for potential U.S. approval.

The market reaction was swift and severe, with OTLK shares falling from a previous close of $2.38 to approximately $1.15 in premarket trading. The stock had already been under significant pressure, with year-to-date losses of 39.68% and a devastating 84.86% decline over the past year. Trading volume surged to over 36.9 million shares, dramatically exceeding the average daily volume of 1.5 million shares as investors rushed to exit positions following the news.

Despite maintaining a modest market capitalization of around $50.6 million, the company faces significant financial challenges with negative earnings per share of -$0.84 and levered free cash flow of -$28.48 million. The rejection adds pressure to Outlook’s already strained financial position, with only $8.9 million in total cash as of the most recent quarter.

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Outlook Therapeutics US-Based Regulatory Woes Continue

CEO Bob Jahr expressed disappointment with the FDA’s decision but indicated the company’s intent to meet with regulators to gain additional clarity on approval requirements. The company is positioning ONS-5010 as a potential FDA-approved alternative to compounded Avastin for wet AMD treatment, a significant market opportunity given the condition’s prevalence as a leading cause of blindness among the elderly. Jahr emphasized that the CRL identified no other outstanding deficiencies in the biologics license application submission beyond the efficacy concerns.

Outlook Therapeutics can take some consolation in its European success, where LYTENAVA has already received marketing authorization from both the European Commission and the UK’s Medicines and Healthcare products Regulatory Agency. The drug became commercially available in Germany and the UK in June 2025, providing a revenue stream outside the crucial U.S. market. This European approval demonstrates that regulators outside the U.S. have found sufficient evidence of the drug’s safety and effectiveness.

The company’s regulatory journey has been particularly challenging, having previously withdrawn its application in 2022 after the FDA requested additional information, followed by another rejection in 2023 due to manufacturing issues. This latest setback represents the third major regulatory hurdle for ONS-5010 in the U.S. market, raising questions about the company’s regulatory strategy and the strength of its clinical data package.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.