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OBG pivotal study recruitment on schedule

EyeGate Pharmaceuticals 7 October 2019 QuickView
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EyeGate Pharmaceuticals

OBG pivotal study recruitment on schedule

Pharma & biotech

QuickView

7 October 2019

Price

$3.40

Market cap

$12m

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Share details

Code

EYEG

Listing

Nasdaq

Shares in issue

3.65m

Business description

EyeGate Pharmaceuticals is a specialty pharma firm developing Ocular Bandage Gel (OBG), a clinical-stage proprietary topical eye drop formulation being advanced for moderate DED and corneal wound healing. EyeGate’s EGP-437 delivers a corticosteroid through an iontophoresis drug delivery system.

Bull

Large market opportunity for OBG in PE, related to dry eye disease.

OBG has shown solid efficacy to date in accelerating wound healing compared to SoC in post-PRK surgery across two trials.

Data expected by YE19 in OBG pivotal study for post-PRK re-epithelialization, potentially leading to approval and revenue generation in 2021.

Bear

The need to raise financing by November 2019 to fulfil clinical development strategy could significantly dilute equity holders.

High level of competition in dry eye market.

EGP-437 missed its primary endpoint in Phase IIb study of post-cataract surgery inflammation and in Phase III uveitis trial, raising uncertainty of future development path.

Analysts

Pooya Hemami, CFA

+1 (646) 653 7026

Maxim Jacobs, CFA

+1 (646) 653 7027

EyeGate’s Ocular Bandage Gel (OBG) is progressing in its ongoing pivotal study in corneal wound healing following photorefractive keratectomy (PRK) surgery. The firm recently met its 75% recruitment target (planned n=260 patients) and data are expected by YE19. If positive, it should lead to a market approval filing in H120. EyeGate will shortly begin a follow-on pilot study in punctate epitheliopathies (PE), a much larger indication that is related to dry eye disease (DED). Prior OBG PRK studies showed improved wound healing and a prior PE pilot trial showed improvement in patient symptoms, which may bode well for OBG’s prospects.

OBG believed to improve wound healing

EyeGate’s OBG is a topical eye drop based on its proprietary, crosslinked thiolated carboxymethyl-hyaluronic acid (CMHA-S). OBG is intended to create a thin, durable and protective coating to a damaged or disrupted ocular surface, serving to facilitate corneal re-epithelization, and the crosslinking may resist degradation. In a 2018 PRK study (n=45), two OBG dosing arms were compared to the standard of care (SoC), a bandage contact lens (BCL) plus artificial tears. Both OBG arms outperformed the SoC; at day 3, 73% and 87% of eyes in the two OBG arms were healed vs 67% for SoC. These data were consistent with a pilot PRK study (n=39) completed in Q117, which also found OBG provided quicker wound closure vs SoC.

PE follow-on study to start shortly, data by YE19

EyeGate received FDA approval in August to begin a follow-on pilot study using OBG to treat patients with PE. In EyeGate’s 2018 OBG study (n=30) in subjects with PE compared to subjects receiving a commercial lubricant drop, OBG showed a statistically significant reduction in symptoms at day 7 and 28, and supporting data in the reduction of central corneal staining reduction (30% for OBG vs 14% for lubricant arm) at day 7. The firm plans to begin enrolment for the follow-up study in Q419, which will assess several endpoints in PE patients. Following pilot study data, expected by YE19, the firm plans to meet with the FDA to establish the most suitable endpoint to use in a pivotal study, planned to start in 2020. If all goes well, the firm plans to launch OBG in both PE and post-PRK wound healing in H221. The PE market is much larger than wound healing, as c 30 million Americans have DED-related symptoms, vs up to 2–3 million corneal injuries per year in the US.

Valuation: EV of $6.0m; funded into late Q120

EyeGate ended H119 with $4.47m cash and since raised $1.9m in equity. Its H119 operating burn rate was $3.57m, but H219 burn should increase given the ongoing and planned OBG studies. It estimates that cash on hand should be sufficient into late Q120 and we anticipate that an additional $5–9m may be needed to fund the firm through the completion of a PE pivotal study (expected by YE20).

Historical financials

Year
end

Revenue
($m)

PBT
($m)

EPS
($)

DPS
($)

P/E
(x)

Yield
(%)

12/17

0.41

(14.56)

(0.93)

0.00

N/A

N/A

12/18

1.65

(10.73)

(0.30)

0.00

N/A

N/A

Source: Company accounts

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This report has been prepared and issued by Edison. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

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The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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Schumannstrasse 34b

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Germany

London +44 (0)20 3077 5700

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United Kingdom

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United States of America

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NSW 2000, Australia

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