EyeGate Pharmaceuticals — OBG shows benefits in Pilot Dry Eye study

EyeGate Pharmaceuticals (EYEG)

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Research: Healthcare

EyeGate Pharmaceuticals — OBG shows benefits in Pilot Dry Eye study

EyeGate recently delivered positive top-line data in a 20-patient trial studying the firm’s lead product, Ocular Bandage Gel (OBG), in patients with moderate dry eye disease (DED). Compared to the positive control, Allergan’s Refresh Preservative-Free OTC lubricant, OBG eye drops showed improvements in central corneal region staining, high order ocular aberrations (HOA) and best corrected visual acuity (BCVA). These results are indicative of therapeutic benefits and EyeGate is gearing to potentially launch a pivotal trial programme in H220.

Written by

Pooya Hemami

Analyst - Healthcare

Healthcare

EyeGate Pharmaceuticals

OBG shows benefits in pilot dry eye study

Pharma & biotech

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16 April 2020

Price

$5.89

Market cap

$27m

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Code

EYEG

Listing

Nasdaq

Shares in issue

4.63m

Business description

EyeGate Pharmaceuticals is a specialty pharma firm developing Ocular Bandage Gel (OBG), a clinical-stage proprietary topical eye drop formulation advanced for moderate dry eye disease and corneal wound healing.

Bull

Large market opportunity for OBG in dry eye disease.

OBG’s demonstrated resistance to degradation, due to its cross-linking chemistry, differentiates it from conventional topical eye drops and in addition to prolonging corneal contact time, enables the product to be classified as a medical device rather than a drug

Positive data in late 2019 from 250-patient OBG pivotal study for post-PRK re-epithelialization, could also support de novo regulatory application for OBG commercialisation

Bear

The need to raise financing by early 2021 to fulfil clinical development strategy could significantly dilute equity holders.

High level of competition in dry eye market with pharmaceutical and non-pharmaceutical products.

COVID-19 pandemic may cause delays in receiving FDA guidance for starting pivotal DED study, or with proceeding with the trial itself.

Analysts

Pooya Hemami, CFA

+1 (646) 653 7026

Maxim Jacobs, CFA

+1 (646) 653 7027

EyeGate recently delivered positive top-line data in a 20-patient trial studying the firm’s lead product, Ocular Bandage Gel (OBG), in patients with moderate dry eye disease (DED). Compared to the positive control, Allergan’s Refresh Preservative-Free OTC lubricant, OBG eye drops showed improvements in central corneal region staining, high order ocular aberrations (HOA) and best corrected visual acuity (BCVA). These results are indicative of therapeutic benefits and EyeGate is gearing to potentially launch a pivotal trial programme in H220.

Improvements shown in ocular surface measures

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, and the crosslinking may resist degradation. In the 14-day pilot study, OBG demonstrated a 25% improvement in corneal staining vs 15% for control, and a 10% improvement at day 7 (vs no improvement with control). For BCVA and HOA, OBG demonstrated trends of improvement over the two-week period, whereas the control did not. EyeGate plans to meet with the FDA in coming months to go over the design of a pivotal study in DED. Since OBG is classified as a device rather than a drug, the company may only require one DED pivotal trial to obtain approval and, depending on FDA guidance, it is possible that it may not require lengthy duration of therapy to achieve the endpoints needed for approval.

DED is a significant market opportunity

DED is one of the largest therapeutic areas in eyecare, as it is estimated to affect over 16 million US adults, and the market size in North America alone was recently estimated at $2.4bn. Currently only two topical eye medications have been FDA-approved to treat DED, lifitegrast (Xiidra by Novartis) and cyclosporine (Restasis by Allergan). While both are effective at treating the inflammatory factors that contribute to DED, OBG can potentially fill a need for a more durable and stable lubricant formulation that supports corneal health and re-epithelialization, as has been shown in the recent pivotal study on post-operative PRK patients.

Valuation: EV of $19m; funded through Q420

EyeGate ended 2019 with $3.78m cash and since raised $4.5m (net) in equity. Its 2019 operating burn rate was $8.16m, but H120 burn should decrease given the completion of the OBG studies. The company estimates that cash on hand should be sufficient through Q420, but we expect the funding needs could increase if a pivotal study in DED is started by YE20, although the current COVID-19 pandemic may affect timing for study commencement.

Historical financials

Year
end

Revenue
($m)

PBT
($m)

EPS
($)

DPS
($)

P/E
(x)

Yield
(%)

12/18

1.65

(10.73)

(4.57)

0.00

N/A

N/A

12/19

2.69

(7.00)

(2.23)

0.00

N/A

N/A

Source: Company accounts

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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.

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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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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

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Germany

London +44 (0)20 3077 5700

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NSW 2000, Australia

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