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EYEG: OBG-PRK Pivotal Data Upcoming, 2020 Launch? OBG-PE Pre-Pivotal Study Moving Quick, Pivotal in 2020?

By Brian Marckx, CFA

NASDAQ:EYEG

READ THE FULL EYEG RESEARCH REPORT

OBG-PRK: Pivotal Data Upcoming, 2020 Launch Feasible OBG-PE: Pre-Pivotal Study Moving Quick, Pivotal in 2020?

We continue to be encouraged by the recent rapid and consistent progress of both the OBG-PRK and OBG-PR programs. The quick pace the ongoing studies follows speediness in nailing down clinical site, trial design and regulatory prerequisites and approvals. While EyeGate Pharmaceuticals (NASDAQ:EYEG) seemed to have hit just about every red light with their EGP-437 program which eventually ran out of gas when it failed to show sufficient effectiveness in confirmatory late-stage testing, it’s been green light after green light for their OBG programs.

For some context of the swiftness of these programs, topline data from the initial OBG-PE pilot study and the second OBG-PRK pilot study were announced almost exactly one year ago today. Since then, EYEG…

‣ designed and received FDA approval to conduct a pivotal U.S. OBG-PRK study, commenced enrollment in June and by mid-October had completed randomization of the study, which qualified 234 patients of the 250 who had enrolled. The rapid pace of the study has been impressive and kept the timelines on-track with what the company had forecasted prior to its commencement. EYEG anticipates topline data from the study by current year-end and, assuming positive results, believes a de novo filing could happen before the middle of next year.

‣ designed and filed for FDA approval of a U.S. OBG-PE study aimed at evaluating different performance endpoints in PE patients. FDA approval came in early August, the first patient enrolled in early October and EYEG anticipates having topline data by year-end. If all goes well, results will guide the specific design of a U.S. OBG-PE pivotal study - which could potentially begin, and (if the pace of the PRK pivotal study is any guide) possibly even finish, next year.

The reasons behind the relative success to-date of the OBG clinical programs may be numerous and varied and while demonstration of acceptable clinical safety and effectiveness (which is further supported by the long history of use of HA in human eyes and its broad use and extensive successful testing for corneal repair in animals) is certainly part of that, we think it is not unreasonable to assume that the significant unmet need (as it relates to both size of the patient population and the lack of approved therapies) in indications such as PE means that successful development and commercialization of OBG, while of tantamount interest to EYEG, is also shared (to some degree) by other key stakeholders including the FDA. By contrast, while representing a sizeable and attractive commercial opportunity for EYEG, EGP-437 would have represented an alternative means (to, arguably, an acceptable standard of care) to treat the relatively rare condition of anterior uveitis – and, as such, may not have attracted the same degree of stakeholder interest alignment.

Also encouraging is that EYEG has shored up their capital base and addressed what had been an impending de-listing from NASDAQ - which should provide investors as well as creditors, suppliers and service providers greater confidence that they will be able to complete the ongoing studies. In early October EYEG raised $1.875M (gross) via the private placement of 600k common shares (w/ 100% warrant coverage). This is in addition to the ~$2.5M in cash on their balance sheet as of the close of Q3. And given the rapid pace and anticipated upcoming data release announcements, there could be value inflection opportunities in the very near term that could make the next capital raise easier and less costly (dilutive).

The most recent highlights include (see our full report for a comprehensive recap of the OBG-PRK and OBG-PE programs):

OBG-PRK FDA pivotal study

‣ FDA IDE approval in June 2019

‣ Surpassed 25% randomization in late July

‣ Surpassed 50% randomization in late August

‣ Completed randomization of 234 patients (of 250 enrolled) by the second week of October

‣ Anticipated near-term milestones include

◦ Topline data by current year-end

◦ (assuming positive results) de novo FDA filing by mid-2020

OBG-PE exploratory endpoint study

‣ Filed for FDA approval to conduct study in early July

‣ FDA approves study in August

‣ Enrollment commenced by mid-October

‣ Anticipated near-term milestones include

◦ Topline data by current year-end

◦ Reconvene with FDA to discuss results, design of OBG-PE pivotal study

◦ (if all goes well) Commence (and possibly even finish) U.S. pivotal study in 2020

◦ U.S. launch for PE indication

We like the chances for OBG-PRK, while OBG-PE is more wildcard w/ even more upside… As we noted shortly following the announcement in June that FDA approved the IDE for the pivotal OBG-PRK study, given the near-identical trial designs of the pivotal PRK study as compared to the earlier pilot studies and the positive results of both pilot studies, which indicated OBG was more effective than BCL, we like the chances of ultimate success of this pivotal FDA study. (See our detailed discussion surrounding the design and results of the two PRK pilot studies in the body of this report).

FDA IDE approval has additional positive implications: we also viewed FDA IDE approval of the OBG-PRK pivotal study as a significant event as it not only represents a major step towards potential eventual U.S. marketing clearance of OBG in an initial indication (i.e. PRK) but also potentially sets the stage for a pivotal study (or other pathway towards label expansion) in punctate epitheliopathies. The PE market, as we explain below, is ~10x the size of the domestic PRK market, representing a potential multi billion-dollar opportunity for EYEG. So, while not to minimize the initial commercial prospects in PRK, if and when a U.S. pivotal study is underway for a PE indication it could have even much more significant positive implications for the market value of EYEG.

As such, we remain eager to not only hear updates related to progress of this pivotal PRK study, but also updates as to EYEG’s progress towards validating the effectiveness of OBG in the treatment of punctate epitheliopathies. We hope the rapid pace of the PRK program and potential streamlining benefits from (our theorized) ‘aligned interests’ may be a harbinger of what is to come in relation to EYEG’s pursuit of a PE indication. If that proves prescient, it’s not unreasonable that EYEG could be marketing (on label) for both indications by late-2020 or early-2021.

We cover EYEG with a $25/share price target. See link for free access to our updated report on the company.

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