Summary
- EyePoint Pharmaceuticals posted preliminary fourth quarter and full year 2019 revenue guidance on Thursday.
- Data showed the company has shown considerable progress ramping up sales in its two recently approved compounds.
- We revisit the long-term investment case on this emerging ocular concern in the paragraphs below.
- Looking for a portfolio of ideas like this one? Members of The Busted IPO Forum get exclusive access to our model portfolio. Get started today »
No-one is equal to anything. Even the same man is not equal to himself on different days."? Thomas Sowell
Shareholders of EyePoint Pharmaceuticals (EYPT) have been treated to a wild ride in the market over the past several years. Despite the volatility in the shares, the company seems to be making traction and the stock was added to the model portfolio of The Busted IPO Forum model portfolio in the fourth quarter of last year. The company provided guidance around preliminary fourth quarter and FY2019 revenue Thursday. It seems a good opportunity to update the investment case on what I believe is an undervalued 'Tier 3' name. A full analysis is provided in the paragraphs below.
Company Overview
EyePoint Pharmaceuticals, Inc. is a Watertown, Massachusetts based specialty biopharma concern focused on drug delivery solutions for the treatment of eye diseases. The company has two wholly-owned FDA approved therapies and three out-licensed products from which it receives royalties. EyePoint was founded in Australia as pSivida in 2000 and listed in the United States in 2005, opening at $42 a share. The company moved its headquarters to the U.S. in 2008 and re-emerged as EyePoint concurrent to its acquisition of Icon Bioscience in March 2018. Its stock currently trades at $2.00 a share and commands a market cap slightly over $200 million.
The company's Durasert platform uses a miniaturized (3.5mm x .37mm), injectable, sustained-release insert for small molecules that can deliver a drug for up to three years. A drug core is surrounded with one or more polymer layers, with the permeability of those layers and other design aspects controlling the rate and duration of release to meet different therapeutic needs. YUTIQ is a product of EyePoint's Durasert platform and was approved for the treatment of chronic non-infectious uveitis affecting the posterior segment of the eye (NIPU) in October 2018. It contains 0.18 mg of corticosteroid fluocinolone acetonide released at an initial rate of 0.25 mcg/day. This single, three-year dosage is injected into the eye during an office visit.
Source: Company Presentation
EyePoint's second delivery platform is called Verisome, which is a biodegradable liquid or slightly viscous gel that contains the active agent. It is then injected into an ocular chamber where it coalesces into a single spherical dose that settles into the lower portion of the chamber. As the dose degrades over a period of weeks or several months, it gradually and consistently releases the drug. When the sphere is no longer visible to the physician, no active ingredient remains in the eye.
EyePoint's other commercial asset, DEXYCU, came over with the $32 million acquisition of Icon Bioscience in March 2018. DEXYCU, which employs the company's Verisome technology, is the first long-acting intraocular product approved for postoperative inflammation. It is the corticosteroid dexamethasone administered as a single dose via injection at the end of ocular surgery. The administration takes 30 to 60 seconds and obviates the need for patient compliance post procedure. Approved in February 2018 and launched in March 2019, DEXYCU is being marketed by a sales force of ~33 account managers. DEXYCU is patent protected in the U.S. until 2034.
