Eyenovia: Promising Pipeline In Underserved Ophthalmic Diseases

Oct. 08, 2019 11:07 AM ETEyenovia, Inc. (EYEN)3 Comments
Leonard Yaffe profile picture
Leonard Yaffe
2.3K Followers

Summary

  • Eyenovia is a specialty ophthalmic company targeting several ophthalmic needs, including progressive myopia and presbyopia.
  • Management estimates the progressive myopia market to be at least $5 billion.  The company's drug, MicroPine, is a microdose formulation of atropine.
  • The company is also pursuing glaucoma, pharmacological mydriasis, red eye and presbyopia with its proprietary microdosing spray technology.
  • The Eyenovia Optejet system represents an alternative to eyedrops, and may prove to result in greater compliance and lower systemic drug absorption.
  • Progressive myopia mostly occurs in young adults and children.  It is increasing in incidence at an alarming rate.  There are no FDA approved pharmaceutical therapies, and treatment is often specialized contact lenses worn at night to reshape the cornea.

Eyenovia (NASDAQ:EYEN) is a specialty ophthalmic company targeting several opportunities with its proprietary microdose Optejet delivery system, which represents an alternative to eyedrops. It results in simpler, more reliable administration with fewer side effects. The company is using different drugs in this system to treat progressive myopia, glaucoma, red eye and presbyopia, as well as to achieve pharmacological mydriasis (pupil dilation). The latter application, named MicroStat, is expected to be first on the market with an NDA filing in 2020. It consists of a combination of two commonly used drugs for this objective, phenylephrine and topicamide. Management estimates the market to exceed $250 million, as there are an estimated 80 million office-based eye exams requiring pharmacologic mydriasis performed in the US annually, in addition to 4 million cataract procedures that require mydriasis. I view this effort as a means to an end; that is, to introduce the technology and to get optometrists and ophthalmologists familiar with its ease of use and effectiveness.

I am very interested in the opportunity in pediatric progressive myopia, the incidence of which is increasing at an alarming rate. It is estimated that 40% of children in the US have myopia today, versus 20% thirty years ago. Furthermore, a recent study by the Brien Holden Vision Institute concluded that, while 1.4 billion people worldwide were myopic in 2000, that number is expected to grow to 4.8 billion by 2050. Contributing factors include near-work activities such as use of computers and smartphones, and greater time spent indoors. High myopia significantly increases the risk of serious ocular health issues, including cataracts, glaucoma and retinal detachment. Current therapies include orthokeratology (specially designed contact lenses worn at night), multifocal contact lenses, multi focal eyeglasses and off-label compounded atropine. Atropine drops have been used for years, though they are not FDA approved for this indication. Several companies, including Nevakar, Sydnexis and Eyenovia, are in Phase 3 clinical studies with low dose atropine formulations, and the first drug, likely Nevakar's, could be on the market in the 2023-2024 timeframe. While atropine eye drops at a 1% concentration have historically been used, recent studies, eg ATOM 1, ATOM 2, LAMP, have shown that lower concentrations are effective in reducing myopia progression with fewer side effects. Importantly, at lower concentrations such as 0.5%, 0.25% and 0.1%, atropine is less stable and may therefore need to be subject to more stringent manufacturing controls. Eyenovia's MicroPine, with its proprietary spray formulation, could offer a superior treatment regimen. Of note, I recently attended The Myopia Meeting in Newport Beach, CA. This gathering brought together many of the leading optometrists in the US. The presentations on progressive myopia fully supported the increasing prevalence of the disease, its association with more severe ophthalmic conditions, and the efficacy of low dose atropine. Dr. Jeffrey Cooper, a leading authority on the use of atropine in myopia, highlighted prior studies that demonstrated the benefit of lower doses of the drug in reducing the rate of myopia progression significantly, and suggested that there may be a benefit in combining the drug with the use of orthokeratology.

Presbyopia is a disease of aging that results in loss of accommodation (near vision), and people typically wear reading glasses or contact lenses. In the US, over 100 million people have the condition. Several companies, including Allergan (NYSE:AGN), Alcon, Presbyopia Therapies, Orasis Pharmaceuticals and Eyenovia, are studying pharmacotherapies. Alcon (ALC) is using an eye drop formulation to restore the crystalline lens flexibility, while the others have miotic treatments aimed at reducing the pupil size, thereby creating a pinhole effect. Eyenovia is studying microdose pilocarpine as a companion therapy to reading glasses for episodic use. Dissatisfaction with reading glasses is supported by a recent Alcon survey which found that, according to eye doctors, 65% of patients were disappointed to consider reading glasses, and of those patients who had glasses, it was not uncommon for them to be lost or misplaced. Eyenovia's approach would therefore allow people to have the option of not wearing reading glasses on a short term basis, or of bringing along the therapeutic when travelling as an adjunct to glasses.

Eyenovia is positioning itself to enter several large ophthalmic markets over the next five years. Management estimates the pharmacological mydriasis opportunity at $250 million, the ocular decongestant market at $850 million, the glaucoma market at $1.5 billion and the pediatric myopia market at $5 billion. The NDA for mydriasis (MicroStat) is slated to be filed in 2020, the glaucoma (MicroProst) Phase 3 trial should begin this quarter, and the pediatric myopia (MicroPine) Phase 3 three year trial should complete enrollment by year end 2020.

Eyenovia's stock falls in the category about which I have written for the past two years, namely microcaps priced for "non success". The stock trades at $3.70 and there are 19.4 million fully diluted shares. The company has approximately $18 million in cash, and it recorded a net loss from operations of $11.3 million for the first half of 2019. There will therefore be the need for additional financing, either through partnership agreements or an equity offering (or both). Even with additional shares being factored in, I find the valuation compelling at this level, given the opportunities in progressive myopia and presbyopia, coupled with near term milestones. As with all microcap stocks, the risk profile must be appreciated; however, regarding Eyenovia, the drugs are known to be effective and the delivery system, which is the proprietary value, appears to offer advantages over conventional eyedrops. Furthermore, I do not believe that investors appreciate the growing prevalence of pediatric progressive myopia. Although MicroPine is not expected to be on the US market until 2024, I maintain that the current stock price does not reflect the potential revenue stream, and I note that the company should have other drugs on the market by that time.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

This article was written by

Leonard Yaffe profile picture
2.3K Followers
I am an MD by background who runs a healthcare hedge fund. I worked as a sell-side medical analyst for 20 years, covering pharmaceuticals, medical devices, PBMs and drug distributors.

Disclosure: I am/we are long EYEN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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