Eyegate Pharmaceuticals Inc (NASDAQ:EYEG) Likely Takeover Candidate

Eyegate Pharmaceuticals Inc (NASDAQ:EYEG) is one name that continues to rocket up the charts. The company first took off in November after announcing interim data on the effects of iontophoretic delivery of its EGP-437 ophthalmic solution on patients with macular edema. Then this week shares rocketed higher again after two investment firms issued bullish ratings on the small cap pharma company. We at Insider Financial like what we see and think there's more in store for EYEG, including a possible buyout.EyeGate is a clinical-stage specialty pharmaceutical company that is focused on developing and commercializing therapeutics and drug delivery systems for treating diseases of the eye. EGP-437, the Company’s first and only product in clinical trials, incorporates a reformulated topically active corticosteroid, Dexamethasone Phosphate that is delivered into the ocular tissues through EyeGate’s proprietary innovative drug delivery system, the EyeGate(R) II Delivery System.In November, the principal investigator of the trial Dr. Jeffrey Heier declared:

"Overall, the interim data from this pilot trial suggests that iontophoresis can non-invasively deliver EGP-437 to the back of the eye. The non-invasive delivery of EGP-437 has demonstrated a positive response in some patients with macular edema. We believe that this data is encouraging, and warrants an extension to the trial to continue to work on the ideal dose and dosing regimen for the iontophoretic delivery of EGP-437."

The key here is that the data from the ongoing Phase 1b/2a study showed that iontophoresis, a non-invasive process that uses low-level electrical current to deliver the drug, can deliver EGP-437 to the back of the eye. This potentially represents a significant route-of-administration advantage over an injection into the eye. This is by far a better solution than EYLEA (aflibercept) from Regeneron Pharmaceuticals Inc (NASDAQ:REGN), which is injected into the eye.Eyegate CEO Stephen From said:

"The interim results of the trial are highly promising and suggest the ability of the EyeGate(R) II Delivery System to deliver drug to the posterior segment of the eye, which could present important new opportunities for our iontophoretic technology and drug formulations in additional disease indications. We look forward to additional data from the extension of this trial, which we expect in mid-2016."

Last month, EYEG announced that the first patient was enrolled in the Company’s confirmatory Phase 3 clinical trial of its EGP-437 combination product, the Company’s lead product, in patients with non-infectious anterior uveitis, an inflammation of the anterior chamber of the eye. This is a key step in bringing EGP-437 to market for the treatment of uveitis. Uveitis is one of the leading causes of preventable blindness in developed counties, with anterior segment uveitis accounting for 60-90% of reported cases. Current treatments, which include topical steroids to alleviate symptoms and control inflammation, may present compliance and self-administration challenges, which can potentially be overcome with EGP-437 delivered via iontophoresis.

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The Phase 3 trial is a double-masked, randomized, positive-controlled trial being conducted at up to 60 clinical sites in the United States. The trial intends to enroll up to 250 subjects and is designed to evaluate the safety and efficacy of iontophoretically-delivered EGP-437, a novel formulation of dexamethasone phosphate ophthalmic solution, through the Company’s EyeGate II Delivery System, in patients with unilateral or bilateral non-infectious anterior segment uveitis. Subjects will receive three treatments of either EGP-437 iontophoresis treatment or a placebo iontophoresis treatment. Patients in the EGP-437 arm will receive placebo eye drops, while patients receiving placebo iontophoresis treatment will be given prednisolone acetate (1%) drops. Eye drops for both arms will be administered for up to 28 days and for up to 8 drops per day. The primary efficacy endpoint is the proportion of subjects with an anterior chamber (AC) cell count of zero at day 14.

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Currently trading at just a $26 million market cap, we think EYEG has more room to run. The company has started receiving coverage from some major Wall Street firms. H.C. Wainwright initiated coverage this week with a $10 price target. Rodman & Renshaw issued a BUY rating as well. Before that, Chardan Capital initiated coverage in December and set a “buy” rating and a $6.00 price objective on the stock. Maxim Group initiated coverage on shares of Eyegate Pharmaceuticals in November with a “buy” rating and a $11.00 price objective on the stock.

We think EYEG could be a possible takeover. Likely buyers include Regeneron, which would like to get its hands on Eyegate, or Valeant Pharmaceuticals Inc (NYSE:VRX). Eyegate already has an exclusive, worldwide licensing agreement with Valeant for EGP-437 in the field of uveitis. An acquisition of EYEG would be a drop in the bucket for Regeneron or Valeant. Either way, we think EYEG will be one of the best performing small cap biotech stocks this year. We will be updating Insider Financial with the latest developments on EYEG. Be sure to sign up today to stay up to date!Disclosure: We have no position in EYEG either long or short. We have not been compensated for this article.