EyeGate Finds New Paths to Dollars, Deal

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EyeGate Pharmaceuticals had hit a wall. Its venture investors were tapped out, and the company needed capital to continue running clinical trials on its lead product. CEO Stephen From turned to the public markets, leading the company through a unique – and small IPO. With $4 million from the offering, the company signed an agreement with Valeant Pharmaceuticals Inc. to help fund the trial. The partnership enabled the company to raise another $10 million from investors, putting it on track to start a confirmatory Phase III clinical trial.


Tom Salemi: Hi, everyone, welcome back to the OIS Podcast. This is your host, Tom Salemi. Thanks for taking a few minutes to visit with us today. Our guest is Steven From. He is President and CEO of EyeGate Pharma. EyeGate has had quite a year. The company managed to go public a year ago. Unfortunately, the company faced some of its own challenges that Steven will hit upon in a few minutes, but it did manage to raise $4 million in an unconventional IPO, enough to keep the company going forward and to pursue a partner for its product to treat uveitis. EyeGate and Steve From were able to go forward. They struck in interesting deal with Valeant Pharmaceuticals, which is of course not known for its interest in early stage opportunities. But it committed another million dollars to the company and signed a deal that could equal much, much more than that, giving the company the legs it needed to follow even more capital, to raise even more capital from the public market. So EyeGate is one of those companies that is finding a way to move the ball up the field, and it’s the kind of story we certainly like to tell here. Looking past the financials, the company had some clinical trial milestones to report, some progress in its clinical trials that Steven will get into in a moment. And at the end of the conversation, he’ll share some early details on some intriguing technology that EyeGate hopes to be pursuing in the future. So I hope you enjoy this visit with Steven From of EyeGate Pharma.

TS: Steven From, welcome to the Podcast.

Steven From: Hi, Tom, and thanks for inviting me.

TS: It’s a pleasure to have you. You’ve had a busy year, and I’m sure it’s going to get busier. You recently announced that you’ve begun a second phase 3 trial. It’s actually a confirmatory study, right, for EGP-437 as a treatment for uveitis. Can you tell us a bit about that news, why it’s important, and tell us a bit about the trial itself?

SF: Yeah, of course. So as you mentioned, it’s our confirmatory or second phase 3 study for anterior uveitis. Using EGP-437 delivered with our unique delivery platform, the iontophoretic system. And so this is really important for us because it’s potentially leading after this trial to an NDA filing. So which gets us one step closer to being a commercial product. And so that’s really exciting for us. It’ll be the first time that a brand new delivery vehicle is being used in ophthalmology in a long time, and it’s unique technology, as I mentioned, iontophoresis. But I think it’s going to be really exciting, you know, to be able to have something like this approved.

TS: So tell us a bit about your technology. Now EyeGate, would you consider it a platform company with products, or a product company with platform? Or am I making a distinction that really doesn’t exist?

SF: No, I think the distinction exists. So right now we are a platform product, or sorry, a platform company with products. But we went public recently, and I think part of our strategy is to become more than that, and to grow up to be a real ophthalmology company per se.

TS: What was – let’s kind of move into the move onto the public markets. You had your IPO earlier this year. It was an unusual approach to doing it, but I think it’s one that many other companies would like to replicate if they could to get access to some moneys in the public market. What was the IPO experience like? Can you tell us a bit about the process?

SF: Yeah, that was interesting because as you mentioned, we did it a little bit differently. And it was more based on circumstance of EyeGate than anything else. I mean we would have preferred to have done a traditional IPO route. We were in a position, unfortunately, where our current investors, venture capitalists, just didn’t have the ability to keep funding the company. You know, they’re more your smaller VCs based in France, the majority shareholders. And so they were running out of funds themselves. And so we had to figure out a way to go forward. And they weren’t keen on us going and doing another private round because they really thought they would lose control of the company without being able to participate in a meaningful manner. So I was able to find a way. Luckily, the markets were in pretty good shape, so I was able to find a way to help take us public without doing it the traditional route.

TS: And how much did you raise in that offering, and what was different about this process than, say, a more traditional IPO process?

SF: Right. So it started out as a traditional IPO process. But because we didn’t have any participation coming from our insiders, it was really difficult to get traction with the larger investment community. They wanted to see that they weren’t being abandoned. So what we decided to do was do a small raise and go OTCQB. So it wasn’t a traditional NASDAQ listing. So we did an OTC. We raised 4.1 million back in early February of 2015, and that allowed us to go public. So that was a really good first step. But you don’t want to say OTC. So our thoughts were very quickly we want to get up to NASDAQ. So now we’re a public company and we needed to do something that would allow us to go raise further funds which would be sufficient enough to go up to NASDAQ. So the one thing that I – there’s only two things really that can help you do that. One is data and the other is getting a nice licensing deal done. So we focused on doing both of those in parallel, and I was lucky enough to get a deal done with Bausch and Lomb/Valeant, which was sufficient enough for us to go out and do a larger fund raise, a $10 million fund raise which closed in August. And that was sufficient to go up to NASDAQ.

TS: Oh, that’s interesting. Just to finish life on the public markets, and you were able to raise some additional moneys later in the summer, correct? Or in the fall?

SF: Yeah. So that’s the 10 million I just mentioned.

TS: Yeah.

SF: So we did a 4 million OTC listing in February. July 9 we closed the Valeant deal. August 4 we closed the 10 million raise publicly. So that was, again, sufficient to go up to NASDAQ.

TS: That’s one of the – well, it’s not a secret, per se, but one of the things about biotech IPOs that always gets overlooked is the fact that the VCs themselves still have to keep kicking in and keeping their shares as a lot of these companies find their way to the public markets. It’s a real challenge.

SF: It is a challenge. You know, and typically they would expect the strategics or the larger partners to come in and take over. And so that’s why I focused on that. It made a lot of sense since my VCs weren’t in a position to keep on funding the program, that I go look for strategic help. And so that was really the impetus for me going out and reaching out to all the larger pharma companies.

TS: And you did fine. You mentioned Bausch and Lomb/Valeant. And the deal is – and you can give us some more details, but they’re funding the trial that we opened up this conversation with, at least starting providing some of the money for that. You’ve got, from what I’ve read from the S1 documents, a million up front from Valeant, and then could receive milestone payments of 32 and a half million. Are those figures about right?

SF: Yeah, that’s correct. So we did the licensing deal. We were able to do it fairly quickly because what we did – so this is a really another interesting story. Because we wanted it done quickly, we kept it at the one indication which is in phase 3, which is uveitis. And so the size of the transaction really reflects the size of the market for a corticosteroid in anterior uveitis. But it’s obvious that Valeant or Bausch and Lomb is interested in larger indications. So in order to get the deal done quickly, we focused on uveitis, which was easier for both parties, easier for them because we had our first phase 3 completed. And they’re more of a risk-free type of organization. They typically only do transactions with products that have been approved. They don’t usually do research or development type of transactions. So it was another way to get them more comfortable with the company and our platform was to focus on this smaller indication. And then they have the first right for other indications with the same drug-device combination.

TS: And you’re right about Valeant. Were you surprised sort of to have them show interest in a company at this stage? Or does uveitis just present such a great opportunity that it’s clear why they would be interested in this partnership?

SF: Good question. It’s actually – I saw there was a bit of surprise because, as a mentioned, they don’t do a lot of licensing deals or research deals. And I don’t thing it’s uveitis per se. I think it’s the platform. You know, it’s a unique platform. One of the things that’s really great about our platform is it’s so simple to use that we even include optometrists in our studies, in our phase 3’s. And for Bausch and Lomb, they have a really strong franchise for corticosteroid eye drops, and a large portion of the prescriptions come from the optometry community. So it was really important to be able to have a platform that could be utilized by the ophthalmologists as well as the optometrists. And it provides a new revenue for the optometrists because there’ll be a reimbursement code for the treatment or the procedure.

TS: That’s interesting. And they are two very different populations, so I could see it being a great challenge for a smaller company trying to sell into both.

SF: Well, that was our other – so when I was out on the road the first time – we talked about the small IPO – that’s one of the main questions everybody focused on. You’re going into the second phase 3. That’s when you start putting your sales and marketing team in place to get ready for launch. How do you plan on doing that? And so it was a difficult question to try and answer because at that time I did not have a licensing agreement in place. So you have to have a foot in both camps and say, look, we’re going to get ready, and at the same time we’re talking to organizations that we’d like to license it to. So it was much easier the second time, you know, five and a half months later when I’m out on the road trying to raise more money because I had the licensing agreement in my back pocket. And so that’s what I led with. And that got a lot more people comfortable, and that’s how we were successful at raising the 10 million. And we did it, you know, fairly quickly.

TS: We’re going to take a quick break from this conversation to invite you to come to OIS@ASCRS. To register, go to OIS.net. It’s a snazzy new website; it’s just been redesigned, but you can still find the register button there. Register and you’ll be seeing us on May 5 in New Orleans. If you would like to tell your company’s story on the stage of OIS, of course go to the presenting application button. Push that, share your information and your story, and we hopefully will see you on stage at a future OIS. Now back to this conversation.

TS: One of the weaknesses of this format is the inability to see things. But can you just give us a sense of how is your technology simple enough to use in both markets and can be used in the optometry market? Can you describe what it looks like and sort of how it works?

SF: Yeah. So you know, the technology itself, it’s a little applicator or cup, I call it, that sits on your eye. And actually this treatment is done in office. So it’d be the optometrist or ophthalmologist that places it on your eye. And one of the interesting things, as you’re aware and the audience is probably aware, putting steroid into the eye can cause side effects. And the one that we’re most mindful of is an increase in ocular pressure. What we’ve been able to show in all of our studies, including the first phase 3 uveitis, is that we mitigate that issue. We’re not really seeing the traditional spikes. In fact, in that first phase 3, the design was against corticosteroid drops, against the standard of care. And we actually had a better safety profile than the drops did, even though we’re putting dexamethasone into the eye, and large quantities of it. So that’s where the optometrist community comes in, and that’s also why a large company like Bausch and Lomb got excited, because you know, the optometrist what I call the softer steroid, the ones that don’t have to – where they won’t have to deal with those complications or side effect issues.

TS: Sure.

SF: So you get the best of both worlds with our product. You’ve got a strong steroid which gives the ophthalmologists comfort that it’s going to be potent enough to take care of the more severe inflammation, and it gives the optometrist comfort that it’s not causing the traditional problems that you see, and so they can use it like a soft steroid on more ocular surface type conditions.

TS: So will your new trial, and forgive me if you already said this, will it include optometrists in there, or is it just ophthalmologists?

SF: Yes, yes, definitely. In the first study, we had some optometrists and we’re including even more optometrists in the second phase 3.

TS: And are they – I’m not as familiar with optometry as I will be, because it’s an interesting area and it’s one that I want to learn a lot more about. But how is it having them involved in a clinical trial? I assume that they follow similar protocols, just as able to participate in a trial as ophthalmologists?

SF: Yeah. So again, another good question. So it’s not as easy. So yes, they do have to follow all the same rules. So there aren’t as many sites. So when we look at optometry sites, we’re looking at the larger academic institutions, not the small private ones. Because they’re set up to do clinical trials. They don’t do a lot of them, but they’re able to handle that.

TS: Fascinating. So what are some of the other areas you may pursue? I know you had, earlier on in your life, you had a focus on dry eye. Is that still an area of interest going forward? Or are you looking at other spaces?

SF: Well, where we’re focusing first is on two other indications. One’s back of the eye, and that’s macular edema. And the other one is going to be inflammation post cataract surgery. OK. So those are two larger indications or markets than uveitis, so they make a lot more sense for us to focus first. I still believe ocular surface is a great place for us to go to, but I still see a lot of difficulty in getting drugs approved for dry eye. And I don’t think it’s for the faint of heart, and I’d rather focus on these two first before I go back to dry eye.

TS: Interesting. And finally, what is the next twelve to 24 months look like for EyeGate? What are you hoping to accomplish, both clinically and financially?

SF: Yeah. OK, so we’ve got one product that’s in the clinic, OK, so we’re going to focus on EGP-437 as much as we can. Like I mentioned, macular edema where we have really great data, showing that we can take the edema down in all types of macular edema patient populations. The cataract surgery inflammation. We’re also then looking at doing another version of our device. So we’re using iontophoresis with a little, small, tiny electric current being applied, and so we need to put a charge on the drug. We’re actually taking that electronics, miniaturizing it, and putting it into a contact lens. We’re also loading drug up into the contact lens, and we’re looking at having this version of contact lens that could be used at home to treat back of the eye diseases like macular degeneration.

TS: Now would the function of the lens be purely delivery? Or would it have vision correcting qualities as well?

SF: We’re not there yet, but you can envision it having both. So the way we’re looking at it right now is it’s something that you would probably wear for a couple of hours at a time, maybe once to twice a week. And it would be disposable. So it would be your typical materials that you would see in soft contact lenses, and we’re working on the prototype right now. We’re hoping to have our first animal data towards the end of this quarter, early next quarter.

TS: And are you looking for other partners in that space? Or given that your relationship with Valeant, is that sort of – do you have to go through them first before even seeking other partners?

SF: So we’re not seeking other partners right now, especially for that early a project. We want to develop that further, and that way it’ll allow us to create more value with that once we’ve done that. We think that’ll be really valuable. We think that’s going to change the way a lot of people think about treating back of the eye diseases if you have a contact lens powered, hopefully wirelessly, and it gives you the ability to treat yourself for macular degeneration or other retinal diseases in the comfort of your own home, with a disposable contact lens. So the other thing, too, though, before we depart, is that we’re also looking at other assets. Now that we’re a public company and we have access to a different type of resource base than when we were private, we’d like to grow beyond iontophoresis and become more of an ophthalmology company. So we’re looking at other assets that perhaps they’re housed in companies that were in a similar position that EyeGate was in a year ago, and so we’re looking to see if we can get access either through in-licensing or acquiring other assets.

TS: Do you think you have the ability to raise the funds necessary to complete those kind of deals? Or do you have it already in the bank with the moneys you’ve raised so far?

SF: So we have enough money to complete the development for uveitis and to do a few other small projects. I think if we bring on exciting enough assets, that will be the impetus to go out and raise further funds. But it would be for a good reason. I don’t really see it being overly dilutive if we’re doing that to create value with other assets that we bring in.

TS: Fascinating. Well, I congratulate you on the start of the trial and your successful fundraising on the public markets. It’s obviously a tumultuous time, more so than last year, but it’s great to have access to the capital you’ll need to grow the company.

SF: Right. I appreciate it, Tom. Thank you very much.

TS: Steven From, thanks for joining us on the Podcast and sharing the EyeGate Pharma story. It’s great to see a company that really is working to keep its programs moving forward to finding a way to getting it done. The OTC IPO was somewhat unorthodox, but clearly effective and has positioned the company to move forward into some new, exciting directions. So thanks for sharing your story, for being so candid, and thank you for listening to the OIS Podcast. Don’t forget we would love to see you on May 5 at OIS@ASCRS. Go to OIS.net and register, and we will see you in New Orleans.