EyePoint Pharma Jumps 6% On $15.7M Ocumension Investment

Shares in EyePoint Pharmaceuticals climbed almost 6% in Monday’s pre-market trading after announcing that China-based peer Ocumension Therapeutics has made an equity investment worth $15.7 million in the ophthalmic pharmaceutical company.

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Specifically, Ocumension purchased 3.01 million shares of EyePoint’s (EYPT) common stock at a five-day trailing volume-weighted average price of $5.22 per share as of the close of trading on Dec. 29, 2020. EyePoint shares closed 11.5% higher at $6.58 on Dec. 31.

As part of the transaction, Ocumension CEO Ye Liu, was elected to EyePoint’s board, replacing Kristine Peterson who stepped down effective Dec. 31, 2020.

EyePoint’s cash and cash equivalents were estimated at $44 million on Dec. 31, 2020, including the net proceeds from the Ocumension equity investment.

The company expects the cash on hand along with cash inflows from expected product sales and sustained cash conservation activities to help finance its operating plan into H221, assuming no material increase in COVID-19-related closures.

Following EYPT’s 1-for-10 reverse stock split announced on Dec. 8, the company traded on Dec. 9 with 15.1 million shares. (See EYPT stock analysis on TipRanks)

Also last month, EyePoint announced the monetization of its ILUVIEN royalty from Alimera Sciences (ALIM) by selling the royalty to SWK Holdings for a one-time payment of $16.5 million.

In reaction to the company’s monetization of ILUVIEN royalty and reverse stock split, H.C. Wainwright analyst Yi Chen on Dec. 21 reiterated a Buy rating on EYPT stock and set a price target of $16 (143% upside potential).

Chen noted that EyePoint used $15 million of net proceeds towards the redemption of its existing long-term debt with CRG Servicing which could reduce its annual interest payments by $1.7 million.

Additionally, the analyst expects EyePoint to raise more capital via an equity offering and thus forecasted the company to end 2021 with 19.7 million outstanding shares.

Overall, the rest of the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on Chen’s Buy and 1 Hold. The average price target stands at $10.50 and implies close to 60% upside potential to current levels.