EyePoint Pharmaceuticals (NASDAQ: EYPT) stock price has surged hard this week as it became a favorite among StockTwits traders. The shares jumped to a high of $22.40 on Monday, its highest point since November 2019. They have now risen by over 778% from the lowest level this year, bringing the market cap to over $647 million.
Dilution starts after EyePoint surgeEyePoint Pharmaceuticals is a firm that is researching for drugs to help patients with serious eye disorders. It uses its proprietary technology known as Durasert for drug discovery and delivery. Like all companies in the industry, its stock tends to do well when it reveals positive testing results.
In a statement on Monday, EyePoint announced positive results for the phase 2 of its EYP-1901 treatment for wet age-related macular degeneration, popularly known as wet AMD. The statement added that the trial process met its primary endpoint with both doses showing non-inferiority change in best corrected visual acuity (BCVA).
The test also met its secondary endpoints with both EYP-1901 does. In a statement, the company’s Chief Executive Officer (CEO) said:
“The DAVIO 2 clinical trial was designed to support the initiation of Phase 3 clinical trials based on feedback received from the U.S. Food and Drug Administration (FDA) at a Type C meeting last year. The 32-week topline DAVIO 2 data strongly supports our planned Phase 3 non-inferiority design, consistent with the FDA’s recent guidance.”
EyePoint stock price surge lost momentum after the company took advantage of the jump to dilute its investors. It announced a $175 million share offering as it seeks to boost its research in the third phase of trial. In addition to these funds, the company left the door open for another $26.25 million capital raise in the next 30 days.
It is not uncommon for companies to raise cash after their stock prices jumps. This situation is more common for companies that are still in the R&D stage of their development. In EYPT’s case, the company has boosted its outstanding shares from 9.55 million in March 2021 to over 35 million today.
EYPT stock price forecast
Looking at the weekly chart, we see that the EYPT share price jumped sharply in the first part of the year after it published strong research results. This rally saw it rise from $2 in January to $15.53 in September and then it started moving downwards.
The stock then suddenly woke up on Monday in a high-volume environment. Total volume surged to over 35 million, up from the three-month average of 843k. I suspect that the stock will now attempt to fill the up-gap as some investors start to take profits. It will also retreat because of the ongoing dilution and as traders wait for the next catalyst. This downtrend will see it retest the key support at $15.
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