Eyegate Pharma (EYEG) is a thinly traded microcap stock with shares that exploded about two weeks ago, and experienced another 45% pop this morning as volume began to build a base. Volume has been so skinny I think it left many on the outside looking in, but today, on the back of entering into a licensing agreement with Valeant Pharmaceuticals Intl Inc. (VRX) , investors have stepped up. It is always a conundrum creating liquidity in microcap stocks, but what I’ve learned over the years is that a lack of liquidity can drive stocks higher just as easily as it can send them lower.
Today you have a buyer trying to accumulate a position. The problem is, the buyer has become his own worst enemy since sellers are few, as it is customary for a portfolio manager to accumulate a position over time so it moves the needle for his daily P&L. It is clear that a fund in this space is in accumulation mode. Shares started moving this week in front of today’s news release, and it seems like the horses are now out of the barn.
Eyegate Pharma Aims to Revolutionize Eye Care
At about $100 million dollar valuation at today’s $10 price, I fully expect volatility to effect this stock. They are revolutionizing the way drugs are delivered to the eye – the days of injections may be behind us if Eyegate can get through these trials, so the potential for huge further gains is substantial. Investors are lurking in the thin liquidity backdrop of the stock, and for the time being, this will not be a place for the weak of wallet, as double digit moves will become the norm.
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® II Delivery System.
Steve Kanaval is the author of the upcoming Equities.com's Small-Cap Throwdown, a premium newsletter designed to help investors identify the best small-cap stocks to add to your portfolio and trading ideas to profit off them. The first issue pits the hottest beverage small-cap stocks against each other to find a winner. Sign-up here for a free issue today!
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