EyePoint's experimental treatment for an advanced eye disease yielded what management called "clinically meaningful results" in a late-stage trial. Shares were pacing toward their worst day on record anyway.

The small-cap biotech reported Phase 3 top-line results for Duravyu, its lead candidate for wet age-related macular degeneration $(AMD)$, a condition that causes blurred vision or reduced central vision.

The treatment ultimately failed to meet the primary endpoint in two trials, a result that CEO Jay Duker described as "unexpected." He wasn't the only one thrown off by the results: Cantor analysts remarked Monday that the scenario was "so unlikely in our view that we hadn't even contemplated it."

Shares plunged nearly 71% to $4.30, heading toward their worst-ever single-day percentage drop, according to Dow Jones Market Data.

But the data were nuanced. Out of 211 study participants, nine of them lost significant vision. However, their vision loss was caused by other health issues, not by their wet AMD disease progressing or failing to respond to treatment, EyePoint said.

As more of these cases happened to end up in one group rather than being spread out evenly-resulting in what the company called an "asymmetric cohort"-these results impacted the overall average. This muddled the full dataset, causing Duravyu to miss its primary official endpoint in the trial.

Still, the result was a crushing blow for investors who had been betting on Duravyu as the company's next success story. In spite of its small size, EyePoint has gotten products to market before-Dexycu and Yutiq, both in 2019.

However, shares had fallen 19% this year heading into Monday's session, fueled by concerns over the company's widening losses and dwindling cash reserves.

The stock was only up on a year-to-date basis twice this year, with both instances occurring at the start of March after EyePoint announced it had dosed the first patients in global Phase 3 trials for Duravyu in diabetic macular edema.

The latest data readout was "disappointing," Citi Research analyst Yigal Nochomovitz wrote on Monday. Since the results fell short, he sees significantly higher risk in an upcoming trial expected to read out in the fourth quarter.

Nochomovitz slashed the drug's probability of success to 40% from 60%, suggesting Duravyu is more likely to fail than succeed. However, the analyst doubled down on a Buy rating while noting that the stock is likely to "trade down substantially."

The analyst also believes Monday's stock drop was an overreaction.

The rival drug used as a benchmark-Regeneron's Eylea-performed unusually well, Nochomovitz pointed out. As just 0.5% of patients suffered major vision loss, compared to 3% to 8% in historical trials, this made Duravyu look worse by comparison than it normally would.

Moreover, patients on Duravyu needed 42% fewer eye injections, beating Wall Street's expectations and surpassing the 30% reduction threshold needed to be commercially viable.

CEO Duker signaled that the company will push past the setback. EyePoint plans to file a new drug application with the Food and Drug Administration in the first half of 2027, assuming fourth-quarter trial results permit it, he said.