Eyenovia, Inc. (NASDAQ:EYEN) Q1 2023 Earnings Call Transcript May 11, 2023

Eyenovia, Inc. beats earnings expectations. Reported EPS is $-0.15, expectations were $-0.19.

Operator: Greetings. Welcome to Eyenovia First Quarter 2023 Earnings Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to John Gandolfo, Chief Financial Officer. Thank you. You may begin.

John Gandolfo: Thank you. Good afternoon, and welcome to Eyenovia’s First Quarter 2023 Earnings Conference Call and Audio Webcast. With me today are Eyenovia’s CEO, Michael Rowe; and COO, Bren Kern. This afternoon, we issued a press release announcing financial results for the 3 months ended March 31, 2023. We encourage everyone to read today’s press release as well as Eyenovia’s quarterly report on Form 10-Q for the quarter ended March 31, 2023, which will be filed with the SEC tomorrow, May 12, 2023, as well as our most recently filed 10-K. Company’s press release and annual report are also available on our website at www.eyenovia.com. In addition, this conference call is being webcast to the company’s website and will be archived there for future reference.

Please note that on today’s call, we will be discussing investigational product candidates, some of which have yet to receive FDA approval. Please also note that certain information discussed on the call today is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that during the call, Eyenovia’s management will be making forward-looking statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company’s business. These forward-looking statements are subject to a number of risks, which are described in more detail in our annual report on Form 10-K. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, May 11, 2023.

Eyenovia undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as may be required by applicable securities law. With that said, I’d like to turn the call over to Michael Rowe, Eyenovia’s Chief Executive Officer. Michael?

Michael Rowe: Thank you, John, and welcome, everyone, to our First Quarter 2023 Financial Results Conference Call. I will start with an update of our recent FDA approval of MydCombi, how that approval fits within our overall strategy and then provide established update for MicroLine. Bren Kern, our Chief Operating Officer, will follow with an update on our manufacturing and commercial readiness progress. We will then turn things over to John Gandolfo, our CFO, and who will review the financials as well as our partnerships with Bausch + Lomb and Arctic Vision. We will then open the call for your questions. During the first quarter of this year, and more recently, we have made significant progress on all of our stated goals, punctuated by FDA approval of our first product, MydCombi.

We also received very encouraging feedback from the FDA, and believe that we have a clear path forward for our MicroLine Presbyopia program. In terms of manufacturing, we are ramping up our activities and we’ll have our Reno facility online next quarter with Optejet Gen2 clinical batches being produced later this year. Finally, our partnership with Formosa as well as others that we expect to come, will pave the way for additional ophthalmic that leverage our Optejet technology. I’ll begin the call by highlighting our most recent achievement. Just a few days ago, we received FDA approval of MydCombi, our proprietary combination of a microdose formulation of tropicamide and phenylephrine, for inducing mydriasis for diagnostic procedures and in conditions where short-term pupil dilation is desired.

This is the first approved fixed-dose combination of tropicamide and in the U.S. and, importantly, is also the first approved product using our Optejet dispensing device. I cannot overstate the importance to our company of this approval. The Optejet is foundational to our development pipeline as well as our partnered programs. And this FDA approval sets the precedent for the future development of additional thalamic therapies delivered by the Optejet in other high-value indications. The FDA’s approval of MydCombi provides crucial external validation of our technology and is just the first of many ophthalmic indications that can utilize the Optejet. The approval also marks the formal transition of Eyenovia from a development company to a commercial organization.

The management team is extremely grateful to all of our Eyenovia colleagues for their dedication in advancing this program through this important milestone. Since Monday, we have received numerous inbound calls and e-mails from ophthalmology and optometry offices asking when they can get MydCombi. The reasons for wanting the product include the horizontal delivery, the lower drug volume exposure, ease of use for both, the doctors and technicians. One doctor said that she plans to modify her office flow, so that she could dilate patients right in the waiting room, and she didn’t have to have them tilt their heads back. We, of course, see this as very encouraging. We plan to introduce MydCombi later this summer to several key ophthalmology and optometry offices as part of our targeted launch process.

As much as we would like to be out there tomorrow, we need some time to bring our internal manufacturing capabilities, which are more cost efficient online. By early 2024, we expect to have our facilities in Redwood City and Reno at full production capacity. For now, customers and all of you can find out more about MydCombi and soon track our launch progress and ultimately hear what doctors and patients are saying about the product by going to the website mydcombi.com. I’ll now turn to MicroLine, our proprietary topical on-demand pilot parking based therapeutic candidate that we are developing for the temporary improvement in near vision associated with presbyopia. As you’ll recall, presbyopia is the age-related hardening of the eye lens causing blurred near vision.

This is an addressable market representing over 18 million people in the United States alone between the ages of 40 and 55, will otherwise never wear glasses and have the resources for a cash pay product. Our proprietary market research suggests, this could be a multibillion-dollar annual market in the U.S. alone. We recently received feedback from the FDA delineating a clear path forward for this program towards a New Drug Application or NDA. MicroLine is being designed for use with our smaller and more advanced Gen2 Optejet device, which has been optimized for in-home use. The machinery to build and fill the Gen2 cartridge is being installed and validated in our Redwood City facility. And we anticipate running NDA registration batches in the first half of 2024 after satisfying the contracted clinical needs of our partners.

The FDA requires 12 months of real-time stability data on the final packaged product before filing the NDA. So we intend to file approximately 10 months after we run those batches. During those 12 months, however, we will not be sitting and waiting. We will be conducting other critical pre-NDA activities, including support of human factors and clinical work to demonstrate the usability of the Gen2 device in the target population as well as measuring patient preference for the Optejet system. This work will be used to support both, the MicroLine NDA and upcoming commercialization of the product. As an ophthalmic spray in the Optejet device, we believe that MicroLine has a number of unique features that may set it apart from presbyopia eye-drop options.

The features of our technology may make using the product easier, while lowering drug and preservative exposure and potentially improving tolerability. The attractiveness of the device itself has been pointed to as a highly desired feature in market research we have conducted. And MicroLine may also fit better with the business model of many optometrists. Many doctors have a retail portion of their practice where they sell eyeglasses, contact lenses and other products for presbyopic patients. MicroLine could fit well into their paradigm as they may be able to include supporting items such as unique device skins, starter kits and so on as part of those offerings. We recently conducted market research with 100 optometrists where MicroLine was compared with the 5 existing or potential presbyopia eye drops that may be on the market in 2025.

What we found was that MicroLine was rated #1 by the doctors surveyed in terms of meeting the optometrists’ and their patients’ overall needs. These doctors estimated that MicroLine could capture as much as 1/3 of the presbyopia pharmaceutical market, with the other 5 eye drops competing for the remaining 2/3 of the market. Should MicroLine be approved, we believe that the Optejet, with its design, ease-of-use and lower drug volume, distinguishes the product, and ultimately, patients other doctors will be choosing from a number of different eye drops or MicroLine, the one and only spray. Turning to our partnering activities. We were very excited to announce in February a development collaboration agreement with Taiwan-based Formosa Pharmaceuticals.

This agreement seeks to combine our Optejet with Formosa’s unique APMT nanoparticle formulation platform for the potential development of new topical ophthalmic therapeutics that employ the Optejet device. Formosa’s proprietary innovative APMT platform improves bioavailability and solubility of active pharmaceutical ingredients, allowing more homogenous formulations that may expand our universe with existing and future drugs that could benefit from delivery using the Optejet. We believe this agreement with Formosa will open up new and large market indications for potential expansion of our pipeline and may serve as a model for future partnerships. We’re continuing to advance discussions with potential partners that may benefit from Optejet within their own development programs such as glaucoma and dry eye.

Co-development partnerships such as this, addressing large ophthalmic indications with unmet needs are a key part of our mid- and long-term growth strategy. We are continuing to build a large body of data demonstrating the benefits of Optejet over conventional eye drops. In January, we announced positive results from a research study conducted in collaboration with Dr. Pedram Hamrah, Interim Chairman of Ophthalmology at Tufts Medical Center. This study evaluated the gene and protein expression of cytokines and chemokines after treatment with latanoprost, a glaucoma medication preserved with BAK administered via Optejet versus administered by standard eyedrops. In these early findings, the Optejet technology appears superior to standard eyedrops and reducing the inflammatory process.

The Optejet was found to achieve a therapeutic dose of latanoprost with significantly less exposure to those excess drugs and harmful preservatives that can be achieved using conventional drops. These results were also presented at the Association for Research in Vision and Ophthalmology Annual Meeting last month. At this point, I’d like to turn the call over to our Chief Operating Officer, Bren Kern, for our manufacturing update. Bren?

Bren Kern: Thank you, Michael. With FDA approval of MydCombi in hand, we’ve been working with our suppliers to finalize preparations for our upcoming MydCombi commercial launch. Material order plans are being finalized, and we are optimizing processes to align with requests made by the FDA during the review period. Our Redwood City facility, along with our contract manufacturers, continue to support our clinical partners, Bausch + Lomb and Arctic Vision, with clinical supplies being delivered regularly. Additionally, the Redwood City facility has made significant progress in qualifying our fill and finish line to support the Gen2 dispenser platform. This progress has instilled confidence to initiate the design of a high-capacity, automated fill and finish line, which would support our anticipated demand streams for the Gen2 device.

This state-of-the-art system should be installed in the second half of 2024, with additional qualifications occurring thereafter. Additionally, our Reno facility continues to make significant progress in establishing base and injector manufacturing. Recall, on our last earnings call, we noted the facility construction was ongoing. These activities have now been completed, and our Reno office staff has taken occupancy. Production equipment is arriving, and installation and qualification activities will follow thereafter. Last quarter, we announced the addition of Enrico Brambilla as Eyenovia’s Vice President of Product Research. Enrico joined us in April, and we are already leveraging his expertise and rapidly increasing our engineering capabilities through by identification of new hires, engineering tools and increased efficiencies, which will be leveraged across our dispenser and an array of drug products.

I am genuinely excited about the significant amount of progress we have made over the last few months. Our operations capabilities are increasing on a daily basis. And the approval of MydCombi has successfully demonstrated our dispense platform is a viable technology solution to topical ophthalmic drug application. I’d now like to turn the call over to our Chief Financial Officer, John Gandolfo, to provide a financial update. John?

John Gandolfo: Thanks, Bren. For the first quarter of 2023, net loss was approximately $5.7 million or $0.15 per share compared to a net loss of approximately $7.3 million or $0.24 per share for the first quarter of 2022. Research and development expenses totaled approximately $2.5 million for the first quarter of 2023. This compares to approximately $3.7 million for the same period in 2022, a decrease of approximately 32%. For the first quarter of 2023, general and administrative expenses were approximately $2.9 million compared with approximately $3.5 million for the first quarter of 2022, a decrease of approximately 15.5%. Total operating expenses for the first quarter of 2023 were approximately $5.5 million compared to total operating expenses of $7.2 million for the same period in 2022.

This represents a decrease of approximately 24%. As of March 31, 2023, company’s cash balance was approximately $18.5 million compared to $22.9 million as of December 31, 2022. In addition, the company has the ability to draw down an additional $5 million on its Avenue capital credit facility through July 31, 2023, based upon the recent approval of MydCombi. Licensing programs are an important source of current and potential future revenues for the company. And a major part of our strategy is to complete additional agreements as a source of nondilutive capital. In addition to the cash balance I noted above, we have a receivable from our license partners of approximately $975,000 as of March 31, 2023, and I expect a reimbursement payment of approximately $2 million from Arctic Vision for product development expenses in the second half of 2023.

Before we open the call to questions, I will conclude with a brief update on our existing licensing programs with Bausch Health for MicroPine in the U.S. and Canada, and Arctic Vision for all 3 of our products in China and South Korea. MicroPine is a proprietary atropine formulation with a reduction of pediatric myopia progression. It has been shown in clinical studies to slow myopia progression by 60% or more. There are currently no FDA-approved drug therapies for this indication. If left untreated, this can result in retinal detachment, myopic retinopathy and vision loss. Bifocal, multifocal glasses or contact lenses are typically prescribed to myopic children. Recall that as part of this agreement with Bausch + Lomb, costs related to the ongoing Phase III CHAPERONE clinical trial were transferred to our partner, and enrollment is progressing as planned.

Our agreement with Arctic Vision covers Greater China and South Korea and covers MicroPine, MicroLine as well as MydCombi. So Arctic Vision is now licensing all 3 of our current programs in those territories. MicroPine for pediatric myopia in particular, represents a significant opportunity in China. The Ministry of Education estimates that nearly 53% of all Chinese children suffered from myopia in 2020. Our agreement with Arctic Vision provides us sales royalties in addition to development milestones. So if and when approved, MicroPine could be a significant source of non-dilutive funding for our company over the long term. To date, our license agreements have generated approximately $16 million in license fees, and we have the potential to earn an additional $60 million in net license and development milestones as well as reimbursable expenses over the next 4 years.

Upon commercialization, if our products are approved, Eyenovia can earn significant sales royalties as well. We are also continuing to assess potential pipeline expansion opportunities such as our Formosa agreement as we believe we can continue to leverage the Optejet technology to address unmet needs in additional large ophthalmic indications. Pipeline expansion was a significant consideration as we were building our new manufacturing facilities. In conclusion, we continue to be pleased with our performance to date. To summarize our key highlights today, we received FDA approval of MydCombi, a fixed-dose combination of tropicamide and phenylephrine mydriasis, and the first FDA-approved product to utilize the Optejet. We received feedback from FDA on a Phase III MicroLine presbyopia candidate that provides a clear and efficient path forward for the program that can potentially address a multibillion-dollar annual market in the U.S. alone.

We announced a co-development agreement with Formosa Pharmaceuticals. Our manufacturing facility in Redwood City, California is operational. And our second facility in Reno, Nevada, is on track to be operational in the third quarter. We have continued to expand the body of research on Optejet, as shown by the results from our collaboration study with that highlighted the significant potential of Optejet to bypass common adverse effects associated with chronic ophthalmic therapy use. And our licensing agreements with Arctic Vision and Bausch + Lomb are progressing well and continue to offer the opportunity for meaningful development and regulatory milestones as well as line of sight to potential sales royalties, possibly within 2 years. That concludes our prepared remarks.

We would now like to open up the call to questions. Operator?

Q&A Session

Operator: [Operator Instructions]. Our first question is from Matt Kaplan with Ladenburg Thalmann.

Operator: Our next question is from Matthew Caufield with H.C. Wainright.

Operator: Our next question is from Jason McDonald, Private Investor.

Operator: [Operator Instructions]. Our next question is from [indiscernible] with RN and Associates.

Operator: Our next question is from Len Yaffe with Stoc Doc Partners.

Operator: Our next question is from Alex Matthews [ph], he’s a private investor.

Operator: We have reached the end of our question-and-answer session. I would like to turn the conference back over to Michael for closing comments.

Michael Rowe: Thank you very much, operator. And thank all of you for joining us today, and that concludes today’s call. We hope we have conveyed our excitement on our significant progress and outlook for the coming quarter. We have our first FDA approval in hand. And with the approval of MydCombi, our MicroLine presbyopia program is progressing. And we look forward to updating you on the manufacturing progress as well as discussions with potential future partners. So thank you again for joining us, and we look forward to our second quarter update later this year. Bye-bye.

Operator: Thank you. This does conclude today’s conference. You may disconnect your lines at this time. And thank you for your participation.