Eyenovia, Inc. (NASDAQ:EYEN) Q2 2023 Earnings Call Transcript

Eyenovia, Inc. (NASDAQ:EYEN) Q2 2023 Earnings Call Transcript August 13, 2023

Operator: Greetings. Welcome to the Eyenovia Second Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I would like to hand the call over to your moderator, Eric Ribner of Investor Relations. Thank you. You may begin.

Eric Ribner: Good afternoon, everyone and welcome to Eyenovia’s second quarter 2023 earnings conference call and audio webcast. With me today are Eyenovia’s Chief Executive Officer, Michael Rowe; Chief Financial Officer, John Gandolfo; and Chief Operating Officer, Bren Kern. This afternoon, we issued a press release announcing financial results for the 3 and 6 months period ending June 30, 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 June 30, 2023, which will be filed with the SEC tomorrow, August 11, and our most recent filed 10-K. The 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 for future reference. Please note that on today’s call, we will be discussing products, product concepts and 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 provision of the Private Securities Litigation Reform Act. We caution the 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 those 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 and other SEC filings.

This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 10, 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, Eric and welcome, everyone to our second quarter 2023 financial results conference call. We have an extremely productive second quarter, and I am excited to share with you our progress this afternoon. During our last conference call, we spoke of our efforts to begin our targeted launch of Mydcombi and our goal of partnering with other companies to leverage and monetize the Optejet technology beyond our own development programs. Today, we will provide an update for both of these topics, starting with Mydcombi and our recent first commercial sale. As you’ll recall in May, we received FDA approval of Mydcombi, the first and only fixed combination of tropicamide and phenylephrine and the only ophthalmic spray for inducing mydriasis for diagnostic procedures and then [indiscernible] short-term pupil dilation is desired.

We are proud to have delivered the first FDA-approved product that leverages our Optejet dispensing device. This important advancement was featured at the annual OCTANE Ophthalmology Tech Forum in June, where we highlighted the innovative nature of Mydcombi and the future of the Optejet technology to the ophthalmic community, including potential industry partners, thought leaders and investors. We’re thrilled to have initiated sales of Mydcombi to a targeted group of professional offices. Ophthalmologists, optometrists, technicians and patients are now experiencing the benefits of Mydcombi themselves, and together, we are learning how the product can streamline practices and help with patient management. As we announced last week upon receipt of our New York pharmacy license, we achieved our first commercial sale of Mydcombi to world-renowned, board-certified ophthalmologist, Dr. Nathan Radcliffe, who becomes first to incorporate Mydcombi into his daily practice.

Last week, we conducted training at OC Retina in Orange, California and as soon as our California pharmacy license is received, we anticipate initiating sales in this state. We are already receiving positive feedback from doctors, technicians and patients, and we anticipate this will only increase with additional sales and marketing ramp up. To that end, we are in the process of formally adding additional commercial manufacturing sites to support Mydcombi, including our Redwood City facility as well as Coastline manufacturing as a secondary site. Bren will provide additional details during his manufacturing overview. These additional sites will provide us with increased capacity to meet and anticipate demand not only of Mydcombi, but potential future ophthalmic therapies utilizing the Optejet.

If you would like to find out more about Mydcombi, track our launch progress and hear what doctors and patients are saying about the product, you can go to the website at mydcombi.com. Now I’d like to talk a bit more about our efforts to leverage and monetize the Optejet technology through partnerships with other companies. We have engaged in active discussions in this area with no fewer than 4 companies across a variety of topical ophthalmic markets. Some of these discussions take longer than would be assumed because we need to first determine if the products under discussion are compatible with the Optejet. This is something that is true for any container closure system. And usually, those tests include both spray performance as well as material compatibility.

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We anticipate being able to announce the first of these arrangements very shortly. Our goal with all of these discussions is to marry our leading delivery technology with a new or unique drug asset to bring the best of both worlds to patients and prescribers, while providing near-term revenue and/or capital opportunities for the company. I’ll now provide an update on Apersure, our intended brand-name for the MicroLine project. Apersure is a proprietary topical on-demand pilocarpine-based therapeutic candidate that we are developing for the temporary improvement in near vision associated with presbyopia. As you may know, presbyopia is the age-related hardening of the eyes’ lens causing blurred near vision. This addressable market represents over 18 million people in the United States alone between the ages of 40 and 55, who otherwise never wore glasses and have the resources for a cash pay product.

Our proprietary market research suggests this could be nearly $1 billion annual market in the U.S. alone. As we discussed last quarter, we received feedback from the FDA, outlining a clear path forward for this program towards a new drug application, or NDA, and we continue to make progress on this front. Apersure is being designed for use with our more advanced Gen 2 Optejet device, which has been optimized for in-home use. These will be manufactured in our Redwood City facility, and we anticipate that manufacturing of registration batches will commence in the fourth quarter of this year. Based on the FDA requirement of 12 months of real-time stability data on the final package product before filing an NDA, we plan to file the NDA approximately 12 months after we run those batches to late 2024.

Apersure differs from the current topical drug treatment option for presbyopia on the market and those in development, and that was a drug-device combination. As such, many optometrists would be able to include Apersure as an offering to patients along with eyeglasses. Apersure has been described by some in market research as a second pair of invisible glasses or the way the [indiscernible] vision for those times when wearing glasses is not desirable. We tested this concept with 100 optometrists, who found that Apersure would meet the needs of both themselves and their patients better than any other pharmaceutical option that they have or believe will have available. These doctors estimated that Apersure ophthalmic spray could capture as much as one-third of the presbyopia pharmaceutical market, with the other five products, all eye drops, competing for the remaining two-third of that market.

If approved, we believe that Apersure administered using the Optejet, will stand out as the one and only spray distinguished by its ergonomic design, ease of use and potentially as it changes side effect profile. 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. As Michael mentioned, we continue to expeditiously build out our manufacturing capabilities in support of Mydcombi and registration batches for Apersure. To expand upon the Mydcombi-targeted launch, we have filed with the FDA a request to approve the use of an additional manufacturing site, Coastline International. The FDA has given us a PDUFA date of mid-November 2023 for the site to be approved for use. Coastline has already been manufacturing clinical supply for us for over a year and has extensive experience with the Optejet. Following the PDUFA, we anticipate to be a smooth ramp up and the team at Coastline is eager to support our commercial manufacturing needs. We also submitted our Redwood City facility to the FDA as an additional manufacturing site and anticipate hearing from the FDA soon without PDUFA dates.

Our Redwood City facility has made significant progress in qualifying our Gen 2 fill-and-finish line. The team is scheduled to begin media fills this month, a monumental step in qualifying this production equipment to support Apersure and the remainder of the Eyenovia drug product lines. As Michael mentioned, we are targeting the initiation of Apersure registration batches in the fourth quarter of 2023. Additionally, our Reno facility continues to make significant progress in establishing base and ejector manufacturing. On our last earnings call, we noted that the facility construction has been completed and the staff has taken occupancy. Since then, production equipment has been received, installation of the equipment is growing underway and qualification activities are in the final planning stages.

I continue to be excited about the progress we’ve made to enhance our manufacturing. With an increased manufacturing capacity, we’ll be better positioned to meet the anticipated growth demand of Optejet, particularly with the approval and commercial availability of Mydcombi. I would 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 second quarter of 2023, net loss was approximately $6.2 million or $0.16 per share compared to a net loss of approximately $7.2 million or $0.22 per share for the second quarter of 2022. Research and development expenses totaled approximately $2.8 million for the second quarter of 2023 as compared to $3.6 million for the second quarter of 2022. For the second quarter of 2023, G&A expenses were approximately $3.1 million compared to $3.5 million for the second quarter of 2022. Total operating expenses for the second quarter of 2023 were approximately $6 million compared to $7.1 million for the second quarter of 2022. As of June 30, 2023, company’s cash and cash equivalents were approximately $17.5 million compared to $22.9 million as of December 31, 2022.

This includes an additional $5 million drawdown on our credit line with Avenue Capital that was triggered by the FDA approval of Mydcombi. For a brief update on our licensing revenues, in addition to the cash balance noted above, we have receivables from our license partners of approximately $430,000 as of June 30, 2023, and expect a reimbursement payment of approximately $2 million from Arctic Vision for product development expenses in the second half of 2023. I’ll now update – I’ll now provide an update on our existing licensing program for Bausch Health for MicroPine in the U.S. and Canada and Arctic Vision for all three of our products in China and South Korea. Bausch+Lomb is continuing to enroll in the ongoing Phase 3 CHAPERONE trial of MicroPine, a proprietary atropine formulation for the 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 therapy for this indication, and if left untreated, this can result in retinal detachment, myopic retinopathy as well as vision loss. Our agreement with Arctic Vision covers Greater China and South Korea and covers MicroPine, MicroLine and Mydcombi and provides us sales royalties in addition to development milestones. MicroPine, in particular, is a significant opportunity in China for pediatric myopia. If 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 with 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 is also eligible to earn significant sales royalties. We are also continuing to assess potential pipeline expansion opportunities similar to our Formosa agreement, and we will continue to leverage the Optejet technology to address unmet needs and additional large ophthalmic indications. Finally, Eyenovia was added to the small-cap Russell 2000 and broad market Russell 3000 indices effective in June as part of the annual Russell Indexes reconstitution. The reconstitution captures the 4,000 largest U.S. stocks as of April 28, 2023, ranked by total market capitalization. So in conclusion, we are very pleased with our performance through the first half of 2023. To summarize some of the key highlights.

We received FDA approval of Mydcombi and initiated sales to select professional offices. Registration batches for Apersure presbyopia program are expected to initiate in the fourth quarter of 2023. We continue to advance discussions with multiple potential partners to leverage the Optejet and additional ophthalmic indications. We’re continuing to build out our manufacturing capabilities, with Coastline manufacturing and our Redwood City facilities anticipated to come to support Mydcombi production in late 2023 and early 2024, respectively. And our licensing agreements with Arctic Vision and Bausch+Lomb are progressing well and remain a promising avenue for significant development and regulatory milestones as well as the potential for sales royalties.

That concludes our prepared remarks today. We would now like to open the call to questions. Operator?

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first questions come from the line of Matthew Caufield with H.C. Wainwright. Please proceed with your question.

Matthew Caufield: Hey, guys. Can you hear me, okay?

Michael Rowe: Yes.

Matthew Caufield: Great. Michal and team thanks for taking our questions. And congrats, obviously, on the ongoing Optejet progress this quarter. So first of two questions. Regarding development of the Gen 2 device, particularly for on-demand presbyopia, is there a point in the future where all devices will be Gen 2, both prospectively for MicroLine or Apersure as well as for Mydcombi? Just kind of wondering if there’s any sort of manufacturing streamlining if all Optejets are based on the Gen 2 design.

Michael Rowe: Thank you, Matt, for that question. The answer is, ultimately, yes. And the reason we’re going from Gen 1 to Gen 2 is not just because Gen 2 ergonomically and aesthetically, we believe, is a nicer product, but it has far fewer parts than the Gen 1 does. So while the system that you use to spray is identical, the parts within the Gen 2 make it a lot easier and simpler and less costly to actually build. So in the long-term, we do want to get everything onto that platform.

Matthew Caufield: Got it. Very helpful. And then just one kind of follow-up on the presbyopia progress. So have the Generation 2 studies for microbial challenge, human factor, electronic safety and any drug stability data, have those all been completed? Or are any of those efforts kind of still ongoing presently?

Michael Rowe: Some of those are completed. Some are ongoing, but they will all be done probably by the end of this year. So they’re not a rate-limiting step and there’s nothing in there that causes us any pause because a lot of this is very similar to what we did with the Gen 1. So really the rate-limiting step is the 12-month stability.

Matthew Caufield: Got it, very helpful. Alright, thank you very much, guys. And congrats again on the progress this quarter.

Michael Rowe: Thank you, Matt.

Operator: Thank you. Our next questions come from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your questions.

Raymond Wu: Hi, this is Raymond in for Matt. Thanks for thanks for taking our question. Congrats on all the progress. I’m proud to see Mydcombi being used. I guess relating to that, I was wondering, how should we think about kind of the state of the launches as it progresses in terms of licenses, uptake and so forth? Thanks. I have a follow-up.

Michael Rowe: John, do you want to take this or I can? It’s up to you.

John Gandolfo: No, it’s okay. So I think that the – with respect to Mydcombi, we’re focusing initially, as Michael mentioned, on a targeted launch program. We feel that with the Coastline manufacturing coming up towards the end of this year, we’ll be able to give better visibility to the investor community as the guidance of Mydcombi once we have that in place. So we expect probably with that third quarter earnings call, which will be in November, we’ll be able to give guidance for obviously 2024, probably beyond as well. With respect to licenses or partnership opportunities, they remain a key focus of ours. Michael highlighted that we’re speaking to no less than four parties at this time. So that continues to be a major focus for the company.

Raymond Wu: Okay. Yes. No, definitely. I appreciate that color. I guess I was wondering, are there any early feedback you’re getting? And are you – do you see how you would like to incorporate that as you are getting ready for a national launch next year?

Michael Rowe: Yes. It’s funny that you asked this question because we just were speaking with some of the technicians at one of the offices in New York. They’ve now used the product for a week. And what they’re finding out is they started by using it on a few patients. They told us today, they used it on every patient, 40 patients they dilated today. And the more they use it, the more they like it. What they’re also finding is that the duration of dilation is less than it is with eye drops, which is actually a positive because one of the reasons people don’t like to get dilated is they end up being dilated for hours and hours and hours, through the rest of the day. And it’s looking like, with Mydcombi, you get the efficacy that you need, and then it may very well not last as long, which is a positive if you get back to normal. So we’re definitely looking into that some more.

Raymond Wu: Appreciate that detail, very helpful. I will jump back in queue. Thanks.

Michael Rowe: Thank you.

Operator: Thank you. I’m showing no further questions at this time. I’d like to hand the floor back to management for any closing comments.

Michael Rowe: Thank you, and thanks, everybody, for joining us today, and that concludes today’s call. We are very pleased with the year we have had so far. We’ve had our first FDA approval and commercial sale of Mydcombi. Our Apersure presbyopia program is progressing, and our manufacturing capabilities are continuing to grow. We look forward to continued momentum through the rest of 2023 and beyond. Thank you again for joining us. We look forward to the third quarter update in [indiscernible].

Operator: Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.