What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-11 compared with 2022-05-13 · 105 added, 53 removed, 96 unchanged (62% of the section changed)

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The following discussion and analysis of the results of operations and financial condition of Eyenovia, Inc.

(“Eyenovia,” the “Company,” “we,” “us” and “our”) as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 should be read in conjunction with our unaudited condensed financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission (“SEC”) on March 30, 2022.

(“Eyenovia,” the “Company,” “we,” “us” and “our”) as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 should be read in conjunction with our unaudited condensed financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission (“SEC”) on March 30, 2022.

Forward Looking Statements

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Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

We are a clinical stage ophthalmic company developing a pipeline of advanced therapeutics based on our proprietary microdose array print (MAP™) platform technology.

We aim to achieve clinical microdosing of next-generation formulations of novel and existing ophthalmic pharmaceutical agents using our high-precision targeted ocular delivery system, branded the Optejet®.

Optejet µ-therapeutics have the potential to replace conventional eye dropper delivery and improve safety, tolerability, patient compliance and topical delivery success for ophthalmic eye treatments.

In the clinic, the Optejet has demonstrated that its targeted horizontal microdose delivery can achieve a significantly higher rate of successful ocular topical delivery compared to the established rate reported with traditional eye drops (~ 90% vs.

Our technology is designed to achieve single-digit µl-volume physiologic drug delivery with up to a 75% reduction in ocular drug and preservative topical dosing and has demonstrated significant improvement in the therapeutic index in drugs used for presbyopia, mydriasis and IOP lowering through six Phase II and Phase III trials.

Conventional eye formulations lack high-precision micro-volume delivery and expose the ocular surface to approximately 300% more medication and preservatives than are physiologically indicated leading to clinically recognized ocular and non-ocular side effects.

Using the Optejet, we are developing the next generation of smart ophthalmic therapeutics targeting new indications or new combinations where there are currently no or few drug therapies approved by the U.S.

Food and Drug Administration (the “FDA”).

Our microdose therapeutics follow the FDA’s regulatory and approval process for combination products.

Our products are classified by the FDA as drug-device combination products with drug primary mode of action, meaning that the Center for Drug Evaluation and Research (“CDER”), is designated as the lead center with primary jurisdictional oversight of our products.

We are a clinical stage ophthalmic company developing an advanced drug delivery technology to improve the lives of patients with ophthalmic diseases and conditions.

We aim to achieve precision in ophthalmic drug delivery of novel and existing ophthalmic pharmaceutical agents.

The precise delivery of a low-volume columnar spray by the Optejet® device also minimizes contamination with a non-protruding nozzle and self-closing shutter.

This technology may replace eye droppers by advancing drug delivery beyond the limitations of patient coordination, drug overexposure, gravity, contamination potential, and discomfort towards a more precise, comfortable, and successful drug administration for improved patient care.

The ergonomic and functional design of the Optejet® delivers microdroplets horizontally faster than the blink reflex to minimize instillation discomfort and overflow spillage, providing a more comfortable experience.

In the clinic, the Optejet® has demonstrated that its targeted delivery achieves a significantly high rate of successful administration of 98% upon first attempt compared to the established rate reported with traditional eye drops of ~ 50%.

The diagnostics and therapeutics in the Company’s pipeline have been tested in Randomized Controlled Trials and demonstrated significant results in improving the benefit to risk profile for drug delivery.

For example, the Company’s deliberately designed technology provides a 75% reduction in ocular drug and preservative exposure to significantly improve the therapeutic index in drugs used for presbyopia, mydriasis and intraocular pressure (“IOP”) lowering through eight clinical trials.

Eyedrops expose the ocular surface to approximately 300% more medication and preservatives that can lead to unintended effects and induce collateral tissue damage.

Drug delivery via the Optejet device reduces ocular exposure to preservatives comparable to that of non-preserved formulations demonstrating potentially less surface damage from ocular stress.

To address unmet medical needs, the Company is developing the next generation of smart ophthalmic therapeutics to target new indications or new combinations where there are currently no or few drug therapies approved by the U.S.

Food and Drug Administration (“FDA”).

The Company’s investigational products are classified by the FDA as drug-device combination products with drug primary mode of action, meaning that the Center for Drug Evaluation and Research (“CDER”) is designated as the lead center with primary jurisdictional oversight.

Accordingly, the product candidates are submitted to the FDA CDER for premarket review and approval under new drug applications, or NDAs.

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We enrolled the first patient in the CHAPERONE study in June 2019.

Due to the COVID-19 pandemic, there have been delays in trial enrollment as a result of supply chain issues with our third party suppliers, which in turn diminished our inventory supply.

On October 9, 2020, we entered into the Bausch License Agreement, pursuant to which Bausch Health may develop and commercialize MicroPine in the United States and Canada.

Due to the COVID-19 pandemic, we experienced delays in trial enrollment as a result of supply chain issues with our third party suppliers, which in turn diminished our inventory supply.

As of December 2021, per our license agreement described below, Bausch + Lomb, Inc.

(“Bausch + Lomb”) manages enrollment of the CHAPERONE study.

We have successfully expanded our manufacturing capabilities with our partnership with Coastline International, Inc.

and the construction of our Redwood City, CA fill finish facility, and we expect to be able to reliably supply this study with clinical product by the third quarter of 2022.

On October 9, 2020, we entered into a license agreement (the “Bausch License Agreement”) with Bausch + Lomb, pursuant to which Bausch + Lomb may develop and commercialize MicroPine in the United States and Canada.

Under the terms of the Bausch License Agreement, we received an upfront payment of $10.0 million and we may receive up to a total of $35.0 million in additional payments, based on the achievement of certain regulatory and launch-based milestones.

Bausch Health also will pay us royalties on a tiered basis (ranging from mid-single digit to mid-teen percentages) on gross profits from sales of MicroPine in the United States and Canada, subject to certain adjustments.

Under the terms of the Bausch License Agreement, Bausch Health assumed sponsorship of the IND as well as oversight and the costs related to the ongoing CHAPERONE study.

MicroLine (or Apersure) is our investigational pharmacologic treatment for presbyopia.

Bausch + Lomb also will pay us royalties on a tiered basis (ranging from mid-single digit to mid-teen percentages) on gross profits from sales of MicroPine in the United States and Canada, subject to certain adjustments.

Under the terms of the Bausch License Agreement, Bausch + Lomb assumed sponsorship of the IND as well as oversight and the costs related to the ongoing CHAPERONE study.

MicroLine is our investigational pharmacologic treatment for presbyopia.

Presbyopia is a non-preventable, age-related hardening of the lens, which causes the gradual loss of the eye’s ability to focus on near objects and impairs near visual acuity.

Allergan recently received FDA approval for and launched Vuity TM , a pilocarpine solution for the treatment of presbyopia.

Allergan recently received FDA approval for and launched Vuity TM , which is a pilocarpine solution for the treatment of presbyopia.

We are currently enrolling our second Phase III study, VISION-2, using the same molecule, but with the advantages of our Optejet delivery system.

We anticipate top-line results from VISION-2 in mid-2022.

We anticipate top-line results from VISION-2 in the third quarter of 2022.

Mydcombi™ (or MicroStat) is our fixed combination formulation of tropicamide-phenylephrine for mydriasis, designed to be a novel approach for the estimated over 100 million office-based comprehensive and diabetic eye exams performed every year in the United States.

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After the ruling, however, the dispenser must be considered as a distinct device constituent part of a drug-device combination product.

We are in the process of providing additional non-clinical device information and expect to file our NDA resubmission in the third quarter of 2022.

On August 10, 2020, we entered into the Arctic Vision License Agreement, which was amended on September 14, 2021, with Arctic Vision, pursuant to which Arctic Vision may develop and commercialize MicroPine, MicroLine and Mydcombi in Greater China (mainland China, Hong Kong, Macau and Taiwan) and South Korea.

We are in the process of providing additional non-clinical device information and expect to file our NDA resubmission in the fourth quarter of 2022.

On August 10, 2020, we entered into a license agreement (the “Arctic Vision License Agreement”) with Arctic Vision (Hong Kong) Limited (“Arctic Vision”), which was amended on September 14, 2021, pursuant to which Arctic Vision may develop and commercialize MicroPine, MicroLine and Mydcombi in Greater China (mainland China, Hong Kong, Macau and Taiwan) and South Korea.

Under the terms of the Arctic Vision License Agreement, as amended, we received an upfront payment of $4.25 million before any payments to Senju Pharmaceutical Co., Ltd.

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Arctic Vision also will purchase its supply of MicroPine, MicroLine and Mydcombi from us or, for such products not supplied by us, pay us a mid-single digit percentage royalty on net sales of such products, subject to certain adjustments.

We will pay between 30 and 40 percent of such payments, royalties, or net proceeds of such supply to Senju pursuant to the Exclusive License Agreement with Senju dated March 8, 2015, as amended.

For a description of the Senju license agreement, see Note 2— Summary of Significant Accounting Policies—Arctic Vision License Agreement and Note 10—Related Party Transactions—Senju License Agreement to our audited financial statements included in this Annual Report on Form 10-K on March 30, 2022.

We will pay between 30 and 40 percent of such payments, royalties, or net proceeds of such supply to Senju pursuant to an exclusive license agreement with Senju dated March 8, 2015, as amended.

For a description of the Senju license agreement, see Note 2 — Summary of Significant Accounting Policies—Arctic Vision License Agreement and Note 10 — Related Party Transactions—Senju License Agreement to our audited financial statements included in the Annual Report on Form 10-K filed with the SEC on March 30, 2022.

Historically, we have financed our operations principally through equity offerings.

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However, based upon our current operating plan, there is substantial doubt about our ability to continue as a going concern for at least one year from the date that the financial statements included elsewhere in this Quarterly Report on Form 10-Q are issued.

Our ability to continue as a going concern depends on our ability to complete additional licensing or business development transactions or raise additional capital, through the sale of equity or debt securities to support our future operations.

Our ability to continue as a going concern depends on our ability to complete additional licensing or business development transactions or raise additional capital, through licensing transactions, the sale of equity or debt securities to support our future operations.

If we are unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce costs.

Our net losses were $7.3 million and $5.4 million for the three months ended March 31, 2022 and 2021.

As of March 31, 2022, we had working capital and an accumulated deficit of approximately $20.0 million and $97.6 million, respectively.

Our net losses were $7.2 million and $14.6 million for the three and six months ended June 30, 2022.

As of June 30, 2022, we had working capital and an accumulated deficit of $13.6 million and $104.8 million, respectively.

Financial Overview

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We record costs for some development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as subject enrollment, clinical site activations or other information our vendors provide to us.

In addition, our license agreements with Arctic Vision and Bausch Health require them to assume or reimburse us for specified research and development costs.

In addition, our license agreements with Arctic Vision and Bausch + Lomb require them to assume or reimburse us for specified research and development costs.

We expect that our research and development expenses will increase with the continuation of the aforementioned initiatives.

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We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research and development and the potential commercialization of our product candidates.

No payments related to the Arctic Vision License Agreement or Senju license agreement were earned or recognized during the six months ended June 30, 2022.

Results of Operations

Three Months Ended March 31, 2022 Compared with Three Months Ended March 31, 2021

Three Months Ended June 30, 2022 Compared with Three Months Ended June 30, 2021

Revenue and Cost of Revenue

In August 2020, we received a $4.0 million upfront payment under the Arctic Vision License Agreement, and made a related payment of $1.6 million to Senju.

This upfront payment was recorded as $4.0 million of deferred license fee and $1.6 million of deferred cost of revenue.

The trial data for one of the two products (MicroPine) was fully submitted to Arctic Vision during the three months ended March 31, 2021.

Therefore, one half of the upfront payment, or $2.0 million, was earned during the three months ended March 31, 2021.

No payments related to the Arctic Vision License Agreement or Senju license agreement were earned or recognized during the three months ended March 31, 2022.

This upfront payment was recorded as $4.0 million of deferred license fees and $1.6 million of deferred cost of revenue.

Trial data for one of the product candidates that is subject to the Arctic Vision License Agreement (MicroLine) was fully submitted to Arctic Vision in June 2021.

As a result, the Company recognized the remaining $2.0 million of deferred license fees and recognized the remaining $0.8 million of deferred license costs related to the Senju payment during the three months ended June 30, 2021.

We had no revenues during the three months ended June 30, 2022.

Research and Development Expenses

Research and development expenses for the three months ended June 30, 2022 totaled $3.6 million, a decrease of $0.1 million, or 2.7%, as compared to $3.7 million recorded for the three months ended, June 30, 2021.

Research and development expenses consisted of the following:

For the Three Months Ended

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Facilities expenses

Other expenses

Supplies and materials

Total research and development expenses

The increase in personnel-related expenses was primarily due to salary increases and new staff additions made in late 2021 and early 2022, primarily related to the anticipated Mydcombi launch.

The increase in non-cash stock-based compensation expenses resulted from stock option grants related to the new hires.

The decrease in direct clinical and non-clinical expenses was primarily due to Mydcombi product testing expense that was primarily done in 2021.

General and Administrative Expenses

For the Three Months Ended June 30,

Professional fees

Salaries and benefits

Stock-based compensation

Insurance expense

Sales and marketing

Facilities expense

Director fees and expense

General and administrative expenses for the three months ended June 30, 2022 totaled $3.5 million, an increase of $1.2 million, or 52.2%, as compared to $2.3 million recorded for the three months ended June 30, 2021.

This increase was primarily attributable to a $0.5 million increase in compensation expense due to new hires and stock-based compensation awards, an increase of $0.6 million in professional services due to increased legal and professional recruiting expenses as well as the addition of new directors in 2022.

In addition, there was an increase of $0.1 million associated with increased travel expenses associated with increased marketing and medical affairs activity.

Six Months Ended June 30, 2022 Compared with Six Months Ended June 30, 2021

Revenue and Cost of Revenue

In August 2020, we received a $4.0 million upfront payment under the Arctic Vision License Agreement, and made a related payment of $1.6 million to Senju.

This upfront payment was recorded as $4.0 million of deferred license fees and $1.6 million of deferred cost of revenue.

Trial data for two of the product candidates that are subject to the Arctic Vision License Agreement (MicroPine and MicroLine) was fully submitted to Arctic Vision during the six months ended June 30, 2021.

As a result, we recognized the $4.0 million of deferred license fees and recognized $1.6 million of deferred license costs related to the Senju payment during the six months ended June 30, 2021.

We had no revenues during the six months ended June 30, 2022.

Research and Development Expenses

Research and development expenses for the six months ended June 30, 2022 totaled $7.3 million, a decrease of $0.7 million, or 8.8%, as compared to $8.0 million recorded for the six months ended, June 30, 2021.

Research and development expenses consisted of the following:

For the Six Months Ended June 30,

Personnel-related expenses

Direct clinical and non-clinical expenses

Non-cash stock-based compensation expenses

Supplies and materials

Facilities expenses

Other expenses

Total research and development expenses

Research and development expenses for the three months ended March 31, 2022 totaled approximately $3.7 million, a decrease of $0.6 million, or 14.0%, as compared to $4.3 million recorded for the three months ended March 31, 2021.

The decrease was primarily attributable to a $1.1 million decrease in direct clinical and non-clinical expenses primarily due to production and testing for Mydcombi and the formulation of MicroLine in 2021, whereas no new batches were manufactured in 2022, offset by an increase of $0.5 million in personnel-related expenses resulting from new hires and stock-based compensation expense.

The increase in personnel-related expenses was primarily due to salary increases and costs related to staff additions made in late 2021 and early 2022 mainly related to the ramp up for the Mydcombi launch.

Stock option grants for these new hires resulted in the increase in non-cash stock-based compensation expenses.

The decrease in direct clinical and non-clinical expenses was mainly due to Mydcombi product testing expense that was primarily done in 2021.

The increase in costs related to supplies and materials was primarily due to the anticipated commercialization of Mydcombi.

General and Administrative Expenses

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Professional fees

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Director fees and expense

General and administrative expense for the three months ended March 31, 2022 totaled $3.5 million, an increase of $1.3 million, or 59.1%, as compared to $2.2 million recorded for the three months ended March 31, 2021.

This increase was primarily attributable to a $0.7 million increase in professional fees associated with an increase of legal and accounting activity in connection with the March 2022 Offering and the At-the-Market Offering facility, and increased recruiting fees for newly hired employees and directors, a $0.4 million increase in salaries and benefits which resulted from new hires, a $0.1 million increase in non-cash stock-based compensation expense, and a $0.1 million increase in the premium for our directors and officers liability insurance policy.

Liquidity and Capital Resources;

Going Concern

General and administrative expenses for the six months ended June 30, 2022 totaled $7.0 million, an increase of $2.5 million, or 55.6%, as compared to $4.5 million recorded for the six months ended June 30, 2021.

The variance was primarily attributable to an increase of (1) $1.3 million in professional fees related to legal services ($0.8 million), professional recruiting expenses ($0.4 million) and consulting expenses ($0.1 million) and (2) an increase of $0.9 million for salaries and benefits and stock-based compensation mainly due to new hires.

Liquidity and Capital Resources and Going Concern

We measure our liquidity in a number of ways, including the following:

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Since inception, we have experienced negative cash flows from operations.

As of March 31, 2022, our accumulated deficit since inception was $97.6 million.

As of March 31, 2022, we had an unrestricted cash balance of $26.7 million, working capital of $20.0 million and stockholders’ equity of $29.8 million.

As of March 31, 2022 and December 31, 2021, we had $8.1 million and $7.5 million, respectively, of debt outstanding.

As of June 30, 2022, our accumulated deficit since inception was $104.8 million.

As of June 30, 2022, we had an unrestricted cash balance of $21.5 million, working capital of $13.6 million and stockholders’ equity of $23.6 million.

As of June 30, 2022 and December 31, 2021, we had $7.7 million and $7.5 million, respectively, of notes payable (gross) outstanding.

Subsequent to June 30, 2022, the Company received approximately $1.0 million in gross and net proceeds from the sale of 589,809 shares of our common stock pursuant to our At-the-Market Offering program with SVB Leerink.

These conditions raise substantial doubt about our ability to continue as a going concern for at least one year from the date that the financial statements included elsewhere in this Quarterly Report on Form 10-Q are issued.

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Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings.

If we are unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce costs in order to conserve our cash.

During the three months ended March 31, 2022 and 2021, our sources and uses of cash were as follows:

Net cash used in operating activities for the three months ended March 31, 2022 was $8.2 million, which includes cash used to fund a net loss of $7.3 million, reduced by $1.0 million of non-cash expenses and $1.9 million of cash used in operating assets and liabilities.

Net cash used in operating activities for the three months ended March 31, 2021 was $4.6 million, which includes cash used to fund a net loss of $5.4 million, reduced by $0.7 million of non-cash expenses and $0.1 million of cash provided by changes in operating assets and liabilities.

Cash used in investing activities for the three months ended March 31, 2022 was $0.2 million, which was related to vendor deposits, leasehold improvement expenditures, and purchases of property and equipment.

Cash used in investing activities for the three months ended March 31, 2021 was $0.3 million, which was related to leasehold improvement expenditures and the purchase of property and equipment.

Net cash provided by financing activities for the three months ended March 31, 2022 totaled $15.7 million, which was mainly attributable to aggregate proceeds received from the March 2022 Offering and the use of the At-the-Market Offering facility.

Net cash provided by financing activities for the three months ended March 31, 2021 totaled $1.5 million, which was mainly attributable to aggregate proceeds from the exercise of warrants.

If we are unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce general and administrative and sales and marketing costs in order to conserve our cash.

During the six months ended June 30, 2022 and 2021, our sources and uses of cash were as follows:

Net cash used in operating activities for the six months ended June 30, 2022 was $12.9 million, which includes cash used to fund a net loss of $14.6 million, reduced by $2.1 million of non-cash expenses, plus $0.4 million of cash used to fund changes in operating assets and liabilities.

Net cash used in operating activities for the six months ended June 30, 2021 was $9.9 million, which includes cash used to fund a net loss of $10.2 million, reduced by $1.4 million of non-cash expenses, plus $1.1 million of cash used to fund changes in operating assets and liabilities.

Cash used in investing activities for the six months ended June 30, 2022 was $0.4 million, which was related to purchases of and vendor deposits for property and equipment.

Cash used in investing activities for the six months ended June 30, 2021 was $0.6 million, which was related to purchases of property and equipment.

Net cash provided by financing activities for the six months ended June 30, 2022 totaled $15.3 million, which was attributable to $15.9 million of gross proceeds received from the March 2022 Offering and the At-the-Market Offering.

This was slightly offset by the repayment of $0.4 million of notes payable and the $0.1 million payment of the March 2022 Offering issuance costs.

Net cash provided by financing activities for the six months ended June 30, 2021 totaled $9.4 million, which was attributable to aggregate net proceeds from the Silicon Valley Bank loan of $7.4 million, the exercise of stock warrants of $2.1 million and the exercise of stock options of $0.1 million.

This was slightly offset by the repayment of $0.3 million of notes payable.

Contractual Obligations and Commitments

During the next twelve months we have commitments to pay:

(a) $2.6 million to settle our March 31, 2022 accounts payable and accrued expenses;

(a) $4.5 million to settle our June 30, 2022 accounts payable, accrued compensation, and accrued expenses and other current liabilities;

(b) $0.7 million relating to our non-cancelable operating lease commitments;

and (d) $8.1 million of payments due under our notes payable.

and (d) $7.7 million of potential payments due under our notes payable.

After twelve months we have commitments to pay an additional $0.8 million relating to our non-cancelable operating lease commitments.

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Critical Accounting Estimates

For a description of our critical accounting estimates, see Item 7 – Critical Accounting Estimates in our Annual Report on Form 10-K filed on March 30, 2022.

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.

The preparation of financial statements requires us to make estimates and judgements that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Changes in estimates are reflected in reported results for the period in which they become known.

Actual results could differ significantly from the estimates made by our management.

There have been no material changes to our critical accounting policies and estimates from those disclosed in our financial statements and the related notes and other financial information included in our Annual Report on Form 10-K for the year ended December 31, 2021

Recently Adopted Accounting Standards

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Quantitative and Qualitative Disclosures About Market Risk.

Smaller reporting companies such as us are not required to provide the information required by this item.

Smaller reporting companies such as Eyenovia are not required to provide the information required by this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis