What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-11 · 66 added, 59 removed, 142 unchanged (47% 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 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.

(“Eyenovia,” the “Company,” “we,” “us” and “our”) as of September 30, 2022 and for the three and nine months ended September 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 an advanced drug delivery technology to improve the lives of patients with ophthalmic diseases and conditions.

We are a pre-commercial ophthalmic technology company developing the Optejet® delivery system for use both in combination with its own drug-device therapeutic programs as well as out-licensing for additional indications.

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 Company believes that this technology could ultimately 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.

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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.

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

Our pipeline is currently focused on the late-stage development of novel, potential first-in-class therapeutic indications for an estimated 25 million potential pediatric patients with progressive myopia in the United States and an estimated over 100 million potential patients with age-related near vision impairment, or presbyopia—indications where there is tremendous unmet need and, to our knowledge, there exists only one known FDA-approved therapy, developed by Allergan.

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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.

and the construction of our Redwood City, CA fill finish facility, and we have been able to reliably supply this study with clinical product as of 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.

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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 the third quarter of 2022.

Our second Phase III study, VISION-2, used the same molecule, but with the advantages of our Optejet delivery system.

We released positive top-line results from VISION-2 in the fourth 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 fourth quarter of 2022.

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

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We have also generated cash through licensing arrangements and our credit facility with Silicon Valley Bank (“SVB”).

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.

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 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 $7.2 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.

Our net losses were $7.3 million and $21.9 million for the three and nine months ended September 30, 2022.

As of September 30, 2022, we had working capital and an accumulated deficit of $18.4 million and $112.1 million, respectively.

Financial Overview

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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.

No payments related to the Arctic Vision License Agreement or Senju license agreement were earned or recognized during the three and nine months ended September 30, 2022.

Results of Operations

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 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.

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

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 for the three months ended September 30, 2022 totaled $3.9 million, an increase of $0.3 million, or 8%, as compared to $3.6 million recorded for the three months ended September 30, 2021.

Research and development expenses consisted of the following:

For the Three Months Ended

Personnel-related expenses

For the Three Months Ended September 30,

Direct clinical and non-clinical expenses

Personnel-related expenses

Non-cash stock-based compensation expenses

Facilities expenses

Other expenses

Facilities 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.

The increase in direct clinical and non-clinical expenses was primarily due to the VISION-2 Phase III MicroLine study in 2022.

The decrease in personnel-related expenses and facilities expenses mainly resulted from an increase in such costs being allocated to clinical supplies.

The decrease in non-cash stock-based compensation expenses resulted from stock grant forfeitures.

The decrease in supplies and materials was mainly due to the delay in the commercialization of Mydcombi.

General and Administrative Expenses

For the Three Months Ended June 30,

General and administrative expenses for the three months ended September 30, 2022 totaled $3.4 million, an increase of $1.0 million, or 42%, as compared to $2.4 million recorded for the three months ended September 30, 2021.

General and administrative expenses consisted of the following:

For the Three Months Ended September 30,

Professional fees

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Stock-based compensation

Insurance expense

Sales and marketing

Insurance expense

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

Total general and administrative expenses

The increase in salaries and benefits was mainly attributable to staff additions made in late 2021 and early 2022 related to the ramp up for the anticipated Mydcombi launch.

The increase in professional services was primarily due to increased legal and professional recruiting expenses related to the addition of new directors in 2022.

The increase in stock-based compensation expense was due to new grants awarded in late 2021 and early 2022.

The increase in facilities expense was primarily due to the new lease entered into in 2022.

Nine Months Ended September 30, 2022 Compared with Nine Months Ended September 30, 2021

Revenue and Cost of Revenue

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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.

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 nine months ended September 30, 2021.

As a result, we recognized the $4.0 million of revenue and recognized $1.6 million of cost of revenue related to the Senju payment during the nine months ended September 30, 2021.

We had no revenues during the nine months ended September 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 for the nine months ended September 30, 2022 totaled $11.2 million, a decrease of $0.4 million, or 3%, as compared to $11.6 million recorded for the nine months ended September 30, 2021.

Research and development expenses consisted of the following:

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Personnel-related expenses

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Total research and development expenses

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.

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

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

The increase in other expenses was mainly due to various outsourcing costs and higher depreciation expense.

General and Administrative Expenses

For the Six Months Ended June 30,

General and administrative expenses for the nine months ended September 30, 2022 totaled $10.4 million, an increase of $3.5 million, or 51%, as compared to $6.9 million recorded for the nine months ended September 30, 2021.

General and administrative expenses consisted of the following:

For the Nine Months Ended September 30,

Professional fees

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Stock-based compensation

Insurance expense

Sales and marketing

Insurance expense

Facilities expense

Director fees and expense

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.

Total general and administrative expenses

The increase in professional fees was primarily due to higher legal and professional recruiting expenses related to the addition of new directors in 2022.

The increase in salaries and benefits was mainly due to new staff additions made in late 2021 and early 2022 related to the ramp up for the anticipated Mydcombi launch.

The increase in stock-based compensation was due to new grants awarded in late 2021 and early 2022.

The increase in facilities expense was primarily due to the new lease entered into in 2022.

Liquidity and Capital Resources and Going Concern

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

September 30,

Cash and cash equivalents

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

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.

As of September 30, 2022, our accumulated deficit since inception was $112.1 million.

As of September 30, 2022, we had an unrestricted cash balance of $17.4 million, working capital of $18.4 million and stockholders’ equity of $20.3 million.

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

Subsequent to September 30, 2022, we received approximately $1.3 million in net proceeds from the sale of 587,298 shares of our common stock pursuant to our At-the-Market Offering program with SVB Leerink.

Subsequent to September 30, 2022, the Company used its $7.9 million of restricted cash and $0.1 million of unrestricted cash in order to repay the SVB Loan, including $7.5 million of principal, a final payment of $0.4 million and a prepayment fee of $0.1 million.

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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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.

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

Net cash used in operating activities for the nine months ended September 30, 2022 was $19.7 million, which includes cash used to fund a net loss of $21.9 million, reduced by $3.4 million of non-cash expenses, plus $1.2 million of cash used to fund changes in operating assets and liabilities.

Net cash used in operating activities for the nine months ended September 30, 2021 was $15.0 million, which includes cash used to fund a net loss of $15.8 million, reduced by $1.8 million of non-cash expenses, plus $1.0 million of cash used to fund changes in operating assets and liabilities.

Cash used in investing activities for the nine months ended September 30, 2022 was $0.6 million, which was related to purchases of and vendor deposits for property and equipment.

Cash used in investing activities for the nine months ended September 30, 2021 was $1.2 million, which was related to purchases of property and equipment.

Net cash provided by financing activities for the nine months ended September 30, 2022 totaled $18.2 million, which was attributable to $19.1 million of gross proceeds received from the March 2022 Offering and the At-the-Market Offering.

This was slightly offset by the repayment of $0.7 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.

Net cash provided by financing activities for the nine months ended September 30, 2021 totaled $9.2 million, which was primarily attributable to $7.5 million of proceeds from the SVB Loan and $2.3 million from the exercise of warrants and stock options.

This was slightly offset by the repayment of notes payable and loan issuance costs of $0.6 million.

Contractual Obligations and Commitments

During the next twelve months we have commitments to pay:

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

(a) $3.8 million to settle our September 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;

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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.

The preparation of financial statements requires us to make estimates and judgments 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.

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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