What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-12 compared with 2022-11-14 · 103 added, 150 removed, 58 unchanged (81% 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 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.

(“Eyenovia,” the “Company,” “we,” “us” and “our”) as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 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, 2022 as filed with the Securities and Exchange Commission (the“SEC”) on March 31, 2023, as amended by Amendment No.

1, as filed with the SEC on May 1, 2023.

Forward Looking Statements

This report contains “forward-looking statements.” Specifically, all statements other than statements of historical facts included in this report, including regarding our financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements.

These forward-looking statements are based on the beliefs of management at the time these statements were made, as well as assumptions made by and information currently available to management.

When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” “may,” “might,” “will,” “continue” “intend,” and “plan” and words or phrases of similar import are intended to identify forward-looking statements.

These statements reflect our current view with respect to future events and are subject to risks, uncertainties and assumptions related to various factors that could cause actual results and the timing of events to differ materially from future results expressed or implied by such forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” included in our most recent Annual Report on Form 10-K filed with the SEC.

Furthermore, such forward-looking statements speak only as of this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements.

The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Such forward-looking statements include our estimates regarding expenses, future revenue, capital requirements and our need for additional financing and other financial items;

any statements of the plans, strategies and objectives of management for future operations;

any statements about the advantages of our product candidates and platform technology;

estimates regarding the potential market opportunity for our product candidates and platform technology;

statements regarding our clinical trials;

factors that may affect our operating results;

statements about our ability to establish and maintain intellectual property rights;

statements about our ability to retain key personnel and hire necessary employees and appropriately staff our operations;

statements related to future capital expenditures;

statements related to future economic conditions or performance;

and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing.

Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “will,” “plan,” “project,” “seek,” “should,” “target,” “would,” and similar expressions or variations intended to identify forward-looking statements.

These statements are based on the beliefs and assumptions of our management based on information currently available to management.

Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the sections titled “Summary Risk Factors” and “Risk Factors” included in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2023, and as amended by Amendment No.

1, as filed with the SEC on May 1, 2023, and the risks discussed in our other SEC filings.

Furthermore, such forward-looking statements speak only as of the date of this Quaterly Report on Form 10-Q.

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 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.

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.

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 (“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.

We are also developing the first microdose fixed combination ophthalmic pharmaceutical for mydriasis to address the estimated over 100 million annual comprehensive eye exams involving pupil dilation.

Recent Development - FDA Approval of Mydcombi™

We received notification from the FDA on May 5, 2023 that its NDA for the Mydcombi™ product was approved.

It is the only FDA-approved fixed combination of the two leading mydriatic agents in the United States.

As an ophthalmic spray, Mydcombi may present a number of benefits for the optometric and ophthalmic offices as well as patients.

Those benefits may include better tolerability, more efficient use of office time and resources, and an overall improved doctor-patient experience.

The Company is preparing to commercialize the product starting with a targeted launch and expanding in 2024 when internal manufacturing capabilities are expected to come on-line.

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

Our aim is to improve the delivery of topical ophthalmic medication through ergonomic design that facilitates ease-of-use, delivery of more physiologically appropriate medication volume, with the goal to reduce side effects and improve tolerability, and introduce digital health technology to improve therapy compliance and ultimately medical outcomes.

The ergonomic and functional design of the Optejet® allows for horizontal drug delivery and eliminates the need to tilt the head back or the manual dexterity to squeeze a bottle, to administer medications.

Drug is delivered in a microscopic array of droplets

faster than the blink reflex to help ensure instillation success.

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

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

A more physiologically appropriate volume of medication in the range of seven to nine microliters is delivered by the Optejet, which is approximately one fifth of the 35 to 50 microliter dose typically delivered in a single eye drop.

Lower volume of medication exposes the ocular surface to less active ingredient and preservatives, potentially reducing ocular stress and surface damage and improving tolerability.

The lower volume also minimizes the potential for drug to enter systemic circulation, with the goal of avoiding some common side effects that are related to overdosing of the eye.

We are developing versions of the Optejet with on-board digital technology to provide reminders via Bluetooth to smart devices and date and time stamp device use.

This information can then be used by practitioners and health care systems to measure treatment compliance and improve medical decision making.

In this way, the Optejet could serve as an extension of the physician’s office by providing information that is not currently possible to collect except through the use of diaries.

Our drug-device product line includes Mydcombi™ (tropicamide and phenylephrine HCL ophthalmic spray) and therapeutic programs MicroPine (atropine ophthalmic spray) and MicroLine (pilocarpine ophthalmic spray).

MicroPine is our first-in-class topical therapy for the treatment of progressive myopia, a back-of-the-eye ocular disease associated with pathologic axial elongation and sclero-retinal stretching.

In the United States, myopia is estimated to affect approximately 25 million children, with up to five million considered to be at high risk for progressive myopia.

In February 2019, the FDA accepted our investigational new drug application (“IND”) to initiate a Phase III registration trial of MicroPine (the “CHAPERONE study”) to reduce the progression of myopia in children.

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

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 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.

In February 2019, the FDA accepted our IND to initiate the CHAPERONE study to reduce the progression of myopia in children.

The first patient was enrolled in the CHAPERONE study in June 2019.

On October 9, 2020, we entered into the Bausch License Agreement with B+L, pursuant to which B+L 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 + 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.

B+L also will pay royalties to Eyenovia 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, B+L assumed sponsorship of the IND as well as ownership and the costs related to the ongoing CHAPERONE study.

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

located in Tijuana, Mexico, and the construction of our own fill and finish facility in Redwood City, California.

As of the date of filing, we are up-to-date supplying clinical product for the CHAPERONE and VISION Studies.

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 , which is a pilocarpine solution for the treatment of presbyopia.

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

Allergan recently launched Vuity™, a pilocarpine drug product for the treatment of presbyopia.

Our second Phase III study, VISION-2, used the same drug, delivered with the advantages of our Optejet® device.

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.

We have completed two Phase III trials for Mydcombi and announced positive results from these studies, known as MIST-1 and MIST-2, and have submitted an NDA to the FDA seeking approval to market the product in the U.S.

In October 2021, we received a complete response letter (“CRL”) in response to our NDA, which in part informed us that pre-filled or co-packaged ophthalmic drug dispenser products like Mydcombi have been reclassified as drug-device combination products.

This reclassification was based upon the U.S.

Court of Appeals for the D.C.

Circuit’s decision in Genus Medical Technologies v.

FDA, not involving Eyenovia, which ordered that products meeting the statutory definition of a device but were previously classified by the FDA as drugs must be regulated as devices.

Before this ruling, the FDA regulated pre-filled or co-packaged ophthalmic dispensers as part of the approved ophthalmic drug distributed and sold with the dispenser.

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 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.

Mydcombi™ is our fixed combination formulation of tropicamide-phenylephrine for inducing mydriasis for diagnostic procedures and in conditions where short term pupil dilation is desired.

Mydcombi is a novel approach for the over 106 million office-based comprehensive and diabetic eye exams performed every year in the United States.

As the only FDA-approved fixed combination of the two leading mydriatic agents in the United States and as an ophthalmic spray, Mydcombi may present a number of benefits for the optometric and ophthalmic offices as well as patients.

Those benefits may include better tolerability, more efficient use of office time and resources, and an overall improved doctor-patient experience.

As noted above in Recent Development, we received FDA approval on May 5, 2023, and are preparing to commercialize the product starting with a targeted launch and expanding in 2024 when we expect our internal manufacturing capabilities to come on-line.

On August 10, 2020, we entered into the Arctic Vision License Agreement with 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.

In addition, we may receive up to a total of $43.75 million in additional payments, based on various development and regulatory milestones, including the initiation of clinical research and approvals in Greater China and South Korea, and development costs.

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 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.

In addition, we may receive up to a total of $39.7 million in additional payments, based on various development and regulatory milestones,

including the initiation of clinical research and approvals in Greater China and South Korea, and development costs.

Arctic Vision also will purchase its supply of MicroPine, MicroLine and Mydcombi from Eyenovia or, for such products not supplied by Eyenovia, pay 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 an exclusive license agreement with Senju dated March 8, 2015, as amended (the “Senju License Agreement”).

We are in active discussions with manufacturers of existing and late-stage ophthalmic medications to explore whether development with the Optejet technology can solve unmet medical and business needs.

Some of those business needs could include extension of exclusivity under the Optejet patents, improvement in a drug’s tolerability profile, or potential improvement in treatment compliance.

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

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.

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 $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.

We have also generated cash through licensing arrangements and our credit facilities with SVB and Avenue.

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 our financial statements 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.

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

Our net losses were $5.7 million and $7.3 million for the three months ended March 31, 2023 and 2022.

As of March 31, 2023, we had working capital and an accumulated deficit of approximately $20.0 million and $124.0 million, respectively.

Financial Overview

Revenue and Cost of Revenue

In August and October 2020, we entered into the Arctic Vision License Agreement and Bausch License Agreement, respectively.

Both of these agreements provide for the Company to earn revenue from an upfront licensing fee, the achievement of various development and regulatory milestones, and royalty income on sales of licensed products.

Pursuant to the Senju license agreement, we will pay a percentage between 30 and 40 percent of such payments from the Arctic Vision License Agreement to Senju.

Research and Development Expenses

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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 + 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 three and nine months ended September 30, 2022.

Results of Operations

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 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 September 30,

Direct clinical and non-clinical expenses

Personnel-related expenses

Non-cash stock-based compensation expenses

Other expenses

Facilities expenses

Supplies and materials

Total research and development expenses

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

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

Salaries and benefits

Stock-based compensation

Sales and marketing

Insurance expense

Facilities expense

Director fees and expense

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

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 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.

Three Months Ended March 31, 2023 Compared with Three Months Ended March 31, 2022

Research and Development Expenses

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 Nine Months Ended September 30,

For the Three Months Ended March 31,

Personnel-related expenses

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Non-cash stock-based compensation expenses

Supplies and materials

Facilities expenses

Supplies and materials

Other expenses

Total research and development expenses

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.

Research and development expenses for the three months ended March 31, 2023 totaled approximately $2.5 million, a decrease of $1.2 million, or 32.1%, as compared to $3.7 million recorded for the three months ended March 31, 2022.

The decrease in direct clinical and non-clinical expenses primarily resulted from the sharp decrease in clinical study expenses based on the VISION 2 Study being concluded in 2022.

The decrease in non-cash stock-based compensation expenses primarily resulted from a change in the allocation percentages of a grant from research and development to general and administrative expense.

The decrease in costs related to supplies and materials primarily resulted from the decline in clinical activity and the increase in deferred clinical supplies was due to greater demand from Arctic Vision and B+L for those supplies.

General and Administrative Expenses

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

For the Three Months Ended March 31,

Salaries and benefits

Professional fees

Stock-based compensation

Sales and marketing

Insurance expense

Sales and marketing

Facilities expense

Director fees and expense

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

General and administrative expense for the three months ended March 31, 2023 totaled $2.9 million, a decrease of $0.5 million, or 15.5%, as compared to $3.5 million recorded for the three months ended March 31, 2022.

The decrease was primarily attributable to legal and professional recruiting expenses associated with the addition of new directors in 2022 that were not recurring during this quarter.

The increase in non-cash stock-based compensation expenses primarily resulted from a change in the allocation percentages of a grant from research and development to general and administrative expense.

Liquidity and Capital Resources;

Going Concern

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

September 30,

Cash and cash equivalents

Restricted cash

Working capital

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

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.

As of March 31, 2023, our accumulated deficit since inception was $124.0 million.

As of March 31, 2023, we had a cash and cash equivalents balance of $18.5 million, working capital of $20.0 million and stockholders’ equity of $15.8 million.

As of March 31, 2023 and December 31, 2022, we had $10.9 million and $10.4 million, respectively, of debt outstanding.

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 general and administrative and sales and marketing costs in order to conserve our cash.

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 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.

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, 2023 and 2022, our sources and uses of cash were as follows:

Net cash used in operating activities for the three months ended March 31, 2023 was $7.0 million, which includes cash used to fund a net loss of $5.7 million, reduced by $1.2 million of non-cash expenses, and $2.4 million of cash used to fund changes in the balances of operating assets and liabilities.

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 $1.1 million of non-cash expenses, and $1.9 million of cash to fund changes in the balances of operating assets and liabilities.

Cash used in investing activities for the three months ended March 31, 2023 was $0.8 million, which was related to vendor deposits, leasehold improvement expenditures for new leases and the purchase of property and equipment.

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 the purchase of property and equipment.

Net cash provided by financing activities for the three months ended March 31, 2023 totaled $3.4 million, which was attributable to aggregate proceeds received pursuant to the Sales Agreement with SVB Securities in an “at-the-market” offering.

Net cash provided by financing activities for the three months ended March 31, 2022 totaled $15.6 million, which was primarily attributable to aggregate proceeds received from our “at-the-market” offering facility and our March 2022 offering, in which we sold (i) 3,000,000 shares of common stock, (ii) pre-funded warrants to purchase an aggregate of 1,870,130 shares of common stock and (iii) warrants to purchase an aggregate of 4,870,130 shares of common stock.

The aggregate gross proceeds to us from the March 2022 offering were approximately $15 million, excluding the proceeds, if any, from the exercise of the warrants.

Contractual Obligations and Commitments

During the next twelve months we have commitments to pay:

(a) $3.8 million to settle our September 30, 2022 accounts payable, accrued compensation, and accrued expenses and other current liabilities;

(a) $2.5 million to settle our March 31, 2023 accounts payable, accrued expenses and other current liabilities;

(b) $0.5 million relating to our non-cancelable operating lease commitments;

and (d) $7.5 million of potential payments due under our notes payable.

After twelve months we have commitments to pay an additional $1.2 million relating to our non-cancelable operating lease commitments.

and (c) $2.2 million of payments due under our notes payable.

After twelve months, we have commitments to pay an additional $1.1 million relating to our non-cancelable operating lease commitments and notes payable in the amount of $8.8 million.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on financial conditions, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Estimates

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 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.

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.

Critical Accounting Policies and Estimates

For a description of our critical accounting policies, including critical accounting estimates, see Item 7 – Critical Accounting Policies in our Annual Report on Form 10-K, as filed with the SEC on March 31, 2023, as amended by Amendment No.

1, as filed with the SEC on May 1, 2023.

Recently Adopted Accounting Standards

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Quantitative and Qualitative Disclosures About Market Risk.

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

Smaller reporting companies such as us 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