HYPERION DEFI, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation 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, 2025 and for the three months ended March 31, 2025 and 2024 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 the 2024 Form 10-K, as amended by the 2024 Form 10-K Amendment. Forward Looking Statements 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 Form 10-K, as filed with the SEC on April 15, 2025, as amended by our 2024 Form 10-K Amendment, and the risks discussed in our other SEC filings. Furthermore, such forward-looking statements speak only as of the date of this Quarterly 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. Overview We are an ophthalmic technology company focused on development of our Optejet® drug delivery platform as well as commercialization of advanced products in areas of unmet medical or patient/consumer needs The Optejet platform is especially useful in chronic front-of-the-eye diseases due to its ease of use, potential for improved drug safety and tolerability, and superior compliance versus standard eye drops. Together, these benefits may combine to produce better treatment options and outcomes for patients and providers. Our current commercial portfolio includes the novel ophthalmic steroid, clobetasol propionate ophthalmic suspension, 0.05%, for post-surgical pain and inflammation, and Mydcombi®, the first FDA-approved use of the Optejet technology, for mydriasis. Presently, we are focused on submitting our Optejet user-filled device (UFD) for regulatory approval in the United States in the second half of 2025, as well as exploring strategic options to obtain the necessary resources for commercialization of our two FDA-approved products. Betaliq Letter of Intent On March 18, 2025, we entered into a non-binding letter of intent (the “Letter of Intent”) with Betaliq, Inc. (“Betaliq”), a Delaware corporation, relating to a proposed business combination between Eyenovia and Betaliq. Betaliq is a clinical stage pharmaceutical company with a therapeutic focus on Glaucoma, founded in 2018 through a collaboration with Novaliq GmbH. The parties currently contemplate a reverse merger structure, pursuant to which (i) a newly-formed, wholly-owned subsidiary of Eyenovia would merge with and into Betaliq, with Betaliq as the surviving corporation and a wholly-owned subsidiary of Eyenovia, and (ii) Betaliq would then immediately merge with and into a second newly-formed wholly-owned subsidiary of Eyenovia (the “Second Merger Sub”), with the Second Merger Sub as the surviving corporation. In connection with the closing of the transaction, Eyenovia expects to change its name and change its trading symbol as will be mutually agreed by Betaliq and us. 15 Table of Contents The parties are currently negotiating a business combination agreement consistent with the provisions of the Letter of Intent as well as other terms and conditions typical for transactions of this nature. During the binding exclusivity period set forth in the Letter of Intent, which was originally scheduled to end on May 16, 2025, has been extended to June 7, 2025, and is subject to further extension, the parties have agreed not to solicit or encourage submission of, or participate in discussions or enter into any agreement regarding any other acquisition proposal. We are excited about an opportunity to partner with Betaliq to create an advanced ophthalmic company with added industry experience, licensing relationships and wider product offerings and reach. However, we believe that the Company’s Optejet device provides for multiple opportunities with consumers, patients, prescribers and existing as well as potential license partners. Other Company Developments On February 25, 2025, we received notice from the Staff of Nasdaq providing notification that the Company had regained compliance with the $1.00 minimum bid price requirement for continued listing on The Nasdaq Capital Market under Listing Rule 5550(a)(2). Previously, Nasdaq had notified us on September 18, 2024 that, for the preceding 30 consecutive business days, the closing bid price of our common stock had been below the minimum requirement of $1.00 per share. The notification letter stated that we would be provided 180 calendar days to regain compliance. In order to regain compliance, the closing bid price of our common stock had to be at least $1.00 for a minimum of 10 consecutive business days at any time before March 17, 2025. On January 31, 2025, the Company effected a reverse stock split of its common stock at a ratio of 1-for-80 (the “Reverse Split”). Upon the effectiveness of the Reverse Split, every 80 issued shares of common stock were reclassified and combined into one share of common stock and the corresponding price per share increased by a multiple of 80. Subsequently, the Staff determined that, from February 3 to February 14, 2025, the closing bid price of our common stock had been at $1.00 per share or greater. Accordingly, the Company had regained compliance with Listing Rule 5550(a)(2). On April 29, 2025, we received a notice from the Staff of the Nasdaq stating that the Company’s stockholders’ equity as reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 was below the minimum $2,500,000 required for continued listing under Listing Rule 5550(b)(1) (the “Minimum Equity Requirement”). The Notice had no immediate effect on the listing of the Company’s common stock on the Nasdaq Capital Market. In accordance with the Nasdaq Listing Rules, the Company has 45 calendar days, or until June 13, 2025, to submit a plan to regain compliance with the Minimum Equity Requirement. The Company intends to submit a plan to regain compliance with the Nasdaq Listing Rules. If the plan is accepted, Nasdaq may grant an extension of up to 180 calendar days from the date of the Notice for the Company to regain compliance, or until October 26, 2025. If the Staff does not accept our plan, we will have the opportunity to appeal that decision to a Hearings Panel. With the restructuring that took place during the fourth quarter of 2024 and the first three months of 2025, our net losses were reduced to $3.5 million as compared to $9.9 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had a working capital deficiency and an accumulated deficit of approximately $9.9 million and $198.8 million, respectively. Financial Overview Revenue and Cost of Revenue Revenue is earned from the sale of our products. The first commercial sale of our Mydcombi product occurred on August 3, 2023 and the first sale of our clobetasol propionate product occurred on October 4, 2024, both as part of a targeted launch. Sales in the first quarter of 2025 primarily consisted of clobetasol propionate. Cost of sales consisted of the cost of the production of the products that were sold. Research and Development Expenses Research and development expenses are incurred in connection with the research and development of our microdose therapeutics and consist primarily of contract service expenses. Given where we are in our life cycle, we do not separately track research and development expenses by project. Our research and development expenses consist of: ● direct clinical and non-clinical expenses, which include expenses incurred under agreements with contract research organizations, contract manufacturing organizations, and costs associated with preclinical activities, development activities and regulatory activities; 16 Table of Contents ● personnel-related expenses, which include expenses related to consulting agreements with individuals that have since entered into employment agreements with us as well as salaries and other compensation of employees that is attributable to research and development activities; and ● facilities and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, marketing, insurance and other supplies used in research and development activities. We expense research and development costs as incurred. 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. Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of payroll and related expenses, legal and other professional services, insurance expense, and non-cash stock-based compensation expense. Results of Operations Three Months Ended March 31, 2025 Compared with Three Months Ended March 31, 2024 Revenue and Cost of Revenue Revenue for the three months ended March 31, 2025 totaled $14,720, which was partially offset by cost of revenues of $48. Revenue for the three months ended March 31, 2024 totaled $4,993, which was offset by cost of revenues of $203,027. Research and Development Expenses Research and development expenses for the three months ended March 31, 2025 totaled $0.7 million, a decrease of $3.8 million, or 85%, as compared to $4.4 million recorded for the three months ended March 31, 2024. Research and development expenses consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended ​ ​ March 31, ​ 2025 2024 Salaries and benefits ​ $ 420,000 ​ $ 1,995,248 Direct clinical and non-clinical expenses ​ ​ 72,657 ​ ​ 508,954 Facilities expenses ​ ​ 70,837 ​ ​ 213,588 Non-cash stock based compensation expenses ​ ​ 64,677 ​ ​ 206,586 Supplies and materials ​ 25,130 ​ 1,060,187 Other expenses ​ 19,742 ​ 115,578 Depreciation expense ​ — ​ 331,460 Total research and development expenses ​ $ 673,043 ​ $ 4,431,601 ​ The decrease in salaries and benefits was primarily due to the layoffs that occurred in the fourth quarter of 2024. The decrease in direct clinical and non-clinical expenses was primarily due to the wind down of clinical trials and studies. The decrease in facilities expense was primarily due to the impairment of right-of-use (ROU) assets in the fourth quarter of 2024, which lowered non-cash rent expense. The decrease in non-cash stock-based compensation expenses was primarily due to reduced stock option awards that resulted from the layoffs in the fourth quarter of 2024. The decrease in supplies and materials was primarily due to expenses that were incurred in 2024 that were not incurred in the first quarter of 2025. These include (a) the expensing of Gen-1 MicroPine vials and cartridges as a result of the reacquisition of the Bausch license rights; (b) drug formulation engineering batches; and (c) the purchase of parts for the Gen-2 device that were used during the period in 2024. The decrease in depreciation expense was primarily due to the full impairment of fixed assets that occurred in the fourth quarter of 2024. 17 Table of Contents Selling, General and Administrative Expenses General and administrative expenses for the three months ended March 31, 2025 totaled $2.4 million, a decrease of $1.3 million, or 35%, as compared to $3.6 million recorded for the three months ended March 31, 2024. General and administrative expenses consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ For the Three Months Ended March 31, ​ ​ 2025 2024 Professional fees ​ $ 1,009,386 ​ $ 892,042 Salaries and benefits ​ 491,980 ​ 1,486,168 Non-cash stock based compensation ​ 214,951 ​ 339,646 Insurance expense ​ 214,457 ​ 219,134 Investor relations ​ 118,687 ​ 112,641 Other expenses ​ 113,207 ​ 39,160 Director fees and expense ​ ​ 97,500 ​ ​ 111,875 Facilities expense ​ ​ 83,156 ​ ​ 126,647 Sales and marketing ​ 22,021 ​ 186,228 Travel, lodging and meals ​ 6,977 ​ 123,648 Total general and administrative expenses ​ $ 2,372,322 ​ $ 3,637,189 ​ The increase in professional fees was primarily due to the increased legal fees this quarter related to the Reverse Split and costs associated with potential strategic transactions. The decrease in salaries and benefits, and the decrease in non-cash stock-based compensation was primarily due to the layoffs that occurred in the fourth quarter of 2024. The decrease in facilities expense was primarily due to the impairment of ROU assets in the fourth quarter of 2024, which lowered non-cash rent expense. The decrease in sales and marketing, and travel, lodging and meals was primarily due to austerity measures taken related to commercial operations. Reacquisition of License Rights Reacquisition of license rights for the three months ended March 31, 2025 was $0, as compared to $2.0 million for the three months ended March 31, 2024. The $2.0 million in 2024 was the amount paid to Bausch + Lomb in connection with the reacquisition of the license for MicroPine and to take control of the CHAPERONE study, which we are recording as an operating expense. Other Income (Expense) Other income (expense) for the three months ended March 31, 2025 totaled approximately $0.5 million of net other expense, a decrease of $0.2 million, as compared to $0.7 million of net other expense for the three months ended March 31, 2024. Net other expense for the three months ended March 31, 2025 primarily consisted of approximately $0.6 million of interest expense and amortization of debt discounts related to the Avenue loan, partially offset by a $0.1 million gain on extinguishment and nominal interest income from cash accounts. Net other expense for the three months ended March 31, 2024 primarily consisted of approximately $0.7 million of interest expense and amortization of debt discounts related to the Avenue loan and $0.1 million related to the charge for defective clinical supplies, partially offset by interest income from Treasury bills. Liquidity and Going Concern We measure our liquidity in a number of ways, including the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2025 2024 Cash and Cash Equivalents ​ $ 3,934,966 ​ $ 2,121,463 ​ ​ ​ ​ ​ ​ ​ Working (Deficit) Capital ​ $ (9,941,301) ​ $ (13,279,008) ​ ​ ​ ​ ​ ​ ​ Notes Payable (Gross) ​ $ 10,786,953 ​ $ 10,740,403 ​ 18 Table of Contents Cash Flow Since inception, we have experienced negative cash flows from operations and our operations have primarily been funded by proceeds from equity and debt financings. Our net losses were $3.5 million and $10.9 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025, we had an accumulated deficit of approximately $198.8 million. As of March 31, 2025, we had a cash and cash equivalents balance of $3.9 million, working capital deficit of $9.9 million and stockholders’ deficiency of $9.7 million. As of March 31, 2025 and December 31, 2024, we had $10.8 million and $10.7 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 were issued. Our financial statements do not include adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern depends on our ability to complete additional licensing or business development transactions, raise additional capital through the sale of equity or debt securities to support our future operations or the completion of a transaction consistent with the strategic alternatives that we are exploring. If we are unable to generate sufficient recurring revenue, secure additional capital or complete a strategic transaction, we may be required to curtail our research and development initiatives, take additional measures to reduce costs in order to conserve cash or file for bankruptcy. During the three months ended March 31, 2025 and 2024, our sources and uses of cash were as follows: Net cash used in operating activities for the three months ended March 31, 2025 was approximately $4.4 million, which includes cash used to fund a net loss of $3.5 million, reduced by $0.8 million of non-cash expenses, plus $1.7 million of net cash used by changes in the levels of operating assets and liabilities. Net cash used in operating activities for the three months ended March 31, 2024 was approximately $9.9 million, which includes cash used to fund a net loss of $10.9 million, reduced by $1.5 million of non-cash expenses, plus $0.5 million of net cash used by changes in the levels of operating assets and liabilities. Net cash used in investing activities for the three months ended March 31, 2025 was $0. Net cash used in investing activities for the three months ended March 31, 2024 was $0.1 million, which was primarily related to the purchase of property and equipment. Net cash provided by financing activities for the three months ended March 31, 2025 totaled approximately $6.3 million, which was primarily attributable to $5.7 million of net proceeds from the sale of common stock in our “at-the-market” offering and $0.9 million of net cash proceeds from the inducement exercise of stock warrants, partially offset by $0.4 million from the repayment of notes payable and the payment of issuance costs related to debt modification. Net cash provided by financing activities for the three months ended March 31, 2024 was approximately $3.1 million, which was primarily attributable to $3.2 million of net proceeds from the sale of common stock in our “at-the-market” offering, partially offset by $0.1 million from the repayment of notes payable. Contractual Obligations and Commitments During the next twelve months we have commitments to pay (a) $5.1 million to settle our March 31, 2025 accounts payable, accrued expenses and other current liabilities, and (b) $10.8 million of gross payments due under our notes payable and convertible notes payable (if not previously converted). After twelve months we have commitments to pay an additional $0.6 million relating to our non-cancelable operating lease commitments. Risks and Uncertainties A potential negative effect on our business is the “Tariff War”, especially with China, Canada and Mexico. The increased tariffs the U.S. has imposed on products from these countries could have an adverse effect on our supply chain, potentially causing financial difficulty for our direct or indirect customers and reduced demand for our products. A continuation of these tariffs could have adverse changes in international trade policies and relations. Tariffs could increase the cost of our products and the components that go into making them. These increased costs could adversely impact the gross margin that we earn on our products. Tariffs could also make our products more expensive for customers, which could make our products less competitive and reduce consumer demand. Changing our operations in accordance with new or changed trade restrictions can be expensive, time-consuming and disruptive to our operations. 19 Table of Contents We cannot predict how the events described above will evolve. If the events continue for a significant period of time or expand to other countries, and depending on the ultimate outcomes of these conflicts, which remain uncertain, they could heighten certain risks disclosed in Item 1A in our Annual Report on Form 10-K which was filed with the SEC on April 15, 2025, including, but not limited to, adverse effects on macroeconomic conditions, including increased inflation, constraints on the availability of commodities, supply chain disruption and decreased business spending; disruptions to our or our business partners’ global technology infrastructure, adverse changes in international trade policies and relations; claims, litigation and regulatory enforcement; our ability to implement and execute our business strategy; our exposure to foreign currency fluctuations; reputational risk; and constraints, volatility, or disruption in the capital markets, any of which could have a material adverse effect on our business, results of operations, cash flows and financial condition. The continuing worldwide implications of the war between Russia and Ukraine and the conflict in the Middle East and between India and Pakistan remain difficult to predict at this time. The imposition of sanctions on Russia by the United States and other countries and counter sanctions by Russia, and the resulting economic impacts on oil prices and other materials and goods, could affect the price of materials used in the manufacture of our product candidates. If the price of materials used in the manufacturing of our product candidates increase, that would adversely affect our business and the results of our operations. 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 As described in Item 7 – Critical Accounting Estimates in our 2024 Form 10-K, as amended by our 2024 Form 10-K Amendment, we prepare our financial statements in accordance with U.S. GAAP, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis. We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above. Item 3. Quantitative and Qualitative Disclosures About Market Risk. Smaller reporting companies such as Eyenovia are not required to provide the information required by this Item.