Eyenovia Inc (EYEN) 2017 Q4 法說會逐字稿

Welcome to the Eyenovia Inc. Fourth Quarter & Full Year 2017 Earnings Conference Call.

(Operator Instructions)

As a reminder, this conference is being recorded.

I would now like to introduce your host for today's conference, Alexander Lobo from The Ruth Group.

Welcome to Eyenovia's Fourth Quarter & Full Year 2017 Earnings Conference Call and audio webcast. With me today are Dr. Sean Ianchulev, Eyenovia's Chief Executive Officer and Chief Medical Officer, and John Gandolfo, Eyenovia's Chief Financial Officer.

Earlier this morning, Eyenovia issued a press release announcing financial results for the three and 12-month ended December 31, 2017. We encourage everyone to read today's press release as well as Eyenovia's annual report on form 10-K, which will be filed with the SEC later today. The Company's annual report and press release will also be available on Eyenovia's Web Site at www.eyenoviabio.com.

In addition, this conference call is being webcasted at the Company's Web Site and will be archived there for future reference. Please note that be certain of the information discussed on the call today is covered under the Safe Harbor Provisions of Private Securities Litigation Reform Act.

We caution listeners that during this call Eyenovia's management will be making forward looking statements. Actual results could differ materially from those stated or implied by these forward looking statements due to risks and uncertainties associated with the Company's business.

These forward looking statements are subject to a number of risks including risk related to fluctuations in our financial result, our ability to attract and retain key personnel, risks of our clinical trial including that of preliminary top line results might not be supported by more detailed analysis or repeatable in future trials.

The timing and our ability to submit applications for, obtain and maintain regulatory approval for, or product candidates and others detailed in and are qualified by the cautionary statements contained in Eyenovia's press releases and SEC filings including its annual report on form 10-K and subsequent filing.

This conference call contains time sensitive information as accurate only as of the date of this live broadcast, April 2, 2018. Eyenovia undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances after the date of this conference call.

With that, I would now like to turn the call over to Sean Ianchulev.

Welcome, everyone, to Eyenovia's first conference call as a publically listed Company. We are very excited to be here today not only to introduce our story to those of you who are new to Eyenovia but also to provide everyone an update on our progress.

Overall, we've made great strides this past year as we move closer to a therapeutic paradigm shift in ophthalmology for front of the eye diseases. With our successful IPO in January, in which we raised $24.5 million in net proceeds, in our robust, late-stage, clinical development top line achievement, we believe that our smart, high precision, piezo-print microdosing technology is poised to bring ophthalmic treatment into the 21st century.

But before I delve into our late-stage assets that incorporate our microdosing technology, I would like to highlight some of the problems we believe current ocular therapies face. The eye dropper, which has been used for more than a century to deliver treatment to the eye, remains a highly flawed method of delivery. The eye can only hold between to six to eight microliters of fluid.

Yet a traditional eye dropper when used correctly will deliver between 30 to 50 microliters of fluid to the eye, an overdose of more than 300%. Of course, that assumes that the eyedropper doesn't miss, particularly as you blink, which can happen 50% to 80% of the time, in which case you have also wasted the fluid and not delivered an effective dose.

These inconsistencies with therapy delivered by a traditional eye drop can lead to side effects, ocular toxicity, and incompletes in dosing, which in terms can lead to poor compliance, which we see from patients.

Eyenovia believes it has the opportunity to deliver a paradigm shift and bring the treatment of front of the eye conditions into the 21st century. Using our smart piezo-print technology, we're able to precisely deliver six to eight microliters of fluid directly to the cornea, gently coating the ocular surface.

This high-precision approach to ocular therapeutics has the potential to reduce ocular toxicity and side effects while simultaneously beating the blink reflex to deliver the correct dose to the patient.

In an effort to both to support through physician and patient care, we have also incorporated smart mobile e-held features into our technology that should provide enhanced compliance data in monitoring and help improve disease management.

Leveraging this technology platform, we're focusing on developing four main programs, two of which we expect to enter Phase III development stages with IND submission by the year's end. Our first program, MicroProst is our proprietary latanoprost prosto-planning micro-formulation being developed for the treatment of chronic angle closure glaucoma. Chronic angle closure glaucoma is characterized by increased intraocular pressure or IOP as we know it, and optic neuropathy and it's easily diagnosed.

It accounts for approximately 580,000 cases in the U.S. alone and up to 50% of all glaucoma diagnoses in China. Despite this significant need to our knowledge, there are currently no FDA approved therapies for chronic angle closure glaucoma and physicians are resorting to using open angled glaucoma treatment off label.

To fill this unmet need, we aim to be the first to seek FDA approval for treatment specifically indicated for chronic angle closure glaucoma. And based on our positive pre Phase III meeting with the FDA, we intend to submit our IND in the second half of 2018. The approval of which will allow us for initiation of the Phase III trial. And we prepare for our MicroProst Phase III trial.

We recently completed the Eyenovia PG21 trial, and ancillary studies evaluating microdose topical delivery of micro-therapeutic latanoprost to examine patient interface and the clinical application of microdosing for the lowering of intraocular pressure. Fifty eyes of 30 healthy volunteers received once-daily treatment for three days and underwent diurnal IOP assessment three times per day.

Based on preliminary top-line results, piezo-print micro-therapeutic latanoprost demonstrated strong IOP lowering effect with equivalent reduction in intraocular pressure to standard eye drop. This was achieved at a significantly lower level of exposure to drugs and toxic preservatives using Eyenovia's horizontal delivery system and high-precision piezo-print smart technology.

We look forward to finalizing data analyses and expect to announce the full and detailed results in the second quarter of this year. The Eyenovia's PG21 trial for IOP lowering further complements [our dry eye] phase II data which was presented last year and provides evidence of the growth applicability of our micro-therapeutic approach for different front of the eye indications. It is particularly informative for our upcoming Phase III program in chronic angle closure glaucoma later this year.

We are also working diligently to initiate by the end of 2018 a Phase III trial for MicroStat for diagnostic mydriasis which is a standard part of the comprehensive eye exam. There are over 18 million dilated eye exams performed each year with an approximate annual addressable market opportunity of $150 million in domestic sales.

Currently, most dilated eye exams use two separate agents to achieve dilation, tropicamide and phenylephrine which are combined upon administration. For MicroStat, we have developed a first-in-class, fixed combination central formulation that only requires a single mydriatic microdose application streamlining the dilation process and eliminating gross overdosing.

While MicroStat is not our largest target market opportunity, we believe that getting our high precision microdosing technology into the hands of physicians is key to initiating a paradigm shift in ophthalmology. And for this reason, we anticipate pricing MicroStatic parity to existing pharmacologic options. With our strong Phase II data in hand demonstrating comparable clinical efficacy with microdosing and fewer side effects, we believe we have the opportunity to offer ophthalmologists a very compelling product.

To supplement our intentions to get our technology platform into the hands of physicians and patients, we have initiated development of, an over-the-counter dry eye product for the artificial tear market. Currently, if you go to a drug store, there are any number of artificial tear products available, however, they all continue to use a traditional eye dropper with all of the same flaws we mentioned.

MicroTears aims to bring our breakthrough microdosing technology this approximately $2 billion market. But we intend to approach the market through physicians' offices rather than through the drug stores.

We believe MicroTears has a simpler development pathway as it does not require any clinical studies for registration, and assuming we complete the formulation and can manufacture to scale in the second half of 2019 as planned, we intend to launch the product in tandem with MicroStat program for mydriasis.

The final program in our pipeline representing what we think is one of the most exciting opportunities in ophthalmology is MicroPine for progressive myopia which develops in childhood and is common in adults. And it's associated with ocular morbidity, including increased rate of retinal detachment, choroidal and retinal atrophy, choroidal neovascularization, all of which can lead to irreversible vision loss.

It is estimated that more than 80 million children worldwide and more then five million children in the U.S. have myopia. And currently there is no FDA approved therapy to treat its progression, however low dose atropine has been identified as a potential treatment for myopia progression. Supported by a growing body of clinical evidence from academic and collaborative trials, as well as support from the American Academy of Ophthalmology indicating level one evidence of efficacy.

However, today traditional delivery methods have been unsuccessful in obtaining approval as they are plagued by overdose related side effects. An inability to develop a stable low dose formulation meeting FDA regulation requirements, however microdosing technology has the potential to deliver sufficiently low doses of atropine at a stable higher concentration to successfully slow the progression of myopia.

From our recent FDA meeting, we received feedback on our pivotal trial protocol design as well as confirmation to advance MicroPine into Phase III clinical development. In addition to this positive indication the FDA has provided us with feedback that potentially only one Phase III pivotal study will be required for registration instead of two rather than the two studies generally required.

As we make progress on our clinical efforts we have also sought to reinforce the team behind Eyenovia. On the management side we appointed John Gandolfo who is here today as our Chief Financial Officer. John brings more than 30 years of Chief Financial Officer experience in high growth public and private medial device and life science companies.

To our scientific advisory board we recently added Dr. Douglas Frederick, an accomplished pediatric ophthalmologist and clinical perfector of ophthalmology in pediatrics at Lucile Packard Children's Hospital at Stanford. Dr. Frederick joins an outstanding team with significant experience in closing entire field and we believe will play an important role in the development in our pediatric myopia program.

And lastly to our Board of Directors, we recently appointed Kenneth Lee Jr., general partner at Hatteras Venture Partners. Charles Mather Co-Head of Equity Capital Market at BTIG, and Dr. Anthony Sun formerly a partner at Aisling Capital, as independent members of the board. Collectively these three industry veterans bring a tremendous amount of experience to Eyenovia.

And we believe that together, with the rest of the Eyenovia team, they will help guide the Company though it's near long term milestones. With multiple opportunities in our clinical development pipeline as well as highly differentiated technology platform, we believe that we have the potential to transform the field of ophthalmology for front of the eye topical therapies.

In the coming month we look forward to announcing detailed data from our recent study evaluating micro dose topical delivery for IOP lowering with micro-therapeutic latanoprost , and submission of the INDs required to initiate Phase III trials in both our MicroProst and MicroStat program.

Together with our highly accomplished scientific advisory board and board of directors, we believe Eyenovia is well positioned to execute all of its outlying programs as we seek to make this coming year a success. And now I would like to turn the call over to John to discuss our financial results.

Thank you, Sean. Once again thank you all for joining us this morning. And welcome to our new shareholders. Financially, we have had a very strong start to 2018 with our successful initial public offering in January that brought in $24.5 million in net proceeds to the Company.

These proceeds give us a necessary resources to move forward with our planed IND submissions for MicroProst and MicroStat in the second half of this year followed by the initiation of Phase III clinical studies in each of the MicroProst and MicroStat programs.

First let me start with our three month results. For the fourth quarter of 2017, we reported a net loss of approximately $2.2 million or .84 cents per share, compared to a net loss of approximately $1.2 million or .51 cents per share for the fourth quarter of 2016.

R&D expenses totaled approximately $1.7 million for the fourth quarter of 2017 compared to approximately $1 million for the same period in 2016, an increase of 72%. The increase research and development expenses reflect increase engineering personnel and increase contractive services for the development of the companies products.

For the fourth quarter of 2017, general and administrative expenses were approximately $500,000 with compared with approximately $200,000 for the fourth quarter of 2016, an increase of 167%. The increase is the result of increase personnel expenses for new hires, an increase of professional services between the two periods.

Total operation expenses for the fourth quarter of 2017 were approximately $2.2 million, compared to total operating expense is at approximately $1.2 million of the same period in 2016, an increase of 87%.

And now I'll review the results for the year ended December 31, 2017. Of the full year ended December 31, 2017 we reported a net loss of approximately $5.1 million or $2.19 per share. This compares to a net loss of approximately $3.5 million or a $1.56 per share for 2016. Research and development expenses increased 29 % to approximately $3.8 million in 2017, compared to approximately $3 million in the prior year.

The increase was primarily due to an increase in contractive services and head count as we expanded our research and development activities. For the full year of 2017 general and administrative expenses increased 131% to approximately $1.3 million versus approximately $600,000 for the full year of 2016.

This increase was primarily attributable to increased non-cash, stock base compensation cost, professional fees, and expenses related to supplies and materials as compared to 2016. Total operating expenses includes 45 % to approximately $5.1 million for 2017 compared to $3.5 million for the full year of 2016. As of December 31, 2017, Company's cash balance was approximately $5.2 million.

This amount does not include the $24.5 million in net proceeds that we raised in our initial public offering in January of 2018. We expect that our current cash on hand and the net proceeds from the IPO to be sufficient to meet our operating capital requirements for at least the next 12 months.

That concludes our prepared remarks. We'd now like to open the call to questions.

(Operator Instructions)

Scott Henry, from ROTH Capital.

First, looking through the press release, the MicroPine, the indication, is it expected to be a pediatric indication or just an indication for anyone presenting with myopia. Is there a threshold where patient age is out of the treatment being effective?

Yes, let me address that question, it's a very good question. Actually, the answer is really in the path of physiology of the disease. Myopia progresses during a specific period in our lives, actually progresses early on into, starting from about five to six years all the way to the 20's. It usually slows down, decelerates and progression can stop around late teens to 20 years.

So, our clinical studies will encompass this population and the age group between 5 and 17, I believe the exact number. Because this is really the time periods in our lives when the disease progresses. So it will be indicated for that population between these age groups.

And then on the PG21 study, did you learn anything new, or did it really just confirm what you all ready expected with regards to dosing? And how representative is IOP lowering in a healthy individual versus someone presenting with glaucoma?

Yes, excellent question. As you recall during the IPO process as well we already had in hand data from our two Phase II studies in mydriasis which was quite informative. It really validated both studies, validated the pharmacal dynamic equivalent and relationship from efficacy and safety standpoint between a microdose and macro dose or an eyedropper. So we were actually quite comfortable understanding that this is a classic therapeutic effect for front of the eye.

Because there is really nothing dramatically different between the ocular surface dynamics and tear film capacity between the different indications. So we all ready had quite a bit of data at hand about micro dose and very good informative results for our chronic angle closure glaucoma program.

At the same time, it is always encouraging and it was welcomed that we were able to do the PG21 study just to confirm what we knew from mydriasis and what we also know from a number of studies that were done and published in the literature showing the low dose efficacy of different therapies for IOP lowering.

So, I think it's both ways. We already had a very good understanding of microdosing through our pharmacal dynamic studies thanks to studies in mydriasis. Again, when we were on the road show, we heard a lot of investor feedback which called for data in for IOP lowering and we thought this was a great opportunity and the team worked really hard to incorporate that and meet the investor feedback and questions on other pharmacal dynamic outcomes.

So, we incorporated that in microdosing evaluation for IOP lowering into our PG21 study and really came out very successful as we mentioned. To your question about IOP lowering in volunteers, we know from the literature that Latanoprost, and there are multiple studies to that effect, Latanoprost eye dropper dose delivered in healthy volunteers leads to pretty acute, immediate and significant IOP lowering and with healthy volunteers which is very similar to what we've seen in glaucoma.

So, we were very encouraged to see similarly low IOP lowering with microdose and in fact in the microdose Latanoprost study PG21 we do have a comparative assessment in that study as well to a standard eye drop dose of Latanoprost. So, I hope that answers your questions.

And just a final question if I could, with regards to R&D spending in 2018, how should we think about that and how should we think about it sequentially throughout the year? Thank you.

Yes, I think in total we estimated that the R&D spending to be in the $10 million to $12 million range for 2018. I expect that will be heavily weighted towards the last two quarters of the year but in total that should give you an expectation of what we anticipate.

Matt Kaplan from Ladenburg Thalmann.

Just a follow up from some of Scott's questions. First, focusing on MicroProst, how should we think about the Chronic Angle Closure Glaucoma opportunity given the lack of approved products there?

So, if I understand that, in terms of the disease phase Chronic Angle Closure today, a lot of patients with Chronic Angle Closure need IOP lowering. The disease is quite distinct. It's a separate disease. It has a very different mechanism than open-angle glaucoma and we see a need to a validated IOP lowering therapeutic paradigm there, as well, to inform physicians and patients on the efficacy of different IOP lowering treatments.

So, we think that the Latanoprost in microdose will be particularly advantageous to those patients because in Chronic Angle Closure compliance one can argue it's even more important in bringing microdosing smart technology with potentially can have and we believe could have less ocular surface problems and has compliance. These will be all welcomed for that population which currently has no FDA approved treatment options.

And then, in the Phase III you were talking about and you're ready to start, what do you need to show or demonstrate in the Phase III do you think for approval there?

Yes, so as we previously discussed and informed we have the Phase III design which will be a superiority trial against active control Timolol. It will be in our case micro therapeutic, MicroProst Latanoprost against Timolol eye drops. And those will be two studies evaluating the efficacy and safety.

Now what is informative in the literature out there and there's multiple trials and in fact more recently a mess analysis of the Chronic Angle Closure comparing Latanoprost eye drops, standard eye drops to Timolol that are very formative and encouraging on the superior affect of Latanoprost eye drops to Timolol. What we've show in healthy volunteers we've really demonstrated and studied the efficacy of microdose and the effect how it compares to a standard dose Latanoprost.

So, it is informative and we're really looking forward to putting our microdose, micro-therapeutic Latanoprost into the Phase III the clinical problems to show the affect and the safety advantages of microdosing.

And just shifting gears to MicroPine, you mentioned that given the precedent data with atropine and progressive Myopia, you were potentially allowed to just complete one Phase III trial in order to file for approval. Can you talk about that data that already exists with atropine and that indication and I think that would help give us a sense in terms of the probability of success here?

Yes, absolutely. And there is a lot of information on our Web Site as well, Matt, and also the literature we've seen now, collaborative groups over the past decade, really focus on low dose atropine diluting it 10 or 100 times than what we currently have, in order to minimize the side effects, at the same time keep it's therapeutic potential for slowing down progression of Myopia.

And it's very interesting, the studies that have been done are phenomenal trials conducted by collaborative and academic groups with hundreds of patients that show that the micro, the low dose of atropine has potential for slowing down progressive Myopia. So, we are encouraged by that data. It's quite informative and we want to do the same low dose approach, but through the microdose system for atropine.

So, a recent analysis was done, as well, in the literature of the different microdose or low dose atropine studies that are in existence, showing a fairly consistent progression reiteration of Myopia in that population.

So, all of these are really informative. What's really needed is a validating study, FDA study with all the controls and all of the clinical operations behind it to demonstrate and validate this effect and we believe that the smart technology, the horizontal delivery and the microdosing that we have is potentially very suited for this population of youngsters who demand technology when it comes to their healthcare.

Okay, and then, thank you very much for that detail. And then last question, in terms of the PG21 data, how will you share that data? Will it be at a medical conference or in a press release form?

We're planning to issue a press release when the data analysis is complete over the coming weeks and certainly will apply to present that data at the upcoming ophthalmology conferences.

Yi Chen from H.C. Wainwright.

This is [Julian] on for Yi. Regarding MicroPine, what would be your target sample size for the single Phase III study? When will you expect to insert to, I guess, begin enrollment and when will expect any data readouts?

Yes, so MicroPine is a study we're planning of the -- according the plan is to initiate that next year and I think the goal is to proceed initially and get data from one clinical study.

We are still working on the specific numbers and we're finalizing those. They will be available probably later on this year. We hope that it will not be higher than 400 or 500 patients, but again, we're finalizing all these analysis and we'll have a lot more information as we get the protocol closed up.

(Operator Instructions)

At this time I am showing no further questions. I would like to turn the call back over to Sean Ianchulev, CEO of Eyenovia for closing remarks.

Thank you. Well, I would just like to thank everybody for joining us this morning and partaking into this session. We hope this was informative. We hope that the team was able to give you more information and data on our work and progress here at Eyenovia and thank you very much.

Ladies and gentlemen, thank you for participation in today's conference. To close the program you may now disconnect.