Eyenovia Inc (EYEN) 2018 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Eyenovia, Inc.

Third Quarter 2018 Earnings Call.

(Operator Instructions) As a reminder, this conference is being recorded.

I would now like to introduce your host for today's conference, Tram Bui of Ruth Group.

You may begin.

Good morning, and welcome to Eyenovia's Third Quarter 2018 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 3 months ended September 30, 2018.

We encourage everyone to read today's press release as well as Eyenovia's quarterly report on Form 10-Q, which will be filed with the SEC later today.

The company's quarterly report and press release will also be available on Eyenovia's website at www.eyenoviabio.com.

In addition, this conference call is being webcast at the company's website and will be archived there for future reference.

Please note that certain information discussed in the call today is covered under the safe harbor provisions of the 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 risks related to fluctuation in our financial results; risks of our clinical trials, including but not limited to, the initiation, timing, progress and results of such trials; the timing and ability to submit applications for and obtain and maintain regulatory approvals for our product candidates; estimates regarding the potential market opportunities for our product candidates; our ability to attract and retain key personnel; and other details in and qualified by the cautionary statements contained in Eyenovia's press releases and SEC filings, including its most recent annual report on Form 10-K and subsequent filings.

This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, November 13, 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 except as may be required by applicable securities law.

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

Thank you, Tram, and welcome everyone to Eyenovia's Third Quarter 2018 Earnings Conference Call.

Over the course of 2018, we've worked diligently to advance our clinical programs.

And now with the acceptance of our IND application for MicroStat for mydriasis, we expect to initiate our first Phase III study later this month.

We also look forward to initiating 2 other Phase III studies, for MicroPine for myopia progression and MicroProst for chronic angle closure glaucoma, over the next 4 to 6 months.

As we work to further support this upcoming trial, we have continued to develop and validate our proprietary high precision microdose technology platform, which we recently branded the Optejet, and remained very excited at the prospect of ushering in a paradigm in the way we treat front- and back-of-the-eye conditions.

We have been active this past quarter presenting at multiple ophthalmology conferences as well as having our PG21 study recognized in a forthcoming publication by the peer-reviewed journal Clinical Ophthalmology.

In addition, we are pleased to announce that we have settled our previously disclosed litigation with certain former shareholders of Corinthian.

Before I dive into our clinical programs and recent activities at ophthalmology conferences, I would like to highlight again our trademark submission for Optejet, which we have selected as the brand name for our proprietary container closure system to deliver microdoses of ophthalmic therapeutics.

After identifying potential brand names and meeting with physicians, we decided Optejet was not only appropriate for our enabling technology but also helpful and memorable for physicians we spoke with.

The name itself can be broken down into 3 parts: opt for the [relationship] between optometry and ophthalmology; E for Eyenovia; and jet for the print jet technology we're using to micronize the drops and deliver precisely 5 to 9 microliters of drop to the eye.

As we have noted previously, we believe the Optejet is able to gently coat the ocular surface accurately while also potentially reducing ocular toxicity and side effects.

Optejet is a brand name that we hope to epitomize our platform technology as the noble nonincremental advancement in topical drug delivery for the eye, going far beyond the conventional eyedropper paradigm, which has changed little for the past 100 years.

More recently, we recorded on the usability of the Optejet from our point PG21 study, demonstrating topical delivery success rate close to 90%, which is well above the 50% rate reported for the conventional eyedroppers.

In the third quarter, we took advantage of multiple opportunities to share our technology and the Eyenovia story with opinion leaders and industry veterans at some of the key ophthalmology conferences in New York and Chicago.

In late September, we presented case studies and discussed the management and complications of treating front-of-the-eye conditions as well as introduce Eyenovia's breakthrough technology at the Ocular Surgery News conference in New York.

And just recently, we were very pleased to present at the Ophthalmology Innovation Summit at the American Academy of Ophthalmology 2018 conference, which had previously recognized Eyenovia for our novel technology and potential in the field of ophthalmology.

As previously announced, we completed the full analysis of our PG21 study in August, and I'm very pleased that peer-reviewed journal of Clinical Ophthalmology has accepted it for publication.

The study investigated the medication administration effectiveness and IOP-lowering effect of microdose latanoprost 0.005% in 60 eyes of 30 healthy volunteers using the Optejet.

In the study, subjects successfully self-administered microdose latanoprost nearly 90% of the time, and the Optejet piezo-print microdose delivery was well tolerated in all subjects.

These results represent a significant improvement over the standard of care eyedropper, which is successfully self-administered less than 50% of the time as demonstrated by multiple peer-reviewed studies.

In addition, a single microdose, which uses 75% less drug and preservative than a standard eyedrop, achieved 29% IOP lowering from baseline, a robust IOP-lowering effect consistent with the 26% effect seen in other studies of conventional eyedrop latanoprost.

Overall, these results were very informative, and we intend to leverage them as we move ahead with our Phase III trials.

I would now like to turn the focus to our clinical programs, which are approaching Phase III initiation or over-the-counter registration as is the case for MicroTears.

Let me start with MicroStat for pharmacologic mydriasis or pupil dilation, which is a standard part of the comprehensive eye exam as well as the diabetic retinopathy exam.

We submitted our IND application for MicroStat in early October and are very pleased to have received acceptance from the FDA.

With the green light to move ahead with our Phase III trials, we expect to initiate the studies this month and announce top line data in the first half of 2019.

The trials will be multicensored double-blind superiority trials with 65 subjects in each trial.

The first trial will examine microdose phenylephrine-tropicamide versus microdose tropicamide versus microdose phenylephrine, and the second trial will examine microdose phenylephrine-tropicamide versus microdose artificial tears.

The primary endpoint in both studies will be the mean change in pupil diameter at 30 minutes versus baseline.

We estimate there are currently over 80 million dilated eye exams performed each year, which could create a significant market opportunity for MicroStat.

We anticipate that with the combination of the Optejet and our novel fixed-dose combination of tropicamide and phenylephrine, we could have the opportunity to offer ophthalmologists and optometrists a compelling product compared to the existing method of dilating eyes.

We're very excited about the MicroStat opportunity as, in our opinion, it could provide important validation of our entire platform delivery technology in the context of a Phase III FDA program.

This is particularly meaningful as all of our programs use the same fundamental delivery microdose technology.

Our next program, MicroPine for the prevention of myopia progression remains what we believe is the crown jewel of our therapeutic pipeline.

Myopia progression is a back-of-the-eye disease characterized by increased axial length and progressive elongation of the eye, causing increased refractive error and nearsightedness.

There are an estimated 5 million children who suffer from severe myopia progression in the U.S. alone.

And by 2055, we expect the rates of visual impairment to increase 7 to 13 fold, which could lead to an increased status of retinal detachment, myopic retinopathy and permanent vision loss in an increasing number of patients.

In China, reports show nearly half of the population and up to 80% to 90% of all adolescents are nearsighted.

Recently, published collaborative studies by major academic institutions have collected 5-year data in large randomized trial examining atropine, an anticholinergic agent, as a potential treatment to slow myopia progression by up to 60%.

But despite the success of these efforts, there remains no FDA-approved treatment as current formulation of atropine have an unacceptable safety profile with significant side effects.

However, thanks to the novel piezo-print microdosing technology within the Optejet, we believe we have the ability to deliver a patented microdose of atropine that while effective also offers better tolerability and safety profile compared with standard doses.

As we accelerated our efforts in the MicroPine program over the course of the third quarter, we are rapidly moving towards an IND submission and look forward to starting the Phase III study in early 2019.

Our third program, MicroProst for the treatment of chronic angle-closure glaucoma, could be the first approved IOP-lowering therapy in this indication.

Chronic angle-closure is characterized by increasing intraocular pressure and optic neuropathy and, we estimate, accounts for approximately 580,000 cases in the U.S. and up to half of all glaucoma diagnoses in China.

Despite the significant medical need, physicians currently resort to using open-angle glaucoma treatments off-label.

We believe that along with the Optejet, we'll be able to provide an improved treatment paradigm for patients in this chronic indication.

We're very excited to submit the IND application for MicroProst in short order to enable Phase III trial initiation in the first half of 2019.

And our fourth program, MicroTears, aims to introduce our breakthrough microdosing technology through the Optejet to the estimated $2 billion dry eye market.

With its straightforward over-the-counter development pathway to registration, we believe that once we complete the formulation and manufacturing ramp-up, we may be able to introduce MicroTears in parallel with MicroStat in early 2020 to physician offices around the country.

This is again in line with our strategy of introducing physicians and consumers to the technology, effectively priming the market before we introduce our other candidates to the market.

With that, I would like to turn the call over to John to discuss our financial results.

Thank you, Sean, and once again, thank you all for joining us this morning.

For the third quarter of 2018, we reported a net loss of approximately $4.3 million or $0.43 per share compared to a net loss of approximately $900,000 or $0.10 per share for the third quarter of 2017.

Research and development expenses totaled approximately $2.5 million for the third quarter of 2018 compared to approximately $600,000 for the same period in 2017, an increase of 336%.

Third quarter 2018 R&D expenses included approximately $240,000 of noncash stock compensation expense.

The increase in research and development expenses reflects increased personnel, clinical engineering and drug formulation expenses associated with the continuing development of the company's pipeline of drugs.

For the third quarter of 2018, general and administrative expenses were approximately $1.8 million compared to approximately $300,000 for the third quarter of 2017, an increase of 482%.

Third quarter 2018 general and administrative expenses include approximately $223,000 of noncash stock compensation expense and $150,000 associated with the aforementioned branding litigation settlement.

The increase in 2018 general and administrative expenses is a result of increased personnel and professional fees as well as costs associated with being a public company.

Total operating expenses for the third quarter 2018 were approximately $4.3 million compared to total operating expenses of approximately $900,000 for the same period in 2017, an increase of 388%.

As of September 30, 2018, the company's cash balance was approximately $21 million, and we believe that we have sufficient cash balances for at least the next 12 months from the date the financial statements are issued, allowing us to progress our pipeline of programs towards Phase III development and over-the-counter registration.

That concludes our financial statement remarks.

I'd like to hand the call back over to Sean for closing remarks.

Thank you, John.

With multiple [shots] ongoing, our clinical pipeline and our continuing success with validating our Optejet technology through ancillary studies such as the PG21, we believe that Eyenovia is well positioned to execute on all of our stated milestones.

Over the next several months, we expect to prepare IND applications for our MicroPine and MicroProst programs and look forward to initiating our Phase III trial for MicroStat for diagnostic mydriasis this month.

In parallel, we're continuing to develop our commercialization strategy with the over-the-counter registration of MicroTears on the horizon.

That concludes our prepared remarks.

We'd now like to open the call for questions.

Operator?

(Operator Instructions) Our first question comes from Scott Henry with ROTH Capital.

For starters, on MicroStat, I believe the press release speaks of initiating your first Phase III study.

I just wanted to confirm, I believe you're going to have to do 2 Phase IIIs.

Were you still planning to do them concurrently?

And should we have data from both of them in the first half of 2019?

Good morning, Scott.

Yes, that's a good clarification.

The program, as I also mentioned earlier, that Phase III program includes 2 Phase III studies.

Those studies will be operationalized quite simultaneously, maybe not exactly at the same time but within weeks of each other.

And yes, we do expect to have the results of both trials sometime in the first half, maybe first quarter of 2019.

This is a very fast-paced program, and it's a really big indication with a lot of patients we're talking about, meaning almost 80 million dilations happening every year.

But ultimately, the outcome we're looking at is a very immediate outcome, which is pupil dilation, in this case within 30 minutes, which is the relevant outcome for the fundoscopic exam.

So Ginger Clasby, who is our VP of Clinical Operations and who has done that for decades and -- she has really prepared a very acute program of execution.

And if we look at the time line, I think there is a fair amount of confidence that we'll be able to execute on those trials in fairly short sequence of each other and have the results of the Phase III, both studies, sometime in [the first half] of 2019.

Okay, great.

And congratulations on the MicroStat IND.

Could you give -- and I apologize if you mentioned this in your prepared remarks, but could you give the time line for the INDs for MicroProst and MicroPine?

Yes.

So I'll now start with MicroPine because we've really prioritized that program quite a bit.

We had some very good success on the formulation front for MicroPine.

And again, in talking to investors over the past few years and months, we understand the urgency of that program and also the significance.

Definitely myopia and progressive myopia is -- we appreciate it's a very big unmet need, not only in the U.S. but globally.

So I think the goal is in the next few months to submit the -- both the INDs for MicroPine and for MicroProst and, ultimately, to have the enabling trial initiations of both programs in the first half of 2019.

So again, the INDs really follow, and the whole point of the INDs is to enable the first patient in and the initiation of the Phase IIIs, and we are looking to initiate both the MicroProst and the MicroPine Phase IIIs, as we've mentioned before, in the first half of next year.

Okay, great.

And then just a final question on the income statement.

R&D, should we expect that to ramp up significantly in Q4?

And then with regards to G&A, if I pull out the $150,000 for the litigation, is that a reasonable run rate for Q4 or perhaps a little lower than that?

I think at the G&A, once you take out the litigation-related expense and the noncash stock compensation expense we alluded to, we expect it to run at those levels as we look through to the end of 2019.

In terms of the R&D, we do expect that to increase as we start getting more involved in the Phase III studies.

So we anticipated to be roughly in the area of about -- probably about $2.5 million to $3 million per quarter going forward.

Okay.

And just -- so the $223,000 noncash comp, was that a onetime event?

Or will that be a recurring expense in that line in the G&A?

So I wouldn't describe it as a onetime event, but it's an expense that is tied to the stock price of the company.

So it's hard to estimate.

It's associated with the noncash value of stock options tied to the company's stock price.

So it could fluctuate from one quarter to the next quarter.

That's why I highlighted because it is noncash [hedged to 1].

And secondarily is because it's absolutely tied to the stock price, so it's hard to forecast.

(Operator Instructions) Our next question comes from Yi Chen with H.C. Wainwright.

My first question is, can you please elaborate on design of the Phase III MicroStat trial?

And how is it different from the previous 103 trial?

Yes.

Yi, so the -- again, this is a registrational study, and the design of our Phase III program was really done with -- in collaboration and very close working with the FDA.

And again, the design or the Phase III program here includes 2 [doses].

One of them is the microdose.

It's a randomized controlled study of the microdose fixed combination phenylephrine and tropicamide versus the microdose of the components.

So versus microdose phenylephrine versus microdose tropicamide.

And again, the outcome of that study is the amount of pupil dilation change from baseline, and this is also done in photopic condition, which is very different than the study which we did earlier on dilation, where we use scotopic conditions.

And the difference between photopic and scotopic conditions is really the ambient illumination.

So when you have photopic conditions, you do have very bright light, and your baseline study point of your pupil is at about 1 to 2 millimeters versus 4 to 5 millimeters in scotopic conditions, which was the case for our earlier studies.

So the dynamic range of pupillary response we're going to have in photopic conditions will be much greater, which allows us a lot more runway for the outcomes.

Second, the second study is really another validation trial which was required by the FDA, where you use the fixed combination of microdose tropicamide and phenylephrine against artificial tears, so against a true control, placebo control.

And again, that is a study that would run with the same outcome, which is a 30-minute pupil dilation.

So again, those studies are specific to pupil dilation and mydriasis.

And when we've reviewed the literature and our prior studies on the pharmacodynamic response, we are very much optimistic that we will demonstrate the dilation effect that we've seen before.

Although those trials are different in terms of the exact time points and the exact fixed combination formulation that we have before, again, we can definitely wait for the results and see.

But again, the results should be available hopefully in the first quarter of 2019.

Got it.

Just to clarify, conventional eyedrops will not be used in Phase III trials, is that correct?

Yes, that's a good point.

The first trial is truly microdose comparison.

So you have microdose fixed combination versus microdose components.

And there is no eyedropper because as the requirements from the FDA state, you need to show the contribution of components, but it could be in the same form.

So we're not running eyedroppers.

We're just doing the fixed combination microdose versus component microdose, which is also the case for the other second study against control.

So yes, you're right.

We're not running those against eyedrops.

Got it.

Okay.

Regarding the OTC registration for MicroTears, do you expect any hurdles at all for that process?

Or is it simply a filing of the forms?

Yi, my job is to expect hurdles every day and deal with hurdles.

So I think, again, we will have to see how the program comes through.

One of the benefits of artificial tears is it's really over-the-counter and it follows a -- the monograph registration.

So we will not be doing clinical studies per se to enable registration.

But at the same time, I can foresee how down the road once we registered, we can run multiple postmarketing studies because we think the technology is so different in the way it delivers coding and microdosing of the tears and [put on] the ocular surface directly versus the artificial tears, where you do an indirect application through the cul-de-sac.

So we'll probably do a lot of studies down the road postmarketing to highlight the benefits of the technology.

But from a registration perspective, it follows the standard pathway of artificial tears.

I think my team is really focused to make sure that all of our scale-up manufacturing, quality assurance, all these things that go into -- in a very harmonized way to ensure you have a launch of -- an effective launch of a successful product, they all have to happen.

But again, the regulatory pressure there is very different than all of our other programs.

This concludes today's Q&A session.

I would now like to turn the call back over to Sean Ianchulev for closing remarks.

Well, we have no further remarks here, and thank you very much.

Ladies and gentlemen, thank you for participating in today's conference.

This does conclude the program.

You may all disconnect.

Everyone, have a great day.