Eyenovia Inc (EYEN) 2019 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Eyenovia First Quarter 2019 Earnings Conference Call.

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

I would now like to turn the conference over to your host, Ms. Tram Bui from The Ruth Group.

Ma'am, you may begin.

Good morning, and welcome to Eyenovia's First Quarter 2019 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 March 31, 2019.

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 be available on Eyenovia's website at eyenovia.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 on 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 risk and uncertainties associated with the company's business.

These forward-looking statements are subject to a number of risks, including risks related to fluctuations in our financial results; risk of our clinical trials, including but not limited to the design, initiation, timing, progress and results of such trials; the timing and our ability to submit applications for and obtain and maintain regulatory approvals for our product candidates; our estimates regarding the potential market opportunity for our product candidates; our ability to develop and implement commercialization, marketing and manufacturing capabilities and strategies for existing product candidates and our ability to identify new product candidates; our ability to attract and retain key personnel; and others detailed 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, May 14, 2019.

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'd now like to turn the call over to Dr. Sean Ianchulev.

Thank you, Tram, and welcome, everyone, to Eyenovia's first quarter 2019 earnings conference call.

We kicked off 2019 with a number of successes, including completing our 2 MicroStat Phase III studies, the MIST-1 and MIST-2 study, which further validate our novel microdosing approach, which we believe will help us advance multiple programs towards Phase III initiations this year.

Just last week, the Eyenovia team was at the American Society of Cataract and Refractive Surgery and American Society of Ophthalmic Administrators joint annual meeting to present our positive MicroStat Phase III trial results, which confirmed for the first time in an FDA registrational trial that we can deliver drugs to the eye with high precision and efficacy using our microdosing technology.

These confirmatory results set the stage as we work diligently towards the initiation of our MicroPine Phase III program and expanded MicroProst Phase III program for IOP lowering, which we expect to begin enrolling patients in the middle and end of 2019, respectively.

Before I discuss our upcoming trials, I'd like to review our recent activities and briefly highlight the results from our MicroStat MIST-1 and MIST-2 studies.

Our MicroStat program for pharmacologic mydriasis or pupil dilation is our first program to complete Phase III trials, and last week, we were very proud to present positive data from our MIST-1 and MIST-2 trials at the ASCRS annual meeting.

In each trial, MicroStat was shown to be safe and effective for pharmacologic mydriasis achieving clinically and statistically superior mean pupil dilation.

Collective results from the study demonstrated that approximately 94% of treated eyes achieved pupil dilation of at least 6-millimeter at 35 minutes post-installation, which was the primary endpoint.

Additionally, exploratory analogies of the data demonstrated that dilation was rapid in most patients with about 2/3 of the MicroStat treated eyes achieving the 6-millimeter dilation as early as 20 minutes post-installation.

In both studies, observed adverse events were infrequent, transient and generally mild in nature.

We are very pleased with the outcome of both Phase III studies and believe that our MicroStat program has the potential to improve in-office patient, throughput efficiency and patient experience for the estimated 80 million annual office-based comprehensive and diabetic eye exams as well as the estimated 4 million mydriatic applications for ocular surgery in the United States.

With no other FDA-approved co-formulation of phenylephrine and tropicamide to our knowledge, we aim to bring the first fixed-dose phen-trop combination to market.

We are focused on preparing the registration and stability manufacturing lots for MicroStat and expect to file a complete NDA with the FDA in 2020.

With a major component of our MicroStat program complete, we continue to focus on our first-in-class back-of-the-eye program, MicroPine, aimed at reducing the progression of myopia in children.

Earlier this year, we received FDA acceptance of our investigational new drug application to initiate our Phase III CHAPERONE study, and we have been working diligently over the past few months to prepare for its initiation and look forward to enrolling patients in mid-2019.

We expect this single registration study will be a U.S.-based multicenter randomized, double-masked trial that will enroll more than 400 children and adolescents.

Participants in the study will be equally randomized to receive treatment of either 2 MicroPine treatment concentrations or a placebo arm.

To our knowledge, there are no FDA-approved therapies at this time to treat myopic progression, which can lead to progressive nearsightedness, decreased vision, and in advanced cases, a retinal detachment and retinal atrophy.

However, with the support of a growing body of evidence, which has been generated from the ATOM1, ATOM2 and LAMP studies, that have demonstrated that low-dose atropine has the potential to slow myopia progression by up to 60% to 70%.

We believe that our microdose formulation of atropine holds the potential to be the first FDA-approved treatment in this indication.

In addition to our Phase III trial for MicroPine, we are also working to prepare our IND application for MicroProst for the lowering of intraocular pressure, or IOP, in an expanded patient population and expect to begin enrolling patients in the Phase III trial by the end of this year.

After discussions with our scientific advisers and further discussions with the FDA, we made a decision earlier this year to expand the MicroProst program to include not only patients with chronic angle closure glaucoma, but also open-angle glaucoma and ocular hypertension patients.

We believe that expanding the patient population will not only allow us to treat a very broad population of approximately 4 million patients, but it may also potentially bring our novel microdosing technology to the vast majority of glaucoma patients as opposed to only those with chronic angle closure.

Additionally, we have also streamlined the clinical program into a single Phase III registration trial, which will enroll approximately 250 patients.

Similarly, we are also -- recently refined our OTC program, MicroTears, to be developed as an ocular decongestant and anti-pruritic agent to address the red eye, itching, and ocular lubrication.

We believe that this updated formulation will be able to address the current issues facing over-the-counter tear products by reducing the medication rebound effect, lowering preservative exposure and being significantly easier to administer by consumers.

We anticipate continuing to develop the program towards an OTC monograph registration with the FDA and expect to launch MicroTears alongside our MicroStat program.

Finally, we recently discussed some of the opportunities we see in ophthalmology where our platform technology could be successfully applied.

As we continue to examine these opportunities, we believe that presbyopia may present an attractive value proposition for Eyenovia.

Presbyopia is the nonpreventable age-related hardening of the lens, which causes the gradual loss of the eye's ability to focus on nearby objects and represents a prevalent vision issue that affects nearly 113 million Americans.

Our research indicates approximately 20 million of those people could potentially benefit from a prescription drug treatment, and we believe that our high-precision microdosing technology, combined with the proven drug, pilocarpine, could provide a short-term improvement in vision in patients lasting approximately 3 to 4 hours while addressing the issues of brow ache normally associated with microdose pilocarpine.

This is an interesting opportunity for us, and we will continue to explore it as we continue to advance our pipeline of late-stage product candidates.

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.

I would like to review our financial results for the 3 months ended March 31, 2019.

For the first quarter of 2019, we reported a net loss of approximately $5.9 million or $0.50 per share, and this compares to a net loss of approximately $3.4 million or $0.45 per share for the first quarter of 2018.

Research and development expenses totaled approximately $4 million for the first quarter of 2019 compared to approximately $2.1 million for the same period in 2018, an increase of 91%.

The increase is primarily due to an increase in direct clinical and nonclinical expenses, supplies and materials and personnel-related expenses associated with our Phase III studies.

In addition, in the first quarter of 2019, we had an increase in contracted services, supplies and hired 3 additional employees as we expanded our R&D activities for our microdose products.

For the first quarter of 2019, general and administrative expenses were approximately $1.9 million compared with approximately $1.3 million for the first quarter of 2018, an increase of 45%.

The increase was primarily attributable to an increase in personnel expenses, professional fees, rent expense as well as costs related to being a public company for the entire first quarter of 2019.

Total operating expenses for the first quarter of 2019 were approximately $6 million compared to total operating expenses of approximately $3.4 million for the same period in 2018, an increase of 73%.

Cash-based operating expenses, which exclude noncash stock compensation expense for the first quarter of 2019, was approximately $4.9 million.

As of March 31, 2019, the company's cash and cash equivalent balance was approximately $14.3 million.

And that concludes our financial statement remarks.

I would now like to hand the call back over to Sean for his closing remarks.

Sean?

Thank you, John.

Before we open the call to questions, I'd like to recognize the hard work of our entire team this past quarter, which was a great success.

Thanks to their tireless work.

Looking ahead, we remain committed to advancing our clinical initiatives for MicroPine and MicroProst, the preparation of the necessary registration and stability manufacturing materials for the submission of our first NDA for MicroStat in 2020 and the OTC registration of our MicroTears program.

We believe that all the pieces of the puzzle are falling into place, and we look forward to making 2019 another successful year as we seek to transform the treatment paradigm of front- and back-of-the-eye diseases.

That concludes our prepared remarks.

I would like to open now the call to any questions.

Operator?

(Operator Instructions) Our first question comes from the line of Esther Rajavelu with Oppenheimer.

Congrats on the quarter.

So I have a couple, the first on MicroPine.

How quickly do you think this trial would enroll?

What are -- can you maybe set some expectations on the number of sites that you are pursuing and kind of the enrollment time frame here?

Esther, thank you, great question.

I wish Ginger was our operations person, but -- so MicroPine is a new program, and we are always cautious when we go into a new therapeutic area where really it's a white space.

I don't think we've seen any industry trials there, so it's hard to look back into the rearview mirror and say, this is what we can expect, so there is a level of caution and unpredictability.

Again, if you compare to glaucoma trials, we have a very good idea of how to enroll a glaucoma study.

We have a good idea for dry eye studies, but MicroPine and myopic progression in that population, it's a really new ballgame for the entire field in ophthalmology.

That being said, and we've done that before when we did the MicroStat studies in glaucoma when there was a really a new space and Ginger did a phenomenal job doing best-in-class enrollment there.

So that being said, I think we expect it's a very, very reasonable trial of about 400 subjects.

It's a huge population and a lot of unmet need.

And currently, patients are trying to get their hands on a low-dose atropine, especially in light of the 3 large randomized controlled studies that came out of collaborative groups such as the ATOM1, ATOM2 and LAMP.

That really laid a lot of evidence down and best-in-class evidence so to speak for the effectiveness and the risk/benefit of low-dose atropine.

So we don't think it's going to be very hard.

We are factoring between 12 and 18 months to complete that trial enrollment, and we're a little bit optimistic that it will be more towards 12 than 18.

But that being said, I think we're giving a vast range for us, and we think that because of the large population, because of the big unmet need and also because of the already existing evidence that we know how this therapeutic behaves and what is the index of that drug, I think that we will be very well received.

And in fact, we've already done a lot of the work in site selection.

I think we're looking anywhere between 20 to 25 sites, and we think that we can really enroll that study in the U.S. alone, where there's plenty of landscape to cover and it will make the operations a little bit more streamlined.

So I hope I answered the question, with the cautionary note that we really don't know for sure.

No.

That's very -- that's a lot of detail, I appreciate that.

And then on presbyopia, can you maybe talk about your thought process there?

What's -- help us understand the landscape and sort of what prompted you to kind of start looking at this?

Okay.

Well, the landscape, it's people really like myself and my wife who are over 40, and we're really -- the first impediment to our well-being is really losing our ability to read at near, and there's a lot of people.

It's really something that happens virtually to everybody as we grow old, when we reach the age of 40 and above, you lose the ability to accommodate because of the stiffening of the lens and that is why we need reading glasses.

Now pilocarpine is a very well-established compound that we know creates [chippings].

It extracts maximum accommodation and also creates an extended depth of focus through a pinhole effect of the pupil.

And it's actually been something that other companies are moving forward now such as Allergan has programs in pilocarpine-based therapeutic approaches for that indication.

And it basically would be -- the way we see it is an episodic application for transient effect, where you would be able to read for an hour or 2 or 3 when you apply a single dose.

And microdosing is the perfect technology for that.

The digital spray allows you to microdose it, allows you to apply directly on the cornea and eliminate 90% of the preservative and other toxicity from the compound, which we know very well.

So we have had that program in our R&D, working on our formulation and also working on the piezo qualification to optimize the formulation for compatibility with our fluid path and with also our piezo-dispersion technology.

And we were very happy to learn from R&D that, that -- all the efforts were successful and ready.

I think we have a lot on our hands right now, so this would be a perfect program that we will be working to partner with somebody for full development because this is a very acute development.

It will be directly into Phase II, III with 1 or 2 trials.

And again, all of them are going to be pretty short-term studies just like the MicroStat or similar to MicroStat because we are talking about a well-known compound and also a very episodic application.

Now that being said, it's a completely new whitespace too.

So there is nothing approved for presbyopia and it's a huge market potential, which is what we like.

We like to take compounds, which we know about safety and find new applications and new potential.

Got you.

And then my last question is for John, and then I will hop back into the queue.

Can you, John, maybe just help us understand the share count for this quarter?

I know you did a fundraise in late 2018, but I'm trying to figure out the delta here.

Yes.

So the -- let me start with the current [tap] table.

So the total common shares outstanding that we have as of today are 12,019,000.

So what you see on the P&L for the first quarter of 2019 reflects the weighted average number outstanding, but the total number right now is 12,019,000.

Your next question comes from the line of Matt Kaplan with Ladenburg.

This is Maria for Matt.

I have a couple of questions.

The first one is in MicroStat, trying to get the time line right.

So I think you started stability work in March 2019, and correct me if I'm wrong, so that means your 12 month data will be available in March 2020.

So is the stability data, the rate-limiting step to filing the NDA, meaning you could file in second quarter 2020?

Or are there other factors that could delay that filing?

Yes.

So let me answer that.

You're right, we wanted -- we are proceeding in a fairly linear way here unfortunately with manufacturing.

That's the limitation.

You need to have a 12-month stability batch data before you file the NDA.

And we, as a small company, we could not parallel process, and we wanted to actually get our positive Phase III data before we commit to a pretty significant spend for MicroStat registration batches.

And in terms of that, we are also working -- this is one of the outsourced activities that go into particle sciences, which is a part of Lubrizol and Berkshire Hathaway companies.

And we're confident that this would proceed in that way as so -- as you outlined.

But again, there is always caveats in manufacturing and dependencies on externalities, which are related to the contracted manufacturing process.

So that being said, we are in a fairly linear wait process for the registration batches.

The clinical activities are done.

The study report is generated.

And right now, my team is turning the efforts fully towards the development of -- and the launch of the MicroPine and the MicroProst programs, while in parallel, we are supporting the outsourced registration activities for MicroStat.

Okay.

Great.

So would it be fair to assume, let's say, approval end of 2020 and launch early 2021 or something like that?

Yes, I think that's right.

Yes.

I think that will be on the aggressive side, but yes, it also depends on the turnaround time from the FDA for the NDA application.

But I think that plus a quarter or 2 would be depending on the mid-case versus more optimistic or less optimistic.

We are basically tracking very closely the manufacturing activities in the fill and formulation for the stability batches.

And we will provide you more updates if anything changes.

Okay.

And speaking of the FDA, I think your plan was to hold that pre-NDA meeting with the FDA mid-2019.

Has that meeting occurred?

Or anything you can provide there?

Yes.

It's forthcoming.

Okay.

And then trying to link the launch, I think you said in your introductory remarks that the OTC MicroTears is expected to be launched with MicroStat.

Is it because it's going to take that long to get this product ready for commercialization or because territory-wise you think it's better to launch both of them at the same time?

I think the second.

I mean artificial tears and MicroTears, it's always been a companion program that augments the sales force for MicroStat by providing an additional product.

We are very cautious about shooting from the hip and launching a big sales force effort without maximizing the potential of that sales force.

And because MicroStat and MicroTears hit the same customer, it really makes a lot of sense to put them together.

And so MicroTears is the kind of the ancillary program from that respect.

It tracks MicroStat, which has dependencies on the FDA.

So yes, we do have a little bit more time on MicroTears.

At the same time, we think MicroTears, which we are looking to register this year, would also add another level of validation because it will pretty much confirm and alleviate any doubts about the container closure and delivery system, which with MicroTears will become commercially registered.

And we think there is a very significant value associated with that as well because it really eliminates and connects the dots in terms of the commercializable nature of our new device and our new delivery system.

Okay.

Great.

And then my last question is regarding the data that you presented last week.

I don't know if I miss it in the -- at the beginning when you -- with your introductory remarks, but did you present the specific results of the primary endpoint?

Because I think you, again, said that 94% of treated patients that had the 6-millimeter dilation, which I think that was already reported in the first preliminary.

So did you provide any more detailed results at the presentation that you don't want to share now because they are going to be published or something?

Yes.

You -- I mean we did provide a little bit more granularity on the secondary outcomes as well and the time course of the 2 studies at the ASCRS.

As we know, a, we don't want to jeopardize publication by revealing all of the data; b, we also want to make sure that we have all of the discussions and review and everything by the FDA first as we do that.

So I think we've provided very meaningful, probably the most meaningful and relevant data to the technology.

And of course, we can provide a lot more information as we publish it and also as we complete our FDA registration process.

And our next question comes from the line of Yi Chen with H.C. Wainwright.

My first question is, is there any update on the specialty pharmacy network regarding when the company plans to have the distribution network in place?

How much is it going to cost the company?

And whether the same network will carry both MicroStat and MicroTears initially?

Yes.

Thank you for your question.

Just want to let you know that you're coming very weak and faded.

I think I understood, you wanted to -- your question was about specialty pharmacy network.

And all I have to say about this now is that this is a great option for the company being developed by Michael Rowe, who came to us from Aerie and has a decade-long veteran history with ophthalmology.

We find this to be a very efficient way of doing business, especially for a small company and also capping the customers.

And one other thing that makes it very amenable to this is that the first 2 products, MicroStat and MicroTears, are really purchases, nonreimbursed products.

They are purchased by the practices rather than prescribed by the doctors, which really provides some scalability there of significant nature.

As we know, today, most physicians are aggregated in multispecialty practices with many offices.

So it really allows us to scale quickly through the specialty pharmacy network.

I think this is still being developed, so I don't think on this call, we can discuss details on that.

Again, it will be something that will be finalized over the next 2 or 3 quarters and in time for our launch.

Again, we are very excited about that option, and we are looking very seriously into it.

My second question is on operating expenses.

So is it reasonable to expect that the company will have increasing operating expenses as you start the MicroProst Phase III and then -- sorry, MicroPine Phase III and then the MicroProst Phase III studies in 2019?

How much increase should we expect?

So I think if you look at what the current rate is, the expense is, they're not linear necessarily.

So they were -- in the fourth quarter and the first quarter, they were a little higher because we were completing our MicroStat study.

I think that you could expect the [magnitudely] increase as we get into the fourth quarter of this year and 2020 to be about roughly $1 million per quarter with the addition of the MicroPine study and probably another $500,000 per quarter with the MicroProst study.

And this is over current levels, but that will not come -- that will be -- most of that will be 2020 to be perfectly honest.

(Operator Instructions) Our next question comes from the line of Jonathan Aschoff with National Securities.

You were saying earlier I thought I heard you correctly that you'd be launching MicroTears along with MicroStat.

Does that mean that we should expect MicroTears to be coming to the market in 2021 rather than next year?

Or is it still going to be on the market at least a year ahead of MicroStat?

So yes, you're correct.

We've always planned to launch both of them at the same time and -- because they are companion products, and we want to have a better ROI on our sales efforts.

So the primary product that goes through the registration pipeline with the FDA and the approval process, this is MicroStat and that governs the time lines for that launch, and MicroTears will follow in the footsteps alongside MicroStat.

So that's correct.

Thank you.

And I'm not showing any further questions.

I'll now turn the call back over to Dr. Ianchulev for closing remarks.

Thank you, everyone, and I hope that was an informative update and we appreciate the attention.

Thank you.

Ladies and gentlemen, this does conclude the program.

You may now disconnect.

Everyone, have a great day.