Eyenovia Inc (EYEN) 2021 Q3 法說會逐字稿

Greetings. Welcome to Eyenovia Third Quarter 2021 Earnings Call. (Operator Instructions) Please note, this conference is being recorded.

I would now like to turn the conference over to Eric Ribner with Investor Relations. Thank you. You may begin.

Thanks very much, and good afternoon, everyone, and welcome to Eyenovia's Third Quarter 2021 Earnings Conference Call Audio Webcast. With me today are Eyenovia's Chief Executive Officer and Chief Medical Officer, Dr. Sean Ianchulev; Chief Operating Officer, Michael Rowe; and Chief Financial Officer, John Gandolfo.

Yesterday afternoon, Eyenovia issued a press release announcing financial results for the 3- and 9-month period ending September 30, 2021. We encourage everyone to read yesterday's press release as well as Eyenovia's quarterly report on Form 10-Q for the quarter ended September 30, 2021, which will be filed -- which was filed with the SEC. The company's press release and quarterly report are also available on Eyenovia's website at eyenovia.com. In addition, this conference call is being webcast on the company's website and will be archived there for future reference.

Please note that on today's call, we will be discussing investigational products which have yet to receive FDA approval.

Please note that certain information discussed on the call today is covered under the safe harbor provision 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 those -- 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 fluctuations in our financial results, volatility and uncertainty in the global economy and financial markets in light of the evolving COVID-19 pandemic; our ability to raise additional money to fund our operations for at least the next 12 months as they grow in concern; our estimates regarding the potential market opportunity for our product candidates and potential revenue from licensing transactions; reliance on third parties; the ability of us and our partners to timely develop, implement and maintain manufacturing, commercialization and marketing capabilities and strategies for our product candidates; risks on our end and our licenses -- licensees' clinical trials, including, but not limited to, the cost design, initiation and enrollment, which could be adversely impacted by COVID-19 and resulting social distancing; timing, progress and results of such trials; the potential impact of COVID-19 and related economic disruptions on our supply chain, including the availability of sufficient components and materials used in our product candidates; the timing of and our licensees' ability to submit applications for, obtain and maintain regulatory approvals for our product candidates; changes in the legal, regulatory and legislative environment in the markets in which we operate and the impact of these changes on our ability to obtain regulatory approval for our products; the potential advantages of our product candidates; the rate and degree of market acceptance and clinical utility of our product candidates; our ability to attract and retain key personnel, intellectual property risks and others detailed in and qualified by the cautionary statements contained in Eyenovia's press release 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 11, 2021. Eyenovia undertakes no obligations 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 all that said, I'd like to turn the call over to Dr. Sean Ianchulev.

Thank you, Eric, and welcome, everyone, to our third quarter 2021 results conference call.

This has been a busy time for Eyenovia with the initiation of our second Phase III trial in presbyopia VISION-2; the recent news on MydCombi, which is now reclassified as a drug device combination by the FDA; and the departure of Dr. Fred Eshelman from our Board of Directors. MicroLine, as you recall, is our product candidate for presbyopia in market representing over 18 million people in the United States between the ages of 40 and 55 and who otherwise never wore glasses. VISION-2 is our second Phase III study for MicroLine and we recently announced the first patient enrolled in the study, and we look forward to completing this study early next year.

Following Allergan's recent approval of pilocarpine, Eyenovia is now the only company with a second Phase III trial underway. There is growing validation for the pharmacologic treatment of presbyopia with pilocarpine. We announced 3 positive Phase III trials between Eyenovia and AbbVie. Michael will provide additional information in a few minutes about this very important and valuable asset.

We're also working on the resubmission for MydCombi, our unique microdose array print formulation of 2 leading mydriatic medications or pupil dilation agents. As we recently announced, the Eyenovia team is working quickly to provide additional information to the FDA for the expedited recognition of MydCombi's new drug application as a device/drug combination. We understand the extrinsic circumstance that compel the FDA to reclassify ophthalmic dispensers of which our Optejet is a highly sophisticated, groundbreaking technology.

Having our products reclassified as a drug/device combination does not change what was seen in our clinical data, and the additional and outlining regulatory requirements are non-clinician in nature and we have prepared for this possibility through the years. Now it is a matter of understanding the specifics of the FDA feedback and addressing the items in the CRL.

One potential positive is the ability of the Optejet dispenser in the future to work seamlessly with the recent changes to the way that doctors may bill for remote therapeutic monitoring. And the Center for Medicare and Medicaid Services, or CMS, manages the procedure code set that physicians and other health care professionals use to reclassify the services for which they bill. These codes are commonly known as CPT code set, which stands for Current Procedure Terminology.

During our recent update, new CPT codes for remote therapeutic monitoring were approved, with 5 new codes that will become effective on January 1, 2022. Remote therapeutic monitoring has come into greater use with the COVID pandemic and will continue to be an important way for doctors to monitor and treat a greater number of patients. Some of these new codes will cover the remote monitoring of data, including compliance and adherence data for pharmacotherapy, and this may provide a pathway for providers and clinics to get reimbursed for such care.

Our Optejet technology has the potential to become a go-to option for the remote therapeutic monitoring associated with topical ophthalmic drug adherence and compliance. This will not only open a new pathway for smarter, more personalized eye care but may enable a new reimbursement paradigm that can have real-world benefits for patients with chronic diseases such as glaucoma. We're closely monitoring the CMS and payer adoption of remote therapeutic monitoring and other telehealth initiatives as we work to create and enable the first pipeline of smart eye therapeutics with our Optejet remote therapeutic monitoring platform.

Before turning the call over to Michael, on behalf of the entire company, I would like to take a minute to thank our Chairman, Dr. Fred Eshelman, who has decided to step down at the end of this year after a decade-long Board leadership. From the very inception of this technology and the founding of Eyenovia, Fred has been instrumental to our success and, over those many years, have made significant contributions to help get us where we are today as a company. The Board will be working on a transition plan for the Chairman role and for potential additions to the Board with the necessary skills and backgrounds to make meaningful contributions to the company.

I will now turn the call over to Michael Rowe, our Chief Operating Officer, for a review of MicroLine. Michael?

Thank you, Sean, and good evening, everybody.

I would like to start with a review of our MicroLine program. MicroLine is our proprietary microdose array print pilocarpine therapy for temporary improvement in near vision associated with presbyopia. Allergan recently received FDA approval for the same molecule as an eye drop for the treatment of presbyopia, and we are very happy to see them opening up this market. Eyenovia's product is different in that MicroLine is designed to be used on-demand with the benefits of microdosing reflected in the very low rate of brow or headaches seen in our VISION-1 trial and a much easier and neater way of instilling the drug through the Optejet device.

As you may recall, we announced positive data from our first Phase III presbyopia clinical trial, VISION-1, earlier this year. Data from that study demonstrated positive efficacy and safety with far fewer side effects reported relative to pilocarpine eye drop formulations. Importantly, in a post-study survey, 71% of study participants reported strong interest in using MicroLine for near vision improvement when approved. These patients said that they would expect to use the product 3 or 4 times per week on average.

We recently announced the first patient enrolled in our second Phase III clinical trial, VISION-2. VISION-2 is a registrational, double-masked, placebo-controlled superiority trial of 2% multi-array print pilocarpine versus placebo. We aim to enroll about 140 subjects into the study and anticipate top line data in early 2022. We believe the addressable market for presbyopia to be many times greater than the addressable market for almost any other ophthalmic condition. So we are very excited about the potential of MicroLine as a key driver of our long-term growth.

In the U.S. alone, there are estimated to be 18 million people between the ages of 40 and 55 who suffer from presbyopia but who never had to wear glasses prior to having difficulty with near vision. This translates into a multibillion-dollar potential market opportunity. MicroLine is also intended as an on-demand companion to product reading glasses for instances when using readers is inconvenient or undesirable. When you look at the clinical results, our plans for VISION-2 and the benefits of our Optejet dispenser, we believe we can capture a significant share of the market should MicroLine be approved.

As Sean mentioned, our team is working on the resubmission of MydCombi to the FDA in response to the Complete Response Letter. The reclassification, which caused the FDA to modify their initial classification of our product from a drug to a drug/device combination, was triggered by a recent court case, Genus Medical Technologies versus FDA, more information about which we have made available on our website.

Specifically, the FDA is requesting certain device validation reports that were not required under a drug submission. One example would be validation reports for laboratory studies that demonstrate that the capabilities of the Optejet device should not degrade over the period of its shelf life. We routinely conducted these types of studies but did not submit a report with the MydCombi NDA because it was not required under a drug submission. Now we are taking this information along with other work we have done and packaging it for resubmission. We cannot emphasize this enough that CRL raised no issues with our clinical results or the product safety or efficacy, and the CRL has no impact on our other programs.

As Sean mentioned, the reclassification of MydCombi to a drug/device combination may have broader positive implications for our platform technology as well as streamline the future review of other late-stage development programs, MicroLine and MicroPine. These programs also leverage our Optejet microdose dispensing technology. So the information being developed to support the drug/device combination filing is very likely transferable across these programs. This is keenly important as we continue to develop MicroLine for presbyopia, a program with a multibillion-dollar sales potential.

In summary, Eyenovia is moving forward on multiple fronts with late-stage programs that offer great potential benefits for patients, providers and our shareholders. We are excited about the potential benefits our technology can bring in light of the recent focus on remote therapeutic monitoring. We remain focused on progressing these programs to potential regulatory approval as efficiently as possible and look forward to providing additional updates in the coming weeks and months.

I would like to turn the call over now to our Chief Financial Officer, John Gandolfo, to provide a brief update on our licensee agreements, including the status of MicroPine, as well as a financial update. John?

Thank you, Michael. I will start with a brief update of our licensing agreements with Bausch Health for MicroPine in the U.S. and Canada and Arctic Vision for all 3 of our drugs in China and South Korea.

MicroPine is a proprietary atropine formulation for the reduction of pediatric myopia progression. It has been shown in clinical studies to slow myopia progression by 60% or more. There are currently no FDA-approved drug therapies for this indication, and if left untreated, this can result in retinal detachment, myopic retinopathy and vision loss. Bifocal or multifocal glasses or contact lenses are typically prescribed to myopia children.

Recall that as part of the agreement with Bausch Health, they agreed to assume oversight and costs related to the ongoing Phase III CHAPERONE clinical trial. This is a 48-month, U.S.-based, multicenter, randomized, double-mask trial that is enrolling more than 400 children between 3 and 12 years of age. The trial is comparing microdose atropine 0.01% versus placebo ophthalmic solution. Enrollment is progressing as planned.

Our agreement with Arctic Vision covers Greater China and South Korea. And while the original agreement was for MicroPine and MicroLine, they also recently added MydCombi as well. So Arctic Vision now licenses all 3 of our current programs. We are pleased that Arctic Vision recently had its MicroPine IND accepted in China and is completing a PK study and preparing to start the Phase III study, so that program is also progressing nicely.

To-date, our license agreements have generated approximately $16 million in license fees and we have the potential to earn an additional $85 million of license and development milestones and reimbursable expenses over the next 4 years. Upon commercialization, if approved, we can also earn significant sales royalties as well. Development is progressing, and we are seeking additional licensing partners for other key geographical territories.

We are also continuing to assess potential pipeline expansion opportunities as we believe we can leverage the Optejet technology to address unmet needs in additional large ophthalmic indications. As we indicated last quarter, some examples include anti-infectives, anti-inflammatories, dry eye and glaucoma, each with significant market opportunities.

Now I would like to review our financial results for the 3 months ended September 30, 2021. For the third quarter of 2021, we reported a net loss of approximately $5.6 million or $0.21 per share on approximately 26.1 million weighted average shares outstanding. And this compares to a net loss of approximately $5.1 million or $0.23 per share for the third quarter of 2020 on approximately 22.2 million weighted average shares outstanding.

R&D expenses totaled approximately $3.5 million for the third quarter of 2021, and this compares to approximately $3.4 million for the same period in 2020, an increase of approximately 3.2%. For the third quarter of 2021, G&A expenses were approximately $2.4 million compared with approximately $1.7 million for the third quarter of 2020, an increase of approximately 40.1%.

Total operating expenses for the third quarter of 2021 were approximately $5.9 million compared to total operating expenses of $5.1 million for the same period in 2020. This represents an increase of approximately 16%. Operating expenses also included approximately $777,000 of noncash stock compensation expense.

As of September 30, 2021, the company's unrestricted and restricted cash balance was approximately $21.4 million. Our current unrestricted and restricted cash resources are approximately $30 million, and we believe this provides the company with sufficient cash to fund all our programs through 2022 due to the anticipated reduced spending with the delayed launch of MydCombi. Therefore, we expect our current cash resources will be sufficient to bring our MydCombi mydriasis product through the NDA process and commercial launch, complete our presbyopia clinical program for MicroLine and complete the preparation of our pilot manufacturing facility.

In closing, we continue to be pleased with our performance to date. To summarize our key highlights today, we are continuing to rapidly advance our Phase III presbyopia program. We've recently initiated a second Phase III trial, VISION-2, with top line data expected in mid-2022. We are actively preparing for the resubmission of our MydCombi NDA in the first quarter of next year, which, if approved, would give us our first commercial product and validate our Optejet dispensing technology.

Our licensing agreements with Arctic Vision and Bausch Health are progressing well and continue to offer the potential for meaningful development of regulatory milestones, potential non-dilutive funding that we can use to expand and advance our pipeline of novel therapeutics, leveraging our MAP technology. We believe we are well positioned to achieve multiple commercial, regulatory and development catalysts this year and next for the benefits of shareholders and patients alike.

That concludes our prepared remarks. We would now like to open the call to questions. Operator?

(Operator Instructions) Our first question is from Tim Chiang with Northland Capital.

Sean and Michael, maybe you could just talk a little bit about the resubmission for MydCombi. What exactly do you have to basically refile to the FDA with this reclassification? Is there any -- also, is there any additional safety data that you have to provide the FDA with the resubmission?

Tim, this is Sean. I'll try to take that. It's exactly as we mentioned, and I think Michael went into some detail. I don't think we can provide too much granularity. But to your point, I think we can answer clearly that there is nothing that has to deal with either the safety or efficacy and it's nothing that really concerns the clinical data. It's really more procedural in nature, and it has to do with the validation, verification type of activities required on the device side, which we're very familiar. In fact, we have deal quality systems that we've maintained for that very reason.

But again, we are not going to really go into too much detail because we're working very actively to fully understand every single item and coordinate and have a call with the FDA so that we can make the resubmission as quick as possible. But it doesn't change anything about the performance of the device, of how the device works or the clinical utility and the clinical performance. It's mostly on the validation and verification side for the device.

I see. Okay. And then maybe just one follow-up. Obviously, Allergan's pilocarpine product basically got approval. I was looking at their label, and I guess the treatment effect from their studies versus the vehicles around, I don't know, give or take, 20% treatment effect. Do you think that you'll have comparable rates of efficacy with your MicroLine product? And is that sort of treatment effect about the same is what you've received in the VISION-1 study?

Right. So we've reported the results on the VISION-1 study, and those are publicly available. I would really hesitate to speculate about our overall data in VISION-2, but on the flip side, we're going to have that very quickly and very soon. I think Ginger from the operations team is very optimistic we'll be able to enroll this study fairly quickly, even quicker than VISION-1. There is such high interest in the field of presbyopia. There is such high availability of patients. And particularly, when it comes to the Optejet, there is really a competition for -- sites are competing to really get into the study because they appreciate how unique that technology is in that particular indication. And especially as we reported in the VISION-1 that we got only less than 2% rate of headaches, which we know with overdose or the topical treatment with the eyedropper, that is more in the vicinity of 12% to 14%, 15%.

So I think there's a lot of things that we're encouraged by and very excited when we've seen our -- and reported our VISION-1 data. We want to validate that with VISION-2. And ultimately, again, the MydCombi part will -- we hope once we address that will not impact in any way the presbyopia pilocarpine program for us. And we're very excited that Allergan is really validating that and has the pharmacologic therapy now on the market, developing the space for follow-on therapeutics.

But Tim, I'm actually -- Tim, I want to add something to that. You correctly pointed out that the delta between the 3 line or 15-character improvement and placebo was 20%. And that's what's required for the FDA approval. But in this market, given a 2-line, 10-letter improvement could be the difference between I can read my cell phone and I can't read my cell phone.

So you have the barrier or you have the bar that you have to get over for the approval, which is very high. But an actual benefit for a patient, many, many more patients will benefit even from the lower bar to do, for example, with our product on-demand to get your functional vision to get you that functional benefit. So I just want to make it clear, there's what's required by the FDA versus what is that patients are going to be happy with.

Our next question is from Matt Kaplan with Ladenburg Thalmann.

Just wanted to follow up on the refiling for MydCombi. If you look at the data and info that you already have in hand with respect to validation and verification, how much more work do you need to do from a de novo or from scratch to be able to refile? I guess where are you in that process, do you think?

It's Michael. We're -- I would say that we probably have 95% to 99% already. And where we don't, it's not like we have to do a clinical study. It may be just going back to look up the rig and then finding the validation studies that we had done and rewrite it to match whatever that regulation might be.

So there's nothing in terms of any clinical that we need to do. And right now, it really is going through all of the validation reports that we've already done, and where there might be a piece or 2 missing, we just fill in the blanks for that.

Okay. That's great. And when you refile, what's your expectation in terms of a Class 1 or a Class 2 review at this point?

Yes. So Matt, I would love to answer this, but probably the best time to do it in the next call when we have some feedback from the FDA. I would hate to speculate now. And also, what Michael said is absolutely correct, and we're very encouraged by the fact that we do have the majority of the data. And this is partially because our team -- and we've said that before, that we've maintained deal-quality systems, and a lot of our engineering data and processes have built in verification-validation because the fact that the FDA reclassifies this does not make us less or more of a device than we've always been when it comes to utilization in the field and how this has to be made. It has to be made with all the appropriate quality control systems because, ultimately, it will be used by the patient.

The part that we don't know is, obviously, the FDA will have an additional review team or additional reviewer from the device side. And one part from us that's really unclear is given what we've developed on our own and what we have created following all of the device regulations and specifications, how acceptable and how that would really be in line with their expectations because we've never had discussions with anybody from the device side.

So again, there's a couple of things that we want to absolutely ascertain before we provide information or come back to you with something that may or may not be true to its nature now that it's a very easy thing. But having dealt with the regulations and the FDA before, it's always important to have very specific feedback, and we intend to get back to them very quickly addressing all their points and showing them the information we already have to make sure that we can expedite that.

Okay, that makes sense. And then a follow-up on the MicroLine program, given the recent approval of Allergan and, I guess, the evolving competitive space in terms of presbyopia and other programs out there. Can you talk about the differentiation of MicroLine versus other programs?

Sure, Matt. The differentiation is going to be on which of these products best match the patient's lifestyle. If you go to an optometrist, and I believe they will be the principal prescriber of these, these are generally patients who've never been into their offices before because their entire life they've never had to wear glasses.

So now they're coming in because they're having trouble with near vision, and they're looking for options, and what they don't want is to turn presbyopia into a disease. They want something that's as easy to use as glasses, but it's not glasses. They're looking for like invisible glasses. And what MicroLine will give them is that ability to manage presbyopia so that they can use the product when they would like to, in a way that they would like to, easy to use, and something with minimal side effects. And I think that's one of the biggest differentiators.

So the ability to use it on demand, number one, instead of having to take it everyday because right now, people don't take their medications everyday; to have a very low side effect profile would be the other differentiator; and the third one would be to make it easy and convenient for them, which the dispenser does. And I think that will make a real difference in the market research we've done. Once you put the Optejet into somebody's hands, that's really all you have to do. It makes all the difference in the world when they see how good that technology is.

Our next question is from Len Yaffe with Stoc*Doc Partners.

Yes. Mike and Sean, I just wanted to have you go over again what I think is the critical point as it relates to MicroLine that this, as you've talked about before, is a cosmetic product where people are often going to be using it in social situations such as not having to wear reading glasses, going out of a restaurant or being at an event where they're going to be photographed and they don't want to have be photographed with glasses. And therefore, the instance of side effects with the cosmetic is the greatest deterrent because people don't want to feel bad for a cosmetic gain.

So I was just wondering, as I understand with Allergan, their AEs, their adverse events, greater than equal to 3% of their trial included headache, blurred vision, eye pain and hyperemia. And obviously, as it relates to being photographed, hyperemia would be a significant deterrent. Could you discuss your specific adverse event profile that you've seen and to the extent that you think that this is an important differentiation?

Sure, Len. I'll start with hyperemia because pilocarpine doesn't generally cause hyperemia. So even though it showed up in their trial and traced a mile showed up in ours, at least in our case, it showed up because we asked people to look for it. So we specifically asked the investigators, "Do you see any hyperemia?" And then I think something like 20% of the cases, they said, "Yes, traced a mile for that and it was transient and disappeared very quickly."

I think the big one is going to be the headache or brow ache, and that is directly related to how much drug you put on to the eye because what happens is you put excess drug, it gets into the local circulation, and you get the muscle between the eyes tensing up, and that's the brow ache and that is directly in relation to how much do you give.

And so not surprisingly, what Allergan saw, I believe, with one of the trials was a headache or brow ache rate of about 14.8%, something close to that, which is what you see for pilocarpine in general and would be what's expected. And in our trial, we saw about 2%, and that's because of how much drug you're putting in.

And I agree with you that the headache could be classified as transient or minimal, but it's probably something most people don't want to even have to bother with. So I see that as a key differentiator between us and any of the drop products.

And so then just as a follow-up, as it relates to pediatric progressive myopia, which is virtually an epidemic worldwide and has been exacerbated by COVID-19 with kids staying inside more and looking at near-term computers or cell phones, how long a study do you think that will be? And where do you think you'll be positioned competitively versus any others who may be looking at this market, which I think could even be far larger than presbyopia?

Yes. That's a great question because I'm here at the Eyecelerator meeting in New Orleans, and we just had a myopia panel that Sean was a part of, and this is a big discussion. The studies are 3 years with a fourth year in there as a follow-up that's required by the FDA, and they're staying firm on that. There are 2 eyedrops ahead of us with NEXUS and Nevakar, and then we come out. And then the other products that are coming are just going into Phase I, so they are years and years and years away.

I'm not particularly concerned if we come out a year or 1.5 years behind the drops. Number one, there's plenty of patients coming in, new patients all the time. Like you said, it's an epidemic. There are literally millions and millions of these kids, unfortunately, who are going to be available.

Secondly, it's a kind of therapy that once we do come out, if it's the better mousetrap, and I believe it is, they can be switched because they'll be going from an atropine drop to an atropine in the Optejet dispenser, where some of the benefits they may get because of that is lower systemic absorption, which is always nice for kids, and it's more comfortable because you're taking less adjustment sting and also because the device itself can track compliance and adherence to therapy, which if the kid is not using the drug, then they're not going to get the benefit. So that's something else that can help them as well.

So right now, I think we'll probably be #3, a close #3. But again, such a big opportunity. Unfortunately, that it's not something that terribly concerns me.

With no more further questions, I would like to turn the conference back over to Sean for closing remarks.

Yes. Thank you, everybody, for listening in, and we look forward to our next update next quarter when we'll have a lot more information. And hopefully, everybody has, in the meantime, a happy holiday season. Thank you.

Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.