Eyenovia Inc (EYEN) 2021 Q2 法說會逐字稿

Thank you for standing by. This is the conference operator. Welcome to the Eyenovia Second Quarter 2021 Earnings Call. (Operator Instructions) The conference is being recorded. (Operator Instructions) I would like to now turn the conference over to Eric Ribner, Investor Relations. Go ahead, please.

Thank you. Thank you. Good afternoon, everyone, and welcome to Eyenovia's Second Quarter 2021 Earnings Conference Call and Audio Webcast. With me today are Eyenovia's Chief Operating Officer, Michael Rowe; and Eyenovia's Chief Financial Officer, John Gandolfo. Dr. Sean Ianchulev, Eyenovia's Chief Executive Officer and Chief Medical Officer, has an unavoidable conflict which arose and is not able to join today's call.

Earlier this afternoon, Eyenovia issued a press release announcing financial results for the 3 and 6 months period ended June 30, 2021. We encourage everyone to read today's press release as well as Eyenovia's quarterly report on Form 10-Q for the quarter ending June 30, 2021, which will be filed with the SEC. The company's press release and quarterly report also will be available on Eyenovia's website at eyenovia.com. In addition, this conference call is being webcast through 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 also 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 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 a going 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; risk of our and our 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 and 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 environments 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, August 11, 2021. 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 laws. With that said, I'd like to turn the call over to Chief Operating Officer, Michael Rowe. Michael?

Thank you, Eric, and welcome everyone to our second quarter 2021 earnings conference call. The clear highlights since our last quarterly update is the positive data from our Phase III VISION 1 study that we announced in May. VISION 1 evaluated the safety and efficacy of our proprietary pilocarpine solution MicroLine versus placebo, with both being administered using our novel Optejet dispenser.

VISION 1 met its primary end point with a 7.7-fold higher rate of 3 or more line responders in mesopic distance corrected near visual acuity for the MicroLine 2% arm compared to placebo, which was statistically significant and enabled us to select this dose for our second registration trial called VISION 2. In this study, MicroLine had a favorable safety profile. Adverse events were all mild in nature, and there were no serious adverse events.

Headache, a frequent issue with pilocarpine delivered as an eye drop, was seen in fewer than 3% of patients treated with MicroLine. This compares very favorably with the up to 20% that has been observed with other pilocarpine eye drop formulations.

In a post-study survey, 71% of study participants reported strong interest in using MicroLine for near vision improvement should it be approved. These patients said that they would expect to use the product 3 or 4 times per week on average. We are very proud of these study results, which is why we are moving rapidly into VISION 2, which I will discuss later.

MicroLine is not the only drug being developed for presbyopia. We believe, however, that MicroLine will offer the best combination of attributes that will lead it to be a treatment of choice. First, in the VISION 1 study, MicroLine has been proven to work in the Phase III rigorous FDA registration study under highly controlled and validated conditions.

Further, VISION 1 produced efficacy outcomes under mesopic or low light conditions. Some other presbyopia treatments in development report photopic treatment outcomes, such as bright ambient light conditions, which can significantly inflate the therapeutic effect due to the avid stimulation of bright light and higher contrast, both of which can increase visual acuity measurements. This is an important distinction because in actual practice, presbyopia is more likely to impact functional vision and lower light conditions, such as when trying to read a restaurant menu.

Another important distinction of MicroLine versus other therapeutics in development is MicroLine is the only one being developed for on-demand use. In other words, there is no need for chronic dosing, everyday or even twice a day for the therapy to work.

Finally, MicroLine is administered via our Optejet dispenser, which is far easier to use and more accurate than traditional eye droppers and has been shown in multiple studies to achieve the same or better efficacy as an eye drop with better tolerability due to 80% less exposure to drug and preservatives. Needless to say, these results strongly support continued development of MicroLine. And to that end, we are planning a second Phase III study, VISION 2, that we expect to initiate by the end of the year.

VISION 2 will be a registrational double-masked placebo-controlled superiority trial of 2% multi- array print pilocarpine versus placebo. We aim to enroll about 100 subjects into the study and anticipate top line data in mid-2022. With a positive outcome of VISION 2, we plan on moving towards a new drug application or NDA later in the year.

The presbyopia market is significant. In the U.S. alone, there are estimated to be 18 million people between the ages of 40 and 55 who suffer from presbyopia who never had to wear glasses prior to having difficulty with near vision. This translates into a multibillion dollar potential marketing opportunity. MicroLine is also intended as an on-demand companion product to reading glasses for instances when 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.

Turning now to MydCombi, which is our unique fixed combination of 2 leading mydriatic medications or pupil dilation agents. As we announced last quarter, the FDA has confirmed our PDUFA date for October 28 of this year. MydCombi is a diagnostic agent with meaningful potential benefits to both the practitioner and the patient. For the practitioner, there is the potential to increase patient throughput without increasing costs. With MydCombi, doctors and staff can spend less time putting different eye drops into patients, including those that help minimize the sting of the current formulations.

On a daily basis, we believe that over an hour of exam room time can be reclaimed just by switching to this faster, more comfortable option. And for patients, since there are no protruding parts with the Optejet and a recess nozzle, MydCombi is far less likely to touch the surface of the eye as compared to a conventional eyedropper. This results in a potential decrease in cross-contamination and improve patient safety, something that resonates loudly in the COVID-19 era. Also, as mentioned, the product was reported to be very comfortable to use in our clinical studies. All of these benefits, we hope, will translate to more people being willing to undergo a comprehensive eye exam.

Market research suggests that millions of people fail to get a comprehensive eye exam every year due to the discomfort and other side effects of traditional mydriatic drops. MydCombi may be able to address these issues, and doctors may be able to further encourage people to take better care of themselves by having a comprehensive eye exam.

The market opportunity for MydCombi is substantial. There were an estimated 100 million office-based comprehensive and diabetic eye exams and 4 million of thalamic surgical dilations performed annually in the United States alone. We estimate this market to be approximately $250 million annually. If approved, we plan to target high-volume practices in the 10 largest U.S. metropolitan areas with just 10 sales professionals to be hired initially.

To help maximize this efficiency and create the opportunity for quick payback, our sales force will initially address the top 20% of eye care practices in terms of total patient volume and expand from there. Together with our agreement with EVERSANA, we believe we are well positioned to initiate a commercial launch soon after approval, pending no disruptions due to COVID-19 on our supply chain. Recall that MydCombi is a cash pay model and purchased directly by the doctor's practice, and this means no interaction with managed care plans, pharmacy benefit managers and others who may control formulary placement and reimbursement.

In addition to the commercial benefits associated with the MydCombi approval, there's also the strategic importance of demonstrating that our Optejet technology can be reviewed and approved by the drug division of the FDA. This technology underscores all of our projects and the approval would help derisk those projects as well.

Now I'd like to share some exciting news about our Optejet digital health system and our ongoing efforts to enable a remote therapeutic monitoring platform for all of our smart micro-array print pharmacologic projects. Earlier this year, we shared exciting compliance data from one of our Phase III trials showing that subjects were on average 90% compliant using the Optejet dispenser. This compares favorably to the 50% compliance rate typically reported for eye dropper bottles.

Since the technology and the Optejet has the potential to become the first smart delivery system for pharmacologic eye treatments with fully embedded digital health functions, we will be able to track therapeutic compliance and adherence almost 100% and our demonstration project from our ongoing Phase III trial was well informative to that effect.

The Optejet digital health system could be the first to enable smart pharmacological eye therapy and digital health for chronic eye diseases. This will not only open a new pathway for smarter, more personalized eye care but may enable a new reimbursable paradigm for remote therapeutic monitoring.

The American Medical Association manages the procedure code set that physicians and other health professionals use to identify the services for which they bill. These codes are commonly known as the CPT code set, which stands for current procedural terminology and our standard billing lexicon for medical services.

During a recent meeting of its editorial panel, new CPT codes for remote therapeutic monitoring were approved with 5 new codes that will become effective in January 2022. Some will cover acquisition and review of compliance and adherence data for pharmacotherapy, and this may provide a pathway for providers and clinics to get reimbursed for such care.

We are closely monitoring the CMS and payer adoptions 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. We look forward to a time in the near future when doctors will be able to deliver better smarter care that is covered under a potential remote therapeutic monitoring CPT code.

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

Thanks, Michael. I will start with a brief update on our licensing agreements with Bausch Health and Arctic Vision. Recall that we entered into agreements to further development of our investigational treatment for the reduction of pediatric myopia progression, which we call MicroPine.

MicroPine is a proprietary atropine formulation that 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.

Our agreement with Arctic Vision covers Greater China and Korea, while our agreement with Bausch covers the U.S. and Canada. To date, we have received $16 million in upfront and milestone payments, and we have the potential to earn up to $100 million in development milestones over the next 4 years as well as significant sales royalties and cost savings, if ultimately approved.

Development is progressing as planned, and we are continuing to evaluate potential licensing partners covering other key geographical territories. We are also assessing 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.

Interestingly, as Michael noted above, we have also seen recent news that physician charges and payments and telemonitoring of things like medication compliance could become routine in the near future, which is a perfect match with the capabilities of our Optejet dispenser. This could be especially important in a disease like glaucoma where medication compliance with traditional eye droppers is notoriously poor.

We have nothing definitive to share on this front today, but we do look forward to keeping you apprised about our progress. Of course, the beauty here is that these development activities would be at least partly funded by outsourcing opportunities such as those just described.

Now I would like to review our financial results for the 3 months ended June 30, 2021. For the second quarter of 2021, we reported a net loss of approximately $4.9 million or $0.19 per share, and this compares to a net loss of approximately $5 million or $0.25 per share for the second quarter of 2020. For the second quarter of 2021, the company reported license fee revenues from our Arctic Vision license agreement of $2 million and a corresponding cost of revenue representing payments to Senju of $800,000.

Research and development expenses totaled approximately $3.6 million for the second quarter of 2021, and this compares to approximately $2.9 million for the same period in 2020, an increase of approximately 24%. For the second quarter of 2021, G&A expenses were approximately $2.4 million compared with approximately $2.1 million for the second quarter of 2020, an increase of approximately 14.3%.

Total operating expenses for the second quarter of 2021 were approximately $6 million compared to total operating expenses of $5 million for the same period in 2020. This represents an increase of approximately 20%. I would like to note that operating expenses included approximately $637,000 of noncash stock compensation expense.

As of June 30, 2021, the company's cash balance was approximately $27.2 million, and this figure includes approximately $7.5 million and initial net proceeds from the $25 million credit facility with Silicon Valley Bank that we received in May of this year. We believe our current cash resources and the initial SVB loan proceeds provide the company with sufficient cash into the end of the third quarter of 2022. Our current cash resources inclusive of SPV are 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 are very pleased with our performance during the second quarter and subsequent period. To summarize our key highlights today, Results for our VISION 1 presbyopia study were positive, and we are rapidly advancing our Phase III presbyopia program. We anticipate initiating a second Phase III trial, VISION 2, by the end of the year with top line data expected in mid-2022. We look forward to an October 28 PDUFA date pertaining to our MydCombi NDA, which, if approved, gives us our first commercial product and validates 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 and regulatory milestones, which represents non-dilutive funding that, if realized, 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 benefit of patients and shareholders alike.

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

(Operator Instructions) The first question comes from Tim Chiang, Northland Capital.

Michael, could you talk a little bit about some of the learnings coming out of the ASCRS conference that recently happened. Obviously, Allergan did show some additional data on their presbyopia product. I think what -- the incidence of headache was around 14%. So obviously, you have a product here that has a much more favorable side effect profile. So I think that's a positive. But could you provide, I don't know, just some commentary post that conference?

Yes. Tim, thanks for the question. I think the thing that was most striking to me was the increase in interest of presbyopia therapies and of drug therapies to treat presbyopia in just the last year, just seeing how really the interest has exploded, how -- the interest by prescribers, by practitioners, how they're thinking about including these therapies into their practice and seeing it as a potential opportunity to bring in patients who they otherwise never would have seen because they just go to the drug store to get their readers. So everybody is very much excited about it.

In terms of the studies, and I'm glad that Allergan was able to share their data, and when we're in a position to file our NDA, I'm looking forward to being able to do the same. What I did notice is that each of these studies are somewhat different from each other. So it's very hard to make a cross-study comparison between the results.

For example, Allergan and we did our studies in mesopic or dark light conditions where some of the other people did theirs in bright light, which is much easier to give a positive answer, the different age groups that are included, the different amount of presbyopia that people have between the different studies. We did take a look at our data and tried to see, well, if we included patients similar to what you saw in the Allergan study, which is not a scientific way to do things because it's post hoc and it's not a lot of people.

But basically, the results we saw in terms of efficacy were very much the same as what Allergan did. So I think in the end, the important thing is that I see a number of products that could end up getting approved. But in the end, I believe that doctors are going to prescribe based on what the patient match is for that product. Whether they want something they can use on demand or use it once a day or if they want someone, if someone wants to use it twice a day, it's really going to come down to matching the patient with the product, which eye doctors are very used to doing. I hope that helps. Thank you.

No, that helps.

Our next call comes from Matt Kaplan, Ladenburg Thalmann.

Just wanted to -- can you give us a quick update in terms of where you are with respect to MydCombi, I guess, with the PDUFA date now quickly approaching in October? How are your commercial plans coming along? And any thoughts on pricing at this point?

Yes. Thanks, Matt. Well, we're still going for a date of October 28. We've got nothing to make us think that's going to be any different. Things are going along. We hope to get some labeling from the FDA in the next 4, 5 or 6 weeks, which will really indicate that things are happening quickly.

In terms of commercial progress, we're preparing -- we have a new Head of Sales and Marketing. He is going to be hiring his salespeople within the next 6 weeks. We're going to start hiring those people and putting them into place. Our plans are still to only go with 10 people in the largest population areas.

We are working to collect our prospects ahead of time so that we have places to go and we're not making cold calls coming out the door. EVERSANA, our partner on the distribution, meaning they're the ones that are going to be doing the e-commerce, taking in the orders and fulfilling the orders. We're in close contact with them. So that's moving along well. I would say everything is progressing the way that we would hope and no hiccups.

In terms of pricing, we're operating on a price at launch of about somewhere between $100 and $120 a cartridge, and you get about 75 patients out of each cartridge, so that's coming out to about $1.25 or $1.35 per patient. We've now been testing this price with potential customers. They find it to be very, very reasonable. And at that price with the cost of goods of about $18 a cartridge, it's a very nice margin for us. What else can I tell you?

No, that's very helpful.

And that's the same pricing basically that they're spending today for the eyedropper bottles on dilation. So basically, they get a -- what we believe to be a superior product for the same pricing.

Same price point, okay. And since there's no need to secure reimbursement and coverage that way, how should we think about kind of the trajectory of the launch once it's out there?

Yes. I think it's unlike a "normal" pharmaceutical product where you have to wait for patients to come in. This is limited by how fast we can go and train the offices because we do want to physically go and train people and make sure they have a great experience with the product. So I would look at this as -- in our assumptions, our plan is to be able to get to about 10% of the offices converted within the first year.

Okay, okay. That's great. And then just switching gears to the MicroLine and your second Phase III at the VISION 2 study, any learnings from VISION 1 that you're applying to VISION 2 at your -- you had very successful results from the first study, anything that you're modifying in the second?

I think VISION 2 is going to look very much like VISION 1, except we don't need to have the 1%. So we know which dose we're going with. John, do you want to add anything to that?

No, I think that's basically pretty accurate. I think that's currently the plan. It's going to look similar, except we're only going to have the one dosage.

Okay, good. And then last question, in your prepared remarks, John, you spoke about potential expansion using the Optejet delivery technology into other products. What -- how should we think about the timing on potential additional products, either via licensing or organically internally developed?

So I would say that we have multiple discussions ongoing. It's tough to handicap the exact timing of things. I think because we have multiple ongoing, I think that I'd like to see us get one in place by the end of this year. I'm not sure that timing will work out. But we feel pretty confident that we'll be able to move forward with different collaborations.

(Operator Instructions) Our next question comes from Len Yaffe, Stoc*Doc Partners.

Michael, I was going to ask several questions. I'm trying to square the circle between the current valuation of the company and the market opportunities. So I'll just throw out a couple of questions and please answer them how you'd like.

The first is that at the ASCRS conference that Tim was referencing, one of the things that impressed me was the group of people you've assembled in terms of sales and marketing, customer interaction all across the board and their FDA interaction. So I just thought it might be a value to go through the number of years of experience and prior associations that you've all had together working at some of the top companies.

The second thing I was wondering is with MydCombi, you talked about it being a $250 million U.S. opportunity. Could that drug, potentially with Optejet be at a breakeven or profitable level to Eyenovia exiting its first year in the market. And if that's the case, given again that it's not a large sales force with significant detailing, it could end up justifying the current market cap pre-MicroLine and MicroPine.

And then on MicroLine, with the Allergan data that we saw and perhaps Allergan, AbbVie have talked about this being a $500 million to $1 billion market, it seems like with the Allergan study, they had a very large placebo effect, which I thought was odd in terms of patients who are not on active drug in the clinical study. I think it was 10% who were actually getting 3 lines of improvement. And I thought that was odd given that these are presbyopia patients, and it would be tough to generate that unless you were seeing near 20/40 and then maybe weren't just needing of the eye drop.

So I was wondering if you could talk about your understanding, if I'm right about that, with the high placebo effect and to the extent that, that could skew the data that they were able to show in terms of the net benefit and how you're positioned with the patients that you have in your study, where you may not get as high a placebo effect, but you may show a greater net difference.

Wow. Thank you, Len. I've been taking notes furiously through that. Let me start with the last question about the Allergan results. And I think the thing I would probably look at is the entry criteria. So they had patients in their study that could have had vision at 20/40. And we had patients now in a study where the best you could have coming into our study is 20/50. And I would guess, if you have patients coming in at 20/40, it could be possible, on any given day, they may be able to read something without any help. So you might find a larger placebo rate just due to that.

But I think that what they're looking at, and I don't want to talk for Allergan, AbbVie, but they're looking at the delta between their active group and their placebo group, which I think was 20 percentage points, and that's what they would point to. And as I said, we don't have enough of the patients to match theirs.

For example, we don't have anybody with 20/40 in our study. But just kind of looking sort of kind of, we see results that we're very happy with compared to their results. And that's the best I can say about that. So I hope in the end, they get approved. I'd love to see them get approved and open this market up. I think it's a lot bigger than $500 million to $1 billion, and that will only help us when we eventually get to the market.

The question about the money, I think I'd like to turn that over to John. John, do you want to take that now? Or do you want me to talk about placebo? Go ahead, John.

No, I could talk about -- certainly talk about it. So the question basically was do we think at the end of 1 year that it will be providing positive contribution margin to the company. I think the first year is difficult to do that because usually, you start off with a controlled launch.

I would say, I think by the fourth quarter, if you look at it on a quarterly basis, we could be at a point where -- and in our internal model, we've seen this, we think that MydCombi will be contributing positive contribution, meaning that the revenue less cost of goods sold and direct sales and marketing expenses will be positive at that point in time. I don't think it will cover the first 12 months because I think you'll start off in a -- I know you'll start off in a loss position. But certainly, I would...

I was thinking 4 quarters out, 1 year out.

Yes. So one way to look at it is if you think about it as -- 2023, we definitely show on our internal model that in that year, it's definitely generating a positive contribution margin for the company. So Michael, I don't know if you want to answer the last piece.

I'll answer the next one about the people. And Len, I appreciate the kudos. They are a fantastic team. We have people here with many, many years of experience, not just in drugs, but specifically in ophthalmology and optometry. And for people who are involved in eye care, they understand that eye care is different, and people tend to stay in it for a very long time.

And people know the nuances, and our team, I'm very proud to have them here coming from backgrounds in much larger eye care companies and now have mainly come here because they want to be able to bring their learnings and their relationships and their expertise and be part of something they see that's going to hopefully create a revolution in eye care. So thank you again for that. And for anybody from Eyenovia who might be listening in, we all appreciate when we're recognized for that. So thank you, Len.

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Rowe for any closing remarks.

Thank you. And thank you, everybody. This concludes today's call. Thank you for joining us and have a good and safe rest of your day. Bye-bye.

Thank you, everyone.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.