Eyenovia Inc (EYEN) 2020 Q3 法說會逐字稿

Greetings and welcome to Eyenovia's Third Quarter 2020 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Eric Ribner Investor Relations. Thank you. You may begin.

Thank you, and good afternoon, and welcome to Eyenovia's Third Quarter 2020 Earnings Call and Audio Webcast. With me today are Eyenovia's Chief Executive Officer and Chief Medical Officer, Dr. Sean Ianchulev; Eyenovia's Chief Financial Officer, John Gandolfo; and Eyenovia's Vice President of Commercial, Michael Rowe.

Earlier this afternoon, Eyenovia issued a press release announcing financial results for the 3 months ended September 30, 2020. We encourage everyone to read today's press release as well as Eyenovia's quarterly report from -- from the Form 10-Q for the third quarter of 2020, which will be filed with the SEC. The company's press release and quarterly report will also 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 be -- which have yet to receive FDA approval. Please also note that certain information discussed on the call today is covered under the safe harbor provision of the Private Securities Litigation 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 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 and uncertainties arising from the U.S. recent U.S. elections; 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 of our 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 trial of such trials; the potential impact of COVID-19 on our supply chain; the timing and our ability to submit applications for -- obtain and maintain regulatory approvals for our product candidates; the potential advantages of our product candidates; the rate and degree of market acceptance and clinical utility of our product candidates; our ability to raise additional capital; 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 the 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 10, 2020. 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 all that said, I'd like to turn the call over to Dr. Sean Ianchulev from Eyenovia.

Thank you, Eric, and welcome, everyone, to our third quarter 2020 earnings conference call. During the third quarter and more recently, we continued to solidify our business position through both new strategic partnerships and our proprietary clinical programs. We believe that together, these activities have positioned us for continued success as we ramp up our manufacturing capabilities and prepare for our first commercial product launch.

Starting with strategic partnerships. To date, our business development partnerships have provided a total of approximately $14 million of gross non-dilutive capital in 2020, with the potential to increase to approximately $100 million in gross non-dilutive capital once you consider potential non-sales-related milestones as well as clinical cost savings or reimbursement.

During the third quarter, we signed an agreement with Arctic Vision for the development and commercialization of MicroPine for progressive myopia and MicroLine for presbyopia for Greater China and South Korea. More recently, we signed an agreement with Bausch Health for MicroPine in the U.S. and Canada. These agreements build apart long-standing partnership with Senju Pharmaceutical covering Japan and the rest of Asia, and we believe provide further validation as to the value of our robust Phase III pipeline and innovative microdose delivery technology.

Our clinical programs, which are directed towards high-value markets with first-in-class treatment, have also made significant positive progress. Our CHAPERONE program for progressive myopia, which is being transitioned to Bausch Health, addresses a high-risk pediatric market of approximately 3 million children in the U.S. alone, with a potential value exceeding multiple billions of dollars. The market in China may be equally large due to a patient pool that some estimate to be as much as 8x greater than that of the U.S.

Our VISION program for improvement of near vision targets the approximately 130 million presbyopic adults, translating to a potential market value that we estimate at about $2 billion. And our recently completed MIST program delivering positive Phase III results as we prepared the new drug application for MicroStat or Mydcombi may provide benefits that address a need for touchless, comfortable, effective and efficient pupil dilation in a world concerned about COVID-19. The common thread among all 3 programs is our Optejet microdose array print technology. The Optejet, with its touchless, smart digital health capabilities, is designed for safer, gentler and more precise delivery to give patients the best-in-class therapeutics they deserve.

With 2 strategic partnerships and pending NDA submission, a unique program for presbyopia in late-stage development as well as a platform technology from which we are working to develop new therapeutic indications, we believe Eyenovia is well positioned to enter 2021 with significant momentum and a line of sight to milestones that could create incremental value for our shareholders.

At this point, I'd like to hand the call over to Michael to provide some highlights from our strategic partnerships. Michael?

Thank you, Sean, and greetings from our R&D and engineering center in Reno, Nevada.

During the third quarter and also more recently, we executed on a strategy to out-license our technology in our MicroLine and MicroPine programs to partners who could potentially provide greater commercial reach than we could on our own. The first of these partnerships is with Arctic Vision, a leading opthalmic company in China who obtained rights to develop and commercialize both MicroLine and MicroPine in Greater China and South Korea. The second more recent agreement is with Bausch Health, a division of Bausch + Lomb, who licensed the rights to develop and commercialize MicroPine in the U.S. and Canada. It is important to note that we have retained the rights to both of these programs in Europe and the rest of the world outside Asia, including Australia, South and Central America, among other territories.

Myopia is among the most common ocular disorders worldwide and the leading cause of visual impairment in children. In the United States, myopia is estimated to affect approximately 25 million children, with up to 3 million considered to be a high-risk for high myopia. In China, the number of children at high-risk may be 8x higher.

Upon signing the licensing agreement with Bausch Health, we received a $10 million upfront payment, and Bausch Health assumed oversight and costs relating to the ongoing CHAPERONE Phase III clinical trial. Recall that the CHAPERONE trial is a randomized double mass clinical trial, targeting enrollment of more than 400 children between 3 and 12 years of age. The trial is assessing the safety and efficacy of low-dose atropine delivered in the Optejet dispenser for the reduction of progressive myopia. The primary efficacy endpoint is the change in refractive error from baseline through 36 months. Enrollment resumed in late June following a brief pause due to COVID 19.

CHAPERONE is a large long-term trial, and the assumption of trial execution and cost by Bausch Health potentially creates millions of dollars per year in savings for our company that we can channel into our MicroLine Phase III studies as well as other development activities to evaluate new therapies leveraging our microdosing technology. In addition, we are eligible to receive up to $35 million in payments from Bausch Health based on product approval and commercial launch-based milestones, as well as tiered sales royalties ranging from mid-single-digit to mid-teen percentages of gross profit on sales of MicroPine in the U.S. and Canada.

The Bausch Health transaction came just 60 days after we signed with the Arctic Vision agreement for the rights to MicroPine as well as MicroLine in Greater China and South Korea. Together, these 2 agreements could represent potential upfront payments, non-sales-related milestones, and product and clinical development cost savings or reimbursements of approximately $100 million. We continue to evaluate other strategic partnering opportunities for additional indications and/or territories as we believe partnerships could be an important contributor to our long-term growth going forward.

Now I would like to hand the call back to Sean to provide an update on our ongoing clinical activities. Sean?

Thank you, Michael. At this point, I would like to provide a brief update on our clinical programs before turning the call over to John to review the financials.

Taking a step back, for those of you who may be new to our story, Optejet is Eyenovia's proprietary microdosing technology, designed for optimal drug delivery to the eye. It utilizes microdose array print technology, similar to an inkjet printer, in horizontal delivery to administer a physiologically compatible dose to the cornea of the eye. Studies show that conventional eye drops can overdose the eye by as much as fourfold, leading to unwanted side effects and unnecessary exposure to excess drug and preservatives that can be harmful. The Optejet has been shown to achieve comparable efficacy to standard eyedrops and doses that are approximately 75% less medication.

We believe both patients and clinicians are comfortable using the Optejet. Prior studies found that 95% of clinicians and 88% of patients were able to successfully administer medication using Optejet on very first attempt. This compares very favorably to eye droppers, where multiple published studies have shown that fewer than half of the users are able to administer medication successfully on first attempt.

Importantly, the Optejet was designed with no protruding part and cannot touch the ocular surface. These are among the Optejet important differentiators, particularly in the age of COVID-19, given the ease with which the infection has spread. Last quarter, I summarized just a few of the publications highlighting the risk of COVID spread in an ophthalmology or optometry examination room. The standard of care eyedropper was found to touch the ocular surface more than 50% of the time. And in the typical clinicians' office, for example, a standard eyedroper for dilating drops may be used on literally dozens of different patients. This presents risk for cross-contamination and an important issue that must be addressed by clinicians against the backdrop of the COVID-19 pandemic.

The Optejet has a recessed delivery aperture as well as non-gravity-driven horizontal spray dispensation, which is designed for a more distant mist delivery. In addition, we reported last quarter that the Optejet appears to be qualified for preservative-free multi-dosing. So we believe the Optejet could address the cross-contamination risk associated with shared droppers, while also replacing therapeutics that are delivered in single-dose packaging, thereby cutting down on costs and waste.

Let's turn to our 2 clinical programs: MicroStat for pharmacologic mydriasis and MicroLine for presbyopia. Beginning with MicroStat, or so-called Mydcombi going forward. Based on our 2 positive Phase III clinical trials, MIST-1 and MIST-2, we continue to work towards submission of an NDA by the end of this year. Pharmacologic mydriasis refers to the dilation of the pupil that is part of any comprehensive eye exam. It is estimated that the 80 million office-based comprehensive and diabetic eye exams and 4 million ophthalmic surgical dilations performed annually in the United States, and pharmacologic mydriasis is essential for diabetic retinopathy, glaucoma and retina disease screening. Mydcombi was found to achieve mydriasis of greater than 6 millimeters in 93% of patients at 35 minutes post dose. This is clinically meaningful for both office retinal exam as well as surgical dilation. If approved, Mydcombi would be our first commercial product, a critical milestone for Eyenovia. Mydcombi will introduce physicians and patients to the Optejet dispenser and potentially generate incremental interest in the Optejet for additional therapeutics. We believe this is an approximately $250 million market in the U.S. alone based on in-office and cataract surgery statistics.

Finally, we could not be more excited about our Phase III MicroLine program for the improvement in near vision in people with presbyopia. Presbyopia, which is the non-preventable age-related hardening of the ocular lens, causing the gradual loss of the eye's ability to focus on nearby object, affects an estimated 130 million people in the U.S., and hundreds of millions more in China, where we've already licensed the product to Arctic Vision. We believe that there are 31 million people in the U.S. who form the sweet spot in the market for pharmacologic treatment of presbyopia, mainly those adults between the ages of 40 and 60 who otherwise never had to wear glasses before. We anticipate initiating the VISION 1 studies this year with the first read of the Phase III data sometime around in the end of Q1 of 2021. subject to any impact of COVID.

There is a growing interest in drug treatment for presbyopia. Currently, the only option for dealing with presbyopia are eyeglasses, contact lenses or surgery. Our own market research showed high interest among our targeted markets for a drug treatment that could provide on-demand improvement in near vision. MicroLine would be a companion product to eyeglasses for those times when patients would prefer not to wear eyeglasses.

The market potential for an on-demand improvement in near vision may be significant. In the U.S. alone, we estimate this opportunity to be in excess of $2 billion. Our VISION program will test 2 different doses of pilocarpine, a compound whose efficacy in improving near vision was validated once again when Allergan announced positive data from its clinical trials in presbyopia a few weeks ago. What sets us apart, in my opinion, is the Optejet. If MicroLine is approved, we believe our technology will facilitate accurate and targeted dispensing of pilocarpine without overdosing the eye, as is common with conventional eyedroppers, a century-old technology used to administer other companies' therapies. We believe the increased portability, comfort and safety offered by the Optejet will be among key differentiators as our development program advances.

I'd now I'd like to turn the call over to John to review our financials. John?

Thank you, Sean. Now I would like to review our financial results for the 3 months ended September 30, 2020.

For the third quarter of 2020, we reported a net loss of approximately $5.1 million or $0.23 per share, and this compares to a net loss of approximately $4.6 million or $0.29 per share for the third quarter of 2019. Research and development expenses totaled approximately $3.4 million for the third quarter of 2020. This compares to approximately $3.2 million for the same period in 2019, an increase of approximately 5.1%. For the third quarter of 2020, general and administrative expenses were approximately $1.7 million compared with approximately $1.5 million for the third quarter of 2019, an increase of approximately 16%.

Total operating expenses for the third quarter of 2020 were approximately $5.1 million compared to total operating expenses of approximately $4.7 million for the same period in 2019. This represents an increase of 8.6%. It's important to note that the operating expenses included approximately $610,000 of noncash stock compensation expense in the third quarter of 2020.

As of September 30, 2020, the company's cash balance was approximately $22.9 million. This includes net proceeds of approximately $12.5 million from a public offering of common stock that we completed in August, which included the exercise of the underwriters overallotment option.

Factoring in the $10 million upfront payment that we received from Bausch Health, our pro forma cash balance as of today is approximately $31 million. We believe that this is sufficient to bring our Mydcombi mydriasis product through the NDA process and commercial launch, complete our presbyopia clinical program for MicroLine and also prepare our pilot manufacturing capabilities for our advanced dispenser technology.

This concludes our financial statement remarks. Now I'd like to turn the call back over to Sean. Sean?

Thank you, John. In closing, we are very pleased with our performance during the third quarter of 2020 and subsequent period. We remain on track to file an NDA by the end of this year. And if approved, plan to introduce our first commercial product in 2021.

We also have a second therapeutic that should be enrolling for its Phase III study shortly in a potential multibillion-dollar indication, subject to any impact of COVID-19. And we expect our 2 licensing agreements with Arctic Vision and Bausch Health to provide us with non-dilutive funding that we can use to advance these programs while potentially leveraging our dispensing technology into additional high-value indications. We believe we're well positioned to achieve multiple commercial, regulatory and development catalysts in 2021, aimed at advancing long-term value for our shareholders.

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

(Operator Instructions) Our first question is from Yi Chen with H.C. Wainwright.

This is Boobalan dialing in for Yi Chen. Can you hear me okay?

Yes.

I would like to ask 3 questions. So beginning with VISION trial. Is the company still on track to initiate the VISION trial even though the COVID cases are rising?

Yes. This is a good question. We, as of the latest that our clinical operations group has informed us, based on feedback from the sites, we have the sites already in the pipe and being prepared. We've gotten feedback that as of now, we don't see any disruption to our time lines. And hopefully, that would continue. I know the sites and the clinical -- the clinics of optometry and ophthalmology practices have really ramped up their precautions, and they've really adapted over the last few months. Of course, we don't know how this new wave will unfold. So we remain cautiously optimistic, and we're monitoring the situation in direct communication with the site. So we'll probably know a lot more in the coming weeks.

Understood. Next question. Do you plan to in-license and out-license additional candidates in the next 12 months?

Yes. So this is something that it's hard to -- again, business development and partnerships is a fickle business. It takes time to evolve. And again, it took us a long time to really develop relationships that we have with Arctic Vision and Bausch Health. There has been a lot of interest in our technology for even several years. But we've been very cautious in selecting the proper partners for that.

Again, I would probably not comment on which way this will go. What we are focused on right now, and the best way we can deliver value, is really to execute on the presbyopia program and also on the NDA for Mydcombi. Presbyopia is such a phenomenal opportunity. It's really a big, big market and particularly so disruptive when we, for the first time, are able to do pharmacologic treatment. So we're really focused on working in the trenches with our sites, being able to enroll our study, so that in Q1 of 2021, which is not far from today, to generate Phase III data. And I think, from what I know, I'm sure there's going to be a lot of interest in our programs. And of course, our management team and our Board will evaluate all the options as well as the option which exists on the table with such a big program is for also Eyenovia, to expand its commercial efforts from Mydcombi.

So again, we're evaluating that, but the first thing is, first, let's execute on our program and let's deliver great Phase III data. And then, of course, all the options will be evaluated.

Understood. One final from me. Has Bausch Health provided any update on the progress of the CHAPERONE trial?

I can answer that, Sean. If...

Yes, sure. Go ahead.

So Bausch is -- we're in the process of transitioning CHAPERONE to Bausch. In the meantime, they're covering us financially, reimbursing us for the work being done. As of right now, we are still managing the CHAPERONE study. That study is progressing as expected. So there's no update or change there from what we said previously. We expect that study to be fully enrolled by the middle of next year.

Our next question is with Matt Kaplan with Ladenburg.

Well, congrats on the progress during the third quarter. Looks very good. I wanted to dig into the MicroLine program a little bit. I guess, we view the program really as clinically derisked given the positive results -- recent positive results for pilocarpine from Allergan in presbyopia. Can you give us a sense in terms of -- describe the competitive landscape in presbyopia with products on the market or either in development? And then what does MicroLine really bring as a differentiating point from a treatment point of view?

Yes, Matt, this is actually a very, very interesting question. And it is so interesting because just a few weeks ago -- and it seems like other people are following that closely -- but a few weeks ago, we also were informed that Allergan, which is developing a pilocarpine formulation for presbyopia, had 2 positive Phase III trials. So again as an ophthalmologist and what I know about pilocarpine and what we've seen with that drug through the years, and underappreciated but very well-known, is that it has a very tremendous ability to create a pinhole pupil, a small aperture, an extended depth of focus with extraction of residual accommodation to really enable near vision. And we've never used that before.

And again, we weren't the first ones to be really astute about that. I think Allergan seems to also have appreciated that, and they're leading the way with their Phase III programs. We're talking about an enormous space here. 130 million potential users in the U.S. and a sweet spot of about 30 to 40 users in the 40 to 60 age group. So we see that this would be a really great solution and treatment. We are really tracking very closely what's happening in the space. Obviously, Allergan is the first comer. It's something that we actually appreciate to some degree because they will open a brand new market, and they're very good at that, as we know, with BOTOX and other cosmoceuticals.

So I think it really validates the mechanism. It validates the compound. And the part that we appreciate is the differentiated approach that we have. Using a great therapy on -- yes. Go ahead, Michael.

To that part, on the competitive environment, I think I can sum it up for us in 2 ways. If you're going to come into the market with something that is essentially a lifestyle drug, which this will be, you need to fit within the lifestyle of the people who are actually using it, and you need to be well-tolerated. Those are the 2 things you really have to hit out of the park.

And I think what Sean was going to talk about is with microdosing and with the Optejet dispenser, that is what differentiates us. The microdosing, we believe, and we'll see what happens in our Phase III study, should result in a better tolerated product, both from how the eyes look as well as with the brow ache which is known to occur at higher doses of pilocarpine. So that would be in terms of tolerability.

In terms of acceptance, we know that the Optejet dispenser makes it much simpler for people to take the medication. And in case in point, when we did market research on this product, we had many people who wear eye makeup, who said, "Well, how is this supposed to work? I can't put drops in my eyes if I'm already made up for the day and I'm going out to dinner or something like that and want to use the product. I don't want to have to do that and reapply my medication." And it's things like that, which the Optejet dispenser can make easier for people and match their lifestyle better.

Sean, did I cover the 2 things you were going to?

Yes. Yes, absolutely. And again, another footnote is, if you remember, we prioritized that program over glaucoma. And now, we actually feel justified in that because of the opportunity and the timeliness. And it's always come off the charts when Michael does his commercial marketing research. So we see high interest by consumers and patients.

And I guess maybe a question for Michael. Can you talk about your commercial preparations, where you are for the, I guess now called Mydcombi potential launch next year after you file the NDA this year?

Yes. So our plan is, we said we intend to file that NDA the end of this year. We would start our commercial preparations towards April, May of next year. The idea behind that -- behind Mydcombi is that we don't need to have a huge sales force to make this successful.

This is not a traditional type of pharmaceutical cell, where you need to do samples and you need to be in the office often and you need to get formulary acceptance. This is essentially a diagnostic supply, which means you go in, you sell into the office. And once you demonstrate for them what the really tremendous value proposition is for the product in addition to it being faster for them, potentially safer, more comfortable, not going to cost a whole heck of a lot more, once you've made that sale, you're done and you move on to the next big office. So that preparation could be done, we believe, by putting 12 very good people in the largest population centers and working from there.

And those are people, we would start to bring on board probably towards the latter half of the year in preparation for a launch in the fourth quarter.

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

Len just said (inaudible) another call.

(Operator Instructions)

Our next question is with Jonathan Aschoff with ROTH Capital Partners.

I was wondering. So Allergan said that we will not get any more detailed Phase III presbyopia data until at least ARVO next year. So I guess you kind of won't know what kind of pilocarpine efficacy to kind of beat. And so I guess I was curious if you're going to have the same primary endpoints as Allergan did. Essentially, near-term vision improving, and then near-term vision improving without distance vision worsening. And on what day after the start of therapy, would you be assessing that primary endpoint?

Yes, Jonathan. So for our program, we have a distance-corrected near visual acuity, which is pretty standard. I believe this is what they have as well in theirs. And the distance-corrected near visual acuity post dosing, for us, we are assessing that through a 3-hour period after administration. And so our study is really designed in such a way that we will be able to enroll and very expeditiously assess the efficacy of our treatment because we're using that and we're looking at the efficacy, literally, within several hours post administration, which is where our endpoint is.

So yes, I'm looking forward to actually seeing their data as well and seeing how the pilocarpine performed in an eye dropper. By that time, I would assume, if we're talking ARVO of next year, that and by that time, we would have some of our Phase III data as well. And hopefully, we will see what we've seen before in terms of the differentiation and the benefit of our micro array print technology. Michael, do you want to add anything?

Yes. I would also add, Jonathan, that the way they're looking at dosing is very different from ours. I believe in their protocol, they were dosing every day. They're looking at it almost as like a chronic medication. We're approaching this as something that you would use on demand. So you would literally only take the spray from the Optejet 15 minutes before you intended to make use of the product. So it's a different way of saying where we think this struggle will fit. And we just personally, from our market research, think the on-demand model is much more likely to fit with these particular types of patients.

You actually bring up another question. Do you think that you guys would have a different onset of activity compared to Allergan?

Well, I'm not familiar with their formulation. We know we have a pretty good idea of our onset of activity, which is, like I said, we think it's going to be working within 15 minutes to fit that on demand profile.

Okay. And I didn't probably remember what you said in answer to my first question. Will you have that composite endpoint of near vision improving without distance visioning worsening?

Yes. So we will have the data on board. We're not going to have a composite endpoint because that's not prespecified, but we will have obviously, we're taking data on both the near and the distance vision. We don't have a composite endpoint in our clinical study.

Okay. And then lastly, I was just curious, since they'll be out first in all likelihood, do you think you'll let their pricing weigh heavily upon your pricing decision? Or do you think the differential and the technology and the benefits therein don't force you to really pay attention or pay much attention to that despite it being a cash market.

Jonathan, if they have a high price, we'll be happy to take it. Is that what you need?

That's definitely one way of looking at it.

One way to look at it. But if they come out with a price that I think doesn't reflect the value that we're bringing, I wouldn't let that impact us too much. We're thinking of a price that I think is very fair and within reach for, we think, about 31 million patients who we're targeting. These are people who have the means and they never needed to wear glasses performing their lives. So there's plenty of them. And at the right price, we believe they'd be very happy to use the products.

(Operator Instructions) Our next question is with [Stuart Grant].

Sean, congratulations on the Bausch Health and Arctic Vision deals. Those are awesome. And it appears that the business is executing very well. But unfortunately, the stock price has been pretty stagnant. Why do you think the market is not recognizing the value in the Bausch Health and Arctic Vision deals? And is the Board concerned about the lack of performance of the stock price?

Yes. That, Stuart, is a very, very good and loaded question. I think that maybe the best way to address it is just giving my perspective, which really doesn't oblige anybody. We obviously expected this to be appreciated a lot more from a stock perspective and appreciation of the value of the stock, given how significant the Bausch transaction and the Arctic Vision transactions are.

I mean, they're not only providing non-dilutive capital today and up to 100 million of non-sales milestones over the coming years, but then potentially huge revenue of fairly derisked late-stage programs that weren't there before.

And so it's a good question, why we really haven't seen that. I think our team made a very concerted effort to hold a press conference and really share with people the details of our transaction. And we actually felt very happy about the partnership. But again, going back, in the context, I wanted to share, if you remember several years ago, we reported the results of our Phase II trial in IOP lowering PG21, and that was a very significant trial because it validated our microdose technology beyond pupil dilation. And that didn't really lift the stock very much. We had subsequent great events from the MIST-1 and MIST-2 study as well as some of the additional milestones that we've reached, including now preparing, we are on the verge of launching a Phase III program in one of the biggest indications in ophthalmology. So it's really hard to explain. I think we do have a shareholder base that we may want to reach out more. I think everybody is distracted with the big biotech and new molecular entities, and sometimes, maybe people miss the small players. And let's not forget that we are really a micro cap. And as such, maybe writing on much bigger programs that actually correspond to what people would expect from a micro cap.

So this is not the first time I've seen value unappreciation, so to speak. In most of my private ventures and exits, that's always been the case, until you have the the major result or breakthrough or exit. So we hope people will follow and see the programs and the milestones that are coming forth, which are great. And we hope those really end up in the -- really, in the spotlight of what biotech and life science success is because we're very excited, and our Board is very excited about where the company is heading. And the fact that we do have now a balance sheet that has been augmented by those business development partnership significantly and provides us probably one of the best cash positions we've had before.

And if I might just follow-up. Is it fair to assume that given the upfront payments that were made, that this fourth quarter, at least for the quarter, that Eyenovia will actually be profitable?

Not on a P&L basis, because for GAAP purposes, you need to defer the upfront cash payments. So when you look at our profit and loss statement, you'll see that we included the upfront cash payment received from Arctic Vision in deferred revenue on our balance sheet. And so we will not be able to recognize that until we provide clinical trial data to Arctic Vision, which will be a 12 to 18 months from now, even though we received the cash. So it is just the nuances associated...

So from a cash flow basis, you'll be positive cash flow for the quarter, but not on a P&L GAAP basis?

Yes, correct. Exactly right.

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

I had to hop off for a bit, so I apologize if these questions were already asked. I was wondering, if you could compare and contrast, you did a little bit in your opening comments, pilocarpine that Allergan is using in the GEMINI 1 and 2 study in terms of the dose they're using. I think it was 1 dose, and if you're using more than 1. Obviously, the issue in the coronavirus pandemic time that we're in with the cleanliness, I think, is a major advantage. And is there any other issues in that regard, if you want to comment on?

And then secondly, when Bausch had their recent reporting of their Q3 results, they talked about the fact they felt they were really incredibly positioned in pediatric progressive myopia with a contact lens company agreement and then with you guys on the pharmacologics side. And I was just wondering if Bausch's devotion for this indication is something that you think could lead your product to be one of the leaders in this of the various companies working on, given their presence in ophthalmology and the fact that given that they're looking at both ways of approaching it, they seem to be very dedicated.

Okay. Well, Len, these are great questions, as always. So let me start with the second one, and then Michael can chime in. But again, progressive myopia right now is kind of like the anti-VEGF and wet AMD before we developed Lucentis, which then became a $10 billion market. We're talking one of the biggest opportunities in ophthalmology. And so it's going to be a place where different technologies and approaches will work and be synergistic.

In terms of the contact lenses, that is a very hardware approach to the disease. It requires the ability to put a contact lens and wear it. And again, it's not for everybody. And a pharmaceutical treatment once at night with an eye drop, particularly if it comes in a very elegant dispenser with a microdose, would probably be something that, at least we believe, is much more germane to the general market.

Now the good part is also that because they have very different mechanisms of how they address progressive myopia, I think clinically, one would be completely open to the idea of using them together to even further influence the progression of myopia and improve the outcomes. Maybe I'll let here Michael to chime in if he has any other commercial perspective.

No, Sean, I think that's exactly it. That the people who are treating pediatric myopia want to have both options available to them. There will be patients where they'll use both. And I think actually, that's their preferred because they'd like to hit the myopia as hard as they possibly can and as much as the child can do. So from Bausch's perspective, they are looking to be the one-stop shop with what they perceive as having the best hardware solution; and with us, the best pharmaceutical solution. And I think even in the comments from Joe Papa, he mentioned that he did think that it was our dispenser technology that really makes the difference, making it possible for these kids who will be medicating themselves for years, to be able to take control of their own treatment and not even talking about the ability to monitor usage and with reminders and everything else that the dispenser can use too. So thank you.

Yes. Great. So absolutely. And to your first question and by the way, just to finish, I think personally, I'm impressed. And I think Bausch has a very mature way of blueprinting the entire progressive myopia future and space. And that's great that they have multiple ways because it's a big opportunity. And if I were a big company, I would definitely pursue multiple venues.

That aside, your other question on pilocarpine. Again, we're very encouraged about pilocarpine. We actually know pilocarpine very well. It's been around for 50 years. So it's no surprise to us that we are seeing positive Phase III results from another company like Allergan, and we're not surprised that Allergan is the one moving into that space.

In terms of our dosing, we are using the 1% and 2% dose. Initially, we were thinking to just do a 1%. But because microdosing and micro array print technology offers some very interesting advantages, whereby a higher dose with a lower total exposure of the cornea and the oculus surface with the targeted delivery can really enhance certain parts of the equation and really inflect the therapeutic index, we decided to put also the 2% as well, and that will be part of our VISION 1 study.

So we will -- we're very excited to see the data, hopefully, in a few months, and share that with you and the wider clinical community in ophthalmology and optometry.

And then lastly, on Mydcombi, how long do you think the FDA review process would be? Is it going to be a standard 10 or 12-month review do you expect from when you file?

Yes. I think we're assuming that. It's really hard to believe today. We're looking at extraordinary times. But we have seen, in all of our communications with the FDA, a very proactive approach and timeliness, which has been really appreciated by our team.

We think we're going to submit very clean data. Our MIST-1 and MIST-2 studies were extremely clean and very, very informative with clear efficacy and safety. So from my experience of a decade plus, the cleaner the data, the more articulate you are for the FDA, the easier you make their job and the better they can and faster they can perform. So we hope that will be the case. And we hope also that they appreciate the advantages of this technology. We spent quite a bit of time really exposing it today to the fact that we have a touchless delivery with our recess model that doesn't cross contaminate as much we hope, just by virtue of inherent intrinsic design. At least, that's what our KOLs really appreciate. So hopefully, these would be all things that can really rationalize a expedient process. But we're going to be supporting them as needed to make that decision and get through their diligence.

There are no further questions at this time. I would like to turn the floor back over to Sean Ianchulev for closing comments.

Well, again, that was a great, very informative call today, I hope. And this concludes our call. Thank you again for joining us, and we look forward to our next financial update in 2021. Have a good afternoon.

This concludes today's conference. Thank you for your participation. You may disconnect your lines at time.