Eyenovia, Inc. (NASDAQ:EYEN) Q4 2023 Earnings Call Transcript
Eyenovia, Inc. (NASDAQ:EYEN) Q4 2023 Earnings Call Transcript March 18, 2024
Eyenovia, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Greetings and welcome to Eyenovia’s Fourth Quarter and Full Year 2023 Earnings Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator instructions] As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Eric Ribner of Investor Relations. Thank you. You may begin.
Eric Ribner: Good afternoon and welcome to Eyenovia’s fourth quarter and full year 2023 earnings conference call and audio webcast. With me today are Eyenovia’s Chief Executive Officer, Michael Rowe; Chief Financial Officer, John Gandolfo; and Chief Operating Officer, Bren Kern. This afternoon we issued a press release announcing financial results for the three and 12 month ended December 31, 2023. We encourage everybody to read today’s press release, as well as Eyenovia’s quarterly report on Form 10-K for the year ended December 31, 2023 which will be filed with the SEC. The company’s press release and annual report are also available on our website at www.eyenovia.com. In addition, this conference call is being webcast to the company’s website and will be archived there for future reference.
Please note that on today’s call we will be discussing product, product concepts and candidates some of 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 Reform Act. We caution listeners that during the 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, which are described in more detail in our annual report on Form 10-K. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast March 18, 2024.
Eyenovia undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as may be required by applicable securities law. With that said, I’d like to turn the call over to Michael Rowe, Eyenovia’s Chief Executive Officer. Michael, the floor is yours?
Michael Rowe: Thank you, Eric and welcome everyone to our fourth quarter and full year 2023 financial results conference call. Last quarter, I talked about how Eyenovia's [indiscernible] as we continue our growth into a development and commercial organization. Those levers were revenues, agreements and sources of capital. Today, I will share with you how we have been executing against these three levers, particularly in terms of our advancing commercial strategy, which continues to accelerate with two approved products and two in Phase III. I will also share news about us entering into two significant agreements that will complement our own sales efforts, as well as provide an update on our plans for dry eye. Bren will then take us through the build-out of our manufacturing capabilities, which are now fully integrated and producing commercial supply of MYDCOMBI and finally, John will provide an update on the third lever, our financials, and the options we are exploring towards ultimately reaching a breakeven point for the company.
So let's dive right into it, with our two FDA approved products, clobetasol propionate ophthalmic nanosuspension, 0.05%, and Mydcombi. As you may recall, the U.S. commercial rights for clobetasol were acquired from Taiwan-based Formosa Pharmaceuticals last August. Just last week, we transferred the NDA for clobetasol from Formosa over to Eyenovia. Clobetasol was approved just two weeks ago on March 04. This unique post-ocular surgery steroid is the first product developed using Formosa's proprietary APNT nanoparticle formulation platform. That technology reduces an active pharmaceutical ingredient's particle size with high uniformity and purity, thereby allowing penetration to relevant compartments in the eye and ultimately enhancing bioavailability.
Clobetasol is a potent steroid indicated for pain and inflammation following ocular surgery. This is the first time that this molecule is available in ophthalmology. Its efficacy and safety profile is highly desirable, with nearly nine out of 10 patients achieving complete absence of post-surgical pain, and six out of 10 achieving total absence of inflammation within 15 days post-ocular surgery. Clobetasol has an advantageous dosing profile of twice a day, without titration versus existing treatments, which require dosing up to four times a day. This is particularly important as eye surgery patients are often on multiple drugs during recovery, so any advancement which simplifies the treatment regimen would be welcomed by eye doctors and patients alike.
And in terms of safety, side effects were seen in no more than 2% of patients, and our label mentions that some of these side effects could have been the result of the surgical procedure itself. You can find additional information and full prescribing information at clobetasolbid.com. It is estimated there are more than seven million ocular surgeries in the U.S. each year, most which are treated with topical ocular steroids and steroid combinations, currently totaling $1.3 billion in sales. This is a very significant market opportunity and one that we think we can capture a mid-single digit market share over the next three to four years. We view clobetasol as a key addition to our commercial product portfolio, which will allow us to further leverage our existing sales force.
Together with Mydcombi, our mydriasis product, we believe that we can bring significant value to eye care offices and surgical centers, and we are working toward a robust commercial launch of clobetasol as soon as our partner has received their Taiwanese export license later this year. Longer term, we see a potential opportunity to develop a formulation of clobetasol for our Optejet dispenser as a potential treatment for dry eye, a market estimated to be worth over $3.6 billion. To that end, we plan to engage with the FDA in the coming months to discuss a path forward in that indication. While clobetasol is a great product for us, it is only half of our revenue story. Mydcombi is the other half. As you know, Mydcombi is the first and only FDA approved fixed combination of two pupal dilation drugs, tropicamide and phenylephrine, and the first ophthalmic spray using the Optejet platform.
When our sales force talks with customers, they highlight how our products can help bookend the surgery by using Mydcombi as their Mydriatic agent pre-surgery and clobetasol as their steroid post-surgery. We have now hired, trained and deployed half of our 10-person field sales force with the remainder set to come on board in the coming weeks. Also, we continue to make excellent progress satisfying state commercial licensing requirements where required with Mydcombi now licensed for sale in 16 states representing more than half of the U.S. targeted population. We have a dozen other license applications in process. In terms of manufacturing, in November, we were very pleased to announce that our contract manufacturer, Coastline International, was approved by the FDA for Mydcombi commercial manufacturing.
We also recently announced FDA approval of our Redwood City facility as a commercial manufacturing facility. With Redwood City, Reno and Coastline now all online, we have commenced the manufacture of commercial supply of Mydcombi and we now have finished product moving into and out of our warehouse. Bren will provide a more detailed manufacturing update in a moment. Customer feedback on Mydcombi has been excellent and to further illustrate that point, we are very pleased to announce that Vision Source, a leading network of approximately 3,000 locally owned optometry offices, has added Mydcombi as an approved product for its membership. We have great expectations for this sales channel as Mydcombi has particular benefits for those offices that are patient focused and choose to incorporate Mydcombi to enhance the comprehensive eye exam experience of their patients.
As we like to say, these offices and doctors use Mydcombi because they care for their patients. The current U.S. market for pupil dilation is valued at approximately $250 million and we feel we are well poised to take a good portion of that market share over the coming years, especially when we move to our next generation device. Staying on the topic of Mydcombi for a moment, we recently completed a study to determine if there is a lower dose that could be effective to achieve pupil dilation for drug sensitive patients. The study was conducted by Dr. Denise Pencil of the State University of New York School of Optometry. 29 subjects were treated with a half dose of Mydcombi, which is 8 microliters per eye. In that study, at 30 minutes post dose, clinically relevant pupil dilation was achieved in approximately two-thirds of patients and that percentage increased by 60 minutes.
Almost all patients returned to a pupil size of less than 5 millimeters between three and a half hours and six hours post installation. This is similar to the time seen in published studies of patients exposed to Tropicamide eye drops and a mydriasis reversal drug. The dose was well tolerated with minimal adverse events reported with three subjects reporting mild installation sight pain and one with mild dry eye upon installation. Given that a standard of care mydriasis agent phenylephrine may present safety risks in a few older patients, the greater dosing flexibility enabled by Mydcombi and the Optejet could address an unmet need among the approximately 100 million comprehensive and diabetic eye exams and over four million cataract surgeries performed in the U.S. each year.
We plan to publish the full results in a peer review journal later this year. As previously mentioned, we will soon have 10 sales representatives and two sales directors in the field to commercialize Mydcombi and clobetasol. Half of this team is already trained and in place, working every day to present the benefits of our products and pull the revenue lever. Additionally, we recently announced a co-promotion agreement with NovaBay, a leading developer of anti-infective eye products. Per the terms of that agreement, NovaBay will promote clobetasol to hundreds of eye care professionals that our salespeople are not calling on through its telephone-based sales people. They will also conduct outreach to eye doctors in those geographic areas that our salespeople are not currently covering.
Meanwhile, our field sales force will promote their prescription Avenova Antimicrobial lid and lash solution to our doctors, who can include this product in their suite of pre and post-surgical offerings. In addition to the benefit of additional promotion and potential sales for both sides, each party will also get a percentage of the sales that they generate. This is an extremely cost-effective way to boost our commercial sales reach, and we believe this agreement will be very beneficial to both parties. In summary, we are actively promoting Mydcombi and will be leveraging our new agreement with Vision Source. We are preparing to commercialize clobetasol and will leverage our new agreement with NovaBay and we are reloading our pipeline by bringing MicroPine back through reacquiring the commercial and development rights this past January for the U.S. and Canada from Bausch and Lomb.
MicroPine is an investigational eight-microliter of ophthalmic spray of atropine delivered by the Optejet. MicroPine is being evaluated as a potential treatment for pediatric progressive myopia or worsening nearsightedness, which is characterized by elongation of the sclera and retina. We estimate that more than 25 million children in the U.S. suffer from myopia, and of these, five million are believed to be at high risk for progressive myopia. If left untreated, progressive myopia can ultimately lead to significant vision loss and potential blindness. Prior studies have demonstrated that atropine can slow myopia progression by as much as 60%, and there is a significant unmet need for safe and effective FDA-approved pharmaceutical treatment options.
In terms of next steps, we are continuing to advance the Phase III CHAPERONE study, and we plan to meet with the FDA to explore options to expedite development and registration of MicroPine in a capital-efficient manner. One option we are working on is a planned interim look at the Chaperone data later this year. If that interim analysis is successful, we could potentially be looking at a substantially de-risked program that could be very attractive either for us alone or for a commercialization partner. Lastly, we are maintaining MicroLine or [indiscernible] in our portfolio should the presbyopia market show signs of improvement. Right now, our opinion is that we can make better use of our capital elsewhere in our portfolio, but we can turn very quickly back to this product candidate if the situation should change.
So this gives us line of sight to three and possibly four commercial revenue-generating products. We continue to explore development of novel therapeutics levering the Optejet for dry eye, glaucoma and other large market indications as part of our second lever toward success. These potential partnerships are moving forward, and we anticipate sharing more information when they reach the stage of a full development agreement after all of the device compatibility work has been completed. At this point, I'd like to turn the call over to our Chief Operating Officer, Bren Kern, for our manufacturing update. Bren?
Bren Kern: Thank you, Michael. During the fourth quarter and through early this year, we continue to execute on our strategy to maintain control of our manufacturing processes, ensuring our products meet high levels of reliability and sterility. As a reminder, we use contract manufacturers to supply us with drug substance, which we then use to fill our cartridges at our Redwood City facility. These cartridges are then married with our electronic base units, which are manufactured at our Reno, Nevada facility. We are now fully capable of supporting our current anticipated Mydcombi commercial demand, as well as the needs for ongoing MicroPine development in 2024. More specifically, last month, we are very pleased to receive FDA approval of our Redwood City facility with no significant concerns raised on the part of the agency.
This approval will provide Redwood City with the ability to perform final assembly, packaging, and labeling activities in support of Mydcombi and complements our Reno facilities and contract manufacturers. As previously announced, Coastline International also received FDA approval and is now producing Mydcombi commercial supply. Redwood City will also be the manufacturing site of our Gen 2 device, which has significantly fewer parts than our existing device, making its manufacturing easier and more reliable. We are targeting Mydcombi as the first product that will be available in Gen 2, and our Redwood City facility is actually making product to begin engineering stability studies and registration batches before the end of the year. Our strategy for moving from the Gen 1 to the Gen 2 will be the subject of an FDA meeting this summer, and assuming we come to an agreement, demonstrating comparability between the two devices should provide a path for Eyenovia to introduce the Gen 2 platform into the commercial market.
Our Reno facility is also producing the Optejet ejector and base in support of Mydcombi and continues to expand production capabilities by refining our state-of-the-art equipment. When complete, the capabilities of this new facility will provide significant increase in ejector manufacturing capacity, enabling fulfilment of both our commercial and clinical product needs. As noted earlier this year, Eyenovia has reacquired the rights to MicroPine. MicroPine is an investigational eight-microliter ophthalmic spray of atropine delivered by Eyenovia's proprietary Optejet device being evaluated as a potential treatment for pediatric progressive myopia characterized by elongation of the retina. We are actively uplifting our MicroPine clinical management capabilities in this regard, which we expect to be complete in mid-April of this year.
With MicroPine under our management, Eyenovia will be speaking with the FDA to discuss opportunities to accelerate the completion of the study. I continue to be excited about our recent successes and the progress we are making. We now have two FDA-approved manufacturing sites that we manage, preparing us to meet the market demands for our products. I'm looking forward to expanding on these significant achievements to be made in this year. I would now like to turn the call over to our Chief Financial Officer, John Gandolfo, to provide a financial update. John?
John Gandolfo: Thank you, Bren. For the fourth quarter of 2023, we reported net loss of approximately $8 million, or $0.18 per share, and approximately 45.4 million weighted average shares outstanding. This includes a $0.02 loss related to the one-time repatriation costs for bringing MicroPine back to Eyenovia from [indiscernible]. This compares to a net loss of $6.1 million, or $0.17 per share, and approximately 35.9 million weighted average shares outstanding for the fourth quarter of 2022. For the full year of 2023, we reported net loss of approximately $27.3 million, or $0.66 per share, and approximately 41 million weighted average shares outstanding. This compares to a $28 million or $0.83 per share, and approximately 33.6 million weighted average shares outstanding for the full year of 2022.
Research and development expenses totalled approximately $4.1 million for the fourth quarter of 2023, and this compares to $2.2 million for the fourth quarter of 2022, an increase of 84.6%. For the full year of 2023, research and development expenses decreased approximately 3% to $13 million, and this compares to $13.4 million for the full year of 2022. The full year decrease was driven primarily by lower direct clinical and nonclinical expenses, as well as deferral of costs related to the future delivery of clinical supply to our licensed partners. For the fourth quarter of 2023, general and administrative expenses were approximately $3.4 million, as compared to $3.2 million for the fourth quarter of 2022, an increase of 7.3%. For the full year of 2023, G&A expenses decreased approximately 8.1% to $12.4 million, as compared to $13.5 million for the full year of 2022.
The full year decrease was driven by reduction in legal expenses and executive recruitment costs on a year-over-year basis. Total operating expenses for the fourth quarter of 2023 were approximately $7.5 million, as compared to $5.4 million for the same period in 2022. This represents an increase of approximately 39%. Total operating expenses for the full year of 2023 decreased approximately 5.6% to $25.4 million, as compared to $26.9 million for the full year of 2022. As of December 31, 2023, companies cash balance with approximately $14.8 million, as compared to $22.9 million as of December 31, 2022. We are currently evaluating various structures and alternatives to increase our cash resources in order to fund our corporate strategy going forward.
I will now provide an update on our existing licensing agreement with Arctic Vision for all three of our products in China and South Korea. Regarding our prior partnership with Bausch and Lomb, as Michael mentioned earlier, we have reacquired the development and commercial rights to MicroPine and have taken over continued execution of the ongoing Phase III CHAPERONE trial. Our agreement with Arctic Vision covers MicroPine, MicroLine and Mydcombi, and provides us sales, royalties, in addition to development milestones. MicroPine in particular is a significant opportunity in China for pediatric myopia. If approved, MicroPine could be a potentially meaningful source of non-dilutive funding for our company over the long term. To date, our license agreements have generated approximately $16 million in license fees, and we have the potential to earn an additional $25 million in net license and development milestones from Arctic Vision over the next three to four years.
If our products are approved upon commercialization, Eyenovia is also eligible to earn significant sales royalties as well. We are continuing to assess potential pipeline expansion opportunities similar to our Formosa agreement, and we will continue to leverage the Optejet technology to address unmet needs and additional large ophthalmic indications, beginning with dry eye. In conclusion, we are very pleased with our performance in the fourth quarter of 2023, as well as the subsequent period. To summarize our key highlights today, we reacquired the development and commercialization rights to MicroPine in the US and Canada from Bausch & Lomb. MicroPine is in phase three as a potential treatment for progressive pediatric myopia, a potential blockbuster opportunity for the company.
We announced FDA approval of clobetasol for the treatment of pain and inflammation following ocular surgery. We announced two important agreements to complement our own sales efforts, one with Vision Source for Mydcombi and one with NovaBay for clobetasol and Avenova. We finalized the build-out of our manufacturing capabilities to support Mydcombi production with Coastline Manufacturing, and our Redwood City facility is now online, in addition to our facility in Reno. And finally, our licensing agreement with Arctic Vision is progressing well and remains a promising avenue for significant development of regulatory milestones, as well as the potential for sales royalties and commercialization. That concludes our prepared remarks. We would now like to turn the call over for questions.
Operator?
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