Eyenovia, Inc. (NASDAQ:EYEN) Q4 2022 Earnings Call Transcript
Eyenovia, Inc. (NASDAQ:EYEN) Q4 2022 Earnings Call Transcript March 30, 2023
Operator: Greetings, and welcome to the Eyenovia Fourth Quarter and Full Year 2022 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Eric Ribner with Investor Relations. Thank you, Eric. You may begin.
Eric Ribner: Thank you, and good afternoon, everyone, and welcome to Eyenovia's Fourth Quarter and Full Year 2022 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, Eyenovia issued a press release announcing financial results for the 3 and 12 months ended December 31, 2022. We encourage everyone to read today's press release as well as Eyenovia's annual report on Form 10-K for the year ended December 31, 2022, which will be filed with the SEC on March 31, 2023, tomorrow and our most recently filed 10-Q. The company's press release and annual report are also available on Eyenovia's website at www.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 product candidates, 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 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 30, 2023. 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?
Michael Rowe : Thank you, Eric, and welcome, everyone, to our fourth quarter and full year 2022 financial results conference call. I will start with an update on our overall strategy and our current development programs. and then Bren Kern, our Chief Operating Officer, will provide an update on our manufacturing and commercial readiness progress. We will then turn things over to John Gandolfo, our CFO, who will review the financials as well as our partnerships with Bausch + Lomb and Arctic Vision. We will then open the call for your questions. The fourth quarter caps a successful year for Eyenovia as we delivered on all of our key milestones. We resubmitted our MydCombi New Drug Application, or NDA, and its review by FDA is well underway.
In fact, earlier this week, I was at our Reno manufacturing facility while the FDA inspection was taking place. We completed the VISION-1 study for our MicroLine Presbyopia program and recently received very encouraging feedback from the FDA providing a clear path forward for the program. Our time line for MicroLine is as we had planned, and we look forward to providing more granularity in the coming weeks. Regarding our manufacturing, we made substantial progress building out our in-house capabilities, which will be key to our longer-term growth initiatives. Subsequent to the end of the quarter, we also participated in the Consumer Electronics Show in Las Vegas with a very innovative boot highlighting our work in digital health, that we believe significantly raised awareness of the Optejet.
And we announced a co-development agreement with Formosa Pharmaceuticals that will open the door to the development of new therapeutics that leverage our technology. But before we talk about our current programs, I'd like to spend a few moments discussing our longer-term strategy. As you probably noticed, we recently have been focusing more on the Optejet technology and its applicability in areas like digital health, Glaucoma and Dry Eye. We believe that incorporating the Optejet technology with late-stage drugs in chronic disease areas like glaucoma could result in new therapies that can address many of the major challenges with today's conventional eye drop options. The horizontal delivery of the Optejet, for example, can make it easier for patients to reliably use our medication.
Digital technology could help prescribers and health care systems understand how drugs are being used and drive prescribing decisions from a position of knowledge rather than guesswork. And the lower dose volumes and ease of use of the Optejet can help address tolerability issues that can also impact long-term outcomes of drug therapy. With that in mind, we are focusing our future efforts on partnerships with drug developers such as Formosa to bring together the best available combination of drugs in the Optejet for the benefit of patients, prescribers and payers. And speaking of combinations, let's talk now about MydCombi. MydCombi is our proprietary combination microdose formulation of tropicamide and vetoleprin for in-office and presurgical pupil dilation.
In December, we announced the FDA had accepted our NDA for MydCombi and the signs of PDUFA action date of May 8, 2023. This was a significant achievement for our company given the additional testing of the Optejet device requested by FDA, following its reclassification of MydCombi to a drug-device combination product in October 2021. As I previously mentioned, we are now in the midst of the review process, including an inspection of one of our manufacturing facilities , and we remain in close contact with the agency. I would like to take a moment to thank all of the Eyenovia employees as well as the many technical experts who have helped to get us this far and we are counting the 39 days until May . It is also worth noting that much of the device validation testing that we conducted for the MydCombi NDA may be referenceable in filings for future programs, potentially streamlining those regulatory review processes.
MydCombi, if approved, represents a very meaningful milestone for Eyenovia for several reasons. One, it is poised to be our first commercial product, ultimately transitioning us to a commercial stage and revenue-generating company, but perhaps more importantly, it would represent critical validation of our proprietary Optejet device technology potentially changing the paradigm in the way that topical eye drugs are developed and delivered. We are leveraging Optejet not only with our own development pipeline, but also current and potential future strategic partnerships as well. We currently have partnerships with Arctic Vision for the development of MydCombi, MicroLine and MicroPine in Greater China and South Korea and Bausch + Lomb for the development of MicroPine in the U.S. and Canada.
And we are actively working on partnerships for chronic ophthalmic diseases such as Glaucoma and Dry Eye. John will provide an update on our current partnerships during his financial overview. Let's now turn to MicroLine, which is our proprietary topical therapeutic candidate that we are developing for the temporary improvement in near vision associated with Presbyopia. Presbyopia is the age-related hardening of the eye's lens causing blurred near vision. This is an addressable market representing over 18 million people in the United States alone between the ages of 40 and 55, who otherwise never wore glasses and have the resources for a cash pay product. In terms of dollars, our proprietary market research suggests this could be nearly a $1 billion annual market in the U.S. alone.
As I previously mentioned, following completion of our VISION-2 trial, we recently received encouraging feedback from the FDA, which outlines a very clear path forward for the program towards an NDA. We can't share much more at the moment other than to say that our development timeline is unchanged, and we plan to provide further updates in the coming weeks as warranted. MicroLine would clearly be differentiated from other Presbyopia eyedrop options. First of all, it has demonstrated compelling safety and tolerability. In both VISION-1 and 2, MicroLine was found to be very well tolerated, with fewer than 3% of MicroLine treated subjects reporting adverse events, all of which were considered mild and transient. This compares very favorably to other pilo based presbyopia treatments where 15% or more of study subjects reported some form of headache or brow ache.
Additionally, as a drug device combination and maybe that MicroLine better fits in the business paradigm of optometrists, many of whom also supply glasses and contact lenses for their patients, we are exploring ways in which the device portion of the product could be stocked and stored by eye care practitioners so that they can provide a full service for their patients that could include eyeglasses as well as MicroLine. In summary, we believe the Optejet represents a key point of differentiation that can set us apart and will resonate with consumers and their doctors as compared to other recently approved topical Presbyopia treatments and those to come in the future. Turning to our partnering activities. We were very excited to announce just a few weeks ago, a new development collaboration agreement with Taiwan-based for most of the pharmaceuticals.
This agreement seeks to combine our Optejet with unique nanoparticle formulation platform. for the potential development of new topical ophthalmic therapeutics that employ the Optejet device. Formosa's proprietary and innovative platform reduces an active pharmaceutical ingredients particle size and improves its solubility, thereby allowing more homogenous formulations that may expand the universe of existing and future drugs that could benefit from delivery using the Optejet. We intend to work together on testing formulations and engaging in discussions with the FDA with the goal of executing a development and commercializations agreement that will see new molecules develop, leveraging Formosa formulation technology in the Optejet. We believe this agreement with Formosa can serve as the model for future partnerships.
And to that end, we are in active discussions with additional parties that may benefit from the Optejet within their own development programs. Own development partnerships such as this and large ophthalmic indications with unmet needs are a key part of our long-term growth strategy. We have built a significant body of data demonstrating the benefits of Optejet over conventional eye drops. In January, we added to this by announcing positive results from a research study conducted in collaboration with Dr. , Interim Chairman of Ophthalmology at Tufts Medical . This study evaluated the gene of protein expression of cytokines and chemokines after treatment with , the glaucoma medication preserved with administered via Optejet versus administered via standard eye drops.
It is common to use preservatives to support product sterility and prolonged shelf life. Unfortunately, patients treated with preserved glaucoma medications often suffer inflammatory side effects and subsequent -- and develop subsequent surface disease. In this most recent study, human cells were used to evaluate 3 RNA markers that signal inflammatory response in groups treated with latanoprost plus BAK by an the Optejet versus standard eye drops. And 2 out of 3 cases, cells treated via the Optejet head markers decreased that was statistically similar to preserving a latanoprost delivered by a standard eyedrops and the control. In these early findings, the Optejet technology appears better than latanoprost plus BAK administered via standard eyedrops in reducing inflammatory processes.
This is a very important finding, particularly as we look at using the Optejet in dry eye or glaucoma where medication has taken over an extended period of time. For the Optejet, it appears that these harmful and unwanted side effects can be significantly reduced. At this point, I'd like to turn the call over to our Chief Operating Officer, Bren Kern, for a manufacturing update. Bren?
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Bren Kern : Thanks, Michael. In anticipation of FDA approval of MydCombi, Eyenovia has been focused on our production capabilities. We view the ability to build and fill the Optejet as a key element of our growth strategy going forward and we have made significant progress in developing world-class capabilities to this end. Recall that in July, we announced at our manufacturing facility in Redwood City, California, became operational and is currently manufacturing clinical supply. That facility is focused on Optejet manufacturing finishing operations, including drug loading, labeling and packaging prior to distribution. Our second facility in Reno, Nevada is progressing as planned, with construction activities currently in process and manufacturing equipment orders and deliveries being finalized.
We anticipate this facility being operational this summer. This facility, when complete, will focus on the production of proprietary Optejet components in the durable portion of the Optejet dispenser, the . We, along with many other companies, across a very broad range of industries, did experience supply chain delays and challenges due to COVID and believe these global challenges are beginning to ease. We have increased our capabilities through the addition of new hires, whose mandate is to scale and strengthen our supply chain. These changes have resulted in significant improvement in the Optejet availability for both our internal development programs as well as for our partners, the benefits of which are already being realized. This is another advantage of having proprietary manufacturing capabilities.
It gives us a level of control over the processes so that we can ensure the quality and consistency that our current and future partners expect for us. Collectively, our new state-of-the-art facilities and increased capabilities of our suppliers provide us with the capacity and operational redundancy to reliably produce products, not only for commercial supply, if and when the products are approved, but also for our internal development programs, clinical trials, partnerships and co-development agreements. To further support our development programs, Eyenovia is pleased to announce the acceptance of an offer by as Eyenovia's Vice President of Product Research and Development. holds a Masters of Science in Mechanical Engineering from the University of and will be joining Eyenovia the second week of April.
The majority of 20-year career has been focused on the development of medical device products. Prior to joining Eyenovia, Enrico served as a Vice President at Ophthalmic and held technical leadership roles at Technologies, home appliances. In his new role, Enrico will be leading our engineering team, supporting our existing product lines as well as leading the development of new innovations. I'm excited to have Enrico in this role and look forward to the numerous contributions he will provide to Eyenovia. 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. With respect to our 2022 P&L results, we recorded no license revenue during the fourth quarter or full year of 2022. By comparison, we recorded license revenue of $10 million and $14 million for the fourth quarter and full year 2021, respectively, from our partnerships with Bausch and Arctic Vision. For the fourth quarter of 2022, we reported net loss of approximately $6.1 million or $0.17 per share on approximately 36.7 million weighted average shares outstanding and this compares to a net income of approximately $3 million or $0.11 per share for the fourth quarter of 2021 on approximately 27.9 million weighted average shares outstanding. For the full year 2022, we reported net loss of approximately $28 million or $0.83 per share on approximately 33.6 million weighted average shares outstanding, and this compares to a net loss of approximately $12.8 million or $0.49 per share for the full year of 2021 on approximately 26.3 million weighted average shares outstanding.
Research and development expenses totaled approximately $2.2 million in the fourth quarter of 2022, and this compares to approximately $3.3 million for the same period of 2021, a decrease of 33%. For the full year 2022, research and development expenses decreased approximately 10% to $13.4 million versus $14.9 million for the full year 2021. 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 license partners. For the fourth quarter of 2022, general and administrative expenses were approximately $3.2 million compared with approximately $3.7 million for the fourth quarter of 2021, a decrease of 13.3%. For the full year 2022, G&A expenses were $13.5 million, an increase of 28% as compared to $10.6 million for the full year 2021.
The full year increase was driven by staff additions, higher professional fees and an increase in stock-based compensation. Total operating expenses for the fourth quarter of 2022 were approximately $5.4 million compared to total operating expenses of $6.9 million for the same period in 2021. This represents a decrease of approximately 22.7%. Total operating expenses for the full year 2022 were $26.9 million, representing an increase of 6% versus $25.4 million for the full year 2021. As of December 31, 2022, company's cash balance was approximately $22.9 million in all unrestricted cash. We believe our current cash balance as of today is sufficient to fund the company's operations as currently planned well into the second quarter of 2024. Before we open the call to questions, I will conclude with a brief update on our licensing programs were Bausch + Lomb for MicroPine in the U.S. and Canada and Arctic Vision for all 3 of our products in China and South Korea.
MicroPine is a proprietary formulation for the reduction of pediatric myopia progression. It has been shown in clinical studies to slow myopia progression by 60% or more. There are currently no FDA-approved drug therapies for this indication, and if left untreated, this can result in retinal detachment, myopic retinopathy as well as vision loss. Bifocal, multifocal glasses or contact lenses are typically prescribed to myopic . Recall that as part of our agreement with Bausch + Lomb, and costs related to the ongoing Phase III MicroPine clinical trial, transferred to our partner. Enrollment is progressing as planned. Our agreement with Arctic Vision covers Greater China and South Korea and covers MicroPine, MicroLine and MydCombi. So Arctic Vision now licenses all 3 of our current programs.
MicroPine for pediatric myopia, in particular, represents a significant opportunity in China. The Ministry of Education there estimates that nearly 53% of all Chinese children suffered from myopia in 2020. Our agreement with Arctic Vision provides a sales royalties in addition to development milestones. So if and when approved, MicroPine could be a significant source of nondilutive funds for our company over the long term. And finally, Arctic Vision continues to enroll patients in its Presbyopia study. This marks the first time that the clinical trial has been approved in China to evaluate pharmacologic treatment for Presbyopia. So that program is also progressing nicely. To date, our license agreements have generated approximately $16 million in license fees and we have the potential to earn an additional $60 million in net license and development milestones as well as reimbursable expenses over the next 4 years.
As noted upon commercialization, if these products are approved, Eyenovia can also earn significant sales royalties as well. We are also continuing to assess potential pipeline expansion opportunities such as our Formosa agreement as we believe we can continue to leverage the Optejet technology to address unmet needs and additional large ophthalmic indications. Pipeline expansion was a significant consideration as we were building our new manufacturing facilities. In conclusion, we continue to be pleased with our performance to date. To summarize our key highlights today our NDA for MydCombi has been accepted by the FDA, and we have a PDUFA date of May 8. We are reviewing the feedback that we recently received from FDA on our MicroLine program, and we believe the agency has outlined a clear path forward for the program, and we plan to provide additional updates in the near future.
This program is also progressing according to plan. We announced the co-development agreement with Pharmaceuticals. Our new state-of-the-art manufacturing facility in Redwood City, California, is operational and our second facility in Reno is on track to be operational in the summer time frame. We have recruited a new Vice President of Product Research and Development, which should help ensure that our technology remains at the forefront of the industry. And our license agreements with Arctic Vision and Bausch + Lomb are progressing well and continue to offer the opportunity for meaningful development and regulatory milestones as well as line of sight to potential sales royalties possibly within the next 2 years. That now concludes our prepared remarks, and we would now like to open up the call to questions.
Operator?
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