Q3 2021 Eyenovia Inc Earnings Call

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Greetings welcome to I know you had third quarter 2021 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

Please note. This conference is being recorded and I'll now like to turn the conference over to Eric Ridner with Investor Relations. Thank you you may begin.

Thanks, very much and good after noon to everyone and welcome to <unk> third quarter 2021 earnings conference call and audio webcast.

With me today are <unk>, Chief Executive Officer, and Chief Medical Officer, Dr. Sean I am sure that Chief operating Officer, Michael Rowe, and Chief Financial Officer, John Gandolfo.

Yesterday afternoon.

<unk> issued a press release announcing financial results for the three and nine months period ending September 32021.

Encourage everyone to read yesterday's press release as well as I know <unk> quarterly report on Form 10-Q for the quarter ended September 32021, which will be filed which was filed with the SEC.

The company's press release and quarterly report are also available on I know abuse website I know that your dot 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 note that certain information discussed on the call today is covered under the Safe Harbor Harbor provision of the private Securities Litigation Reform Act, we caution listeners that during this call I know abuse management will be making forward looking statements.

Actual results could differ materially from those stated or implied by those by these forward looking statements due to risks and uncertainties associated with the company's business.

These forward looking statements are subject to a number of risks, including risks related to fluctuations in our financial result volatility and uncertainty in the global economy and financial markets in light of the evolving COVID-19 pandemic, our ability to raise additional money to fund our operations for at least the next.

12 months as they go and concern our estimates regarding the potential market opportunity for our product candidates and potential revenue from <unk>.

Transactions reliance on third parties, the ability of us and our partners to timely develop implement and won't see manufacturing commercialization and marketing capabilities and strategies for our product candidates.

Risks on our end and Ara licenses licensees clinical trials, including but not limited to the cost side.

Initiation and enrollment, which could be adversely impacted by Covid, 19, and resulting social distancing.

<unk> progress and results of such trials, the potential impact of COVID-19, and related economic disruptions on our supply chain, including the availability of sufficient components and materials used in our product candidates the timing of and our license fees the ability to submit applications for obtain and maintain regulatory approvals for our product candidates.

Changes in the legal regulatory and legislative environment, and the markets in which we operate and the impact of these changes on our ability to obtain regulatory approval for our product.

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 <unk> press release, and SEC filings, including its most recent annual report on Form 10-K and subsequent filings.

The conference call contains time sensitive information that is accurate only as of the date of this lifeblood fast November 11th 2021.

<unk> undertakes no obligations to revise or update any forward looking statements to reflect events or circumstances.

The date of this conference call, except as may be required by applicable Securities law.

That said I'd like to turn the call over to Dr. Shawn yesterday.

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

It's been a busy time for writing avia with the initiation of our second phase III trial in Presbyopia vision to the.

The recent news Amit Combi, which is now reclassified as a drug device combination by the FDA and the departure of Dr. Fred Eshelman come out of a board of directors.

Micro line as you recall is our product candidate for presbyopia, a market representing over 18 million people in the United States between the ages of 40 and 55.

Otherwise never wore glasses vision to ease our second phase III study for micro line and we recently announced the first patient enrolled in the study.

And we look forward to completing this study early next year.

Following Ali gallons, a recent approval with pilocarpine I know he is now the only company with a second phase III trial underway. There is a growing validation for the pharmacologic treatment of presbyopia with pilocarpine, we'd announce three positive phase III trials between right and all of you and Abbvie.

Michael will provide additional information in a few minutes about this very important and valuable asset.

We're also working on the Resubmission form it can be our unique microdose array print formulation of two leading mydriatic medications or people dilation in Egypt.

As we originally announced the inorganic team is working quickly to provide additional information to the FDA for the expedited recognition of mid Con this new drug application. It's a device drug combination we understand the extrinsic circumstances that compel the F D a to reclassify ophthalmic dispensers.

Our op T. J it is a highly sophisticated groundbreaking technology.

Having our product reclassified as a drug device combination does not change what was seen in our clinical data.

The additional an outstanding regulatory requirements on non clinician in nature, and we have prepared for this possibility through the years nowadays.

Now it is a matter of understanding the specifics of the F D a feedback and addressing the items in the fear around.

One potential positive is the ability of the optics of dispenser in the future to work seamlessly with the recent changes to the way that doctors may bill for remote therapeutic monitoring and the center for Medicare and Medicaid services or CMS manages the procedure called set that physicians and other health care professionals use.

Classified the services for which they built this codes are commonly known as CPT code set which stands for current procedural terminology. During a recent update in Mississippi to cold for most of the pubic monitoring were approved with five new codes that will become effective on January one 2022.

Remote therapeutic monitoring has come into greater use with the Covid pandemic and we will continue to be an important way for doctors to monitor and treat a greater number of patients. Some of these new codes will cover the remote monitoring of data, including compliance and adherence data for pharmacotherapy and this may provide a pathway for providers in clinics.

To get reimbursed for such care, our <unk> technology has the potential to become a go to option for most therapeutic monitoring associated with topical ophthalmic drug adherence and compliance. This will not only open a new pathway for smarter more personalized I cared, but may enable a new reimbursement paradigm that can have real world benefits for patients with <unk>.

Diseases, such as glaucoma.

We're closing monitoring the CMS and payer adoption of remote therapeutic monitoring and other telehealth initiatives as we work to create and enabled the first pipeline of smart <unk> therapeutics with our <unk> remote monitoring platform.

Before turning the call over to Michael on behalf of the entire company.

I would like to take a minute to take out to thank our chairman Dr. Fred Eshelman, who has decided to step down at the end of this year. After a decade long board leadership from the very inception of this technology and the founding of like nausea threat has been instrumental to our success in all of those many years have made significant contributions to help get us where we.

We are today as a company the board will be working on the transition plan for the chairman role and potential additions to the board with the necessary skills and backgrounds to make meaningful contributions to the company.

I will now turn the call over to Michael Rowe, Our Chief operating officer for a review of Mic Hawaii Michael.

Thank you Shawn and good evening everybody.

I'd like to start with a review of our micro line program Micro line is our proprietary microdose array print pilocarpine therapy for the temporary improvement in near vision.

Societally with Presbyopia, our game recently received FDA approval for the same molecule as an eye drop for the treatment of presbyopia and we are very happy to see them opening up this market I know biggest product is different in that micro line is designed to be used on demand with the benefits of micro dosing reflected in the very low rate of brower headache as seen in our vision.

One trial and a much easier and neither way of instilling the drug through the after just device.

As you May recall, we announced positive data from our first phase III presbyopia clinical trial, they shouldn't one earlier this year.

Data from that study demonstrated positive efficacy and safety with far fewer side effects reported relative to pilocarpine eye drop formulations.

Importantly in the post study survey, 71% of study participants reported strong interest in using micro ly for near vision improvement when approved these patients said that they would expect to use the product three or four times per week on average we.

We recently announced the first patient enrolled in our second phase III clinical trial vision to vision, two as a registrational double masked placebo controlled superiority trial of 2% multi array print pilocarpine versus placebo.

We aim to enroll about 140 subjects into the study and anticipate top line data in early 2022.

We believe the addressable market for presbyopia has to be many times greater than the addressable market for almost any other ophthalmic condition. So we are very excited about the potential of micro line is a key driver of our long term growth.

The U S alone there are estimated to be 18 million people between the ages of 40, and 55, who suffer from presbyopia, but who never had to wear glasses prior to having difficulty with near vision. This translates into a multibillion dollar potential market opportunity Michael.

Micro line is also intended as an on demand companion product to reading glasses for instances when using readers ease and convenience are undesirable.

When you look at the clinical results our plans for vision, two and the benefits are out of our up to jet dispenser. We believe we can capture a significant share of the market should micro line be approved.

As Sean mentioned, our team is working on the Resubmission of <unk> Combi to the F D. A M.

Sponsored the complete response letter.

Reclassification, which caused the FDA to modify their initial classification of our product from a drug to a drug device combination was triggered by a recent court case peanuts medical technologies versus F. D. A.

More information about which we have made available on our website.

Specifically the FDA is requesting certain device validation reports that were not required under a drug submission. One example would be validation reports for laboratory studies that demonstrate that the capabilities of the opt to jet device did not degrade over the period of its shelf life.

We routinely conducted these types of studies, but not did not submit a report with the Combi NDA because it was not required under a drug submission now where we are taking this information along with other work we've done and packaging. It for Resubmission, we cannot emphasize this enough that she RL raised no issues with our clinical results are the product safety.

Our efficacy and this year all has no impact on our other programs.

As Sean mentioned, the reclassification reclassification of bid Combi to a drug device combination.

Brother positive implications for our platform technology as well as streamlined the future review of other late stage development programs micro line and micro part.

Programs also leverage our op microdose dispensing technology, so the information being developed to support the drug device combination filing is very likely transferable across these programs. This is keenly important as we continue to develop micro lying for presbyopia a program with a multibillion dollar sales potential.

In summary, I know, it's moving forward on multiple fronts with late stage programs that offer great potential benefits for patients providers and our shareholders. We are excited about the potential benefits of our technology can bring in light of the recent focus on remote therapeutic monitoring we remain focused on progressing these programs the potential regulatory approval.

Sufficiently as possible and look forward to providing additional updates in the coming weeks and months I.

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

Thank you Michael.

I'll start with a brief update of our licensing agreements with Bausch health from micro <unk> in the U S and Canada and Arctic fishing for all three of our drugs in China and South Korea.

Micro opinions of proprietary atropine formulation for the reduction of pediatric myopia progression is that it's 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. It can result in retinal detachment myopic retinopathy ambition loss bifocal or a multifocal glasses or contact lenses are typically prescribed to myopia in children.

Called out as part of the agreement with bass shell.

I agreed to assume oversight and costs related to the ongoing phase III chaperone clinical trial. This is a 48 month U S. Based multi center randomized double masked trial that is enrolling more than 400 children between three and 12 years of age to trial is comparing microdose atropine 0.01.

Percent versus placebo ophthalmic solution enrollment is progressing as planned.

Our agreement with Arctic fishing covers greater China, and South Korea, and while the original agreement Western micro peanut micro line. They also recently added mid Combi as well so Arctic vision now lessons as all three of our current programs. We are pleased that Arctic because your Moody's recently had its micro pain I N D accepted in China.

And is completing a PK study and preparing to start the phase III study. So that program is also progressing nicely.

To date, our license agreements have generated approximately $16 million in license fees and we have the potential to earn an additional $85 million in license and development milestones and Reimbursable expenses over the next four years.

Upon commercialization if approved we can also earn significant sales royalties as well.

Development is progressing and we are seeking additional licensing partners for other key geographical territories.

We are also continuing to assess potential pipeline expansion opportunities as we believe we can leverage the <unk> technology to address unmet needs in additional large ophthalmic indications as we indicated last quarter. Some examples include anti infectives anti inflammatories dry eye and glaucoma.

Each with significant market opportunities now.

Now I would like to review our financial results for the three months ended September 32021.

In the third quarter of 2021, we reported a net loss of approximately $5 $6 million or 21 per share on approximately 26.1 million weighted average shares outstanding and this compares to a net loss of approximately $5 1 million or 23 cents per share for the third quarter of <unk>.

<unk> 20 on approximately $22 2 million weighted average shares outstanding.

R&D expenses totaled approximately $3 $5 million for the third quarter of 2021 and.

And this compares to approximately $3 $4 million for the same period in 2020, an increase of approximately three 2% for the.

Third quarter of 2021, G&A expenses were approximately $2 $4 million compared with approximately $1 $7 million for the third quarter of 2020, an increase of approximately 41%.

Total operating expenses for the third quarter of 2021, more approximately $5 $9 million compared to total operating expenses of $5 $1 million from the same period in 2020. This represents an increase of approximately 16%.

Operating expenses also included approximately $777000 of noncash stock compensation expense.

At September 30 of 2021, the company's unrestricted and restricted cash balance was approximately $21 $4 million, our current unrestricted and restricted cash resources are approximately $30 million and we believe this provides the company with sufficient cash to fund all our programs through 2010.

Two due to the anticipated reduced spending with the delayed launch of med combi.

Therefore, we expect our current cash resources will be sufficient to bring out a combi mydriasis product through the NDA process and commercial launch.

Our presbyopia clinical program for micro line and complete the preparation of our pilot manufacturing facility.

In closing we continue to be pleased with our performance to date.

Summarized key highlights today, we are continuing to rapidly rapidly advance our phase III Presbyopia program. We recently initiated a second phase III trial of vision two with topline data expected in mid 2022, we are actively preparing for the resubmission never ever but combi NDA in the first quarter.

Of next year, which if approved would give us our first commercial product and validate our outreach at dispensing technology.

Licensing agreements with the Arctic vision bus shelter are progressing well and continues to offer the potential for meaningful development and regulatory milestones.

Non dilutive funding that we can use to expand and advance our pipeline of novel Therapeutics, leveraging our <unk> technology.

Technology.

We believe we are well positioned to achieve multiple commercial regulatory and development catalyst this year and next for the benefit of shareholders and patients alike.

That concludes our prepared remarks, we would now like to open the call to questions operator.

Thank you.

To ask a question. Please press star one on your telephone keypad.

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And for participants.

Speaker phone it may be necessary to pick up the handset before pressing the star keys. Our first question is from Tim Chiang with no I think capital. Please proceed.

Oh thanks.

Shawn and Michael maybe you could just talk a little bit about the resubmission.

For mid Combi.

Definitely do you have to basically.

Re file to the FDA with this reclassification is there any and also is there any additional safety data that you have to provide to the FDA with the resubmission.

Hi, Tim This is Shawn I'll try to take it out.

It's exactly as we mentioned that I think Michael went into some detail I don't think we can we can provide too much granularity, but to your point I think we can answer clearly that there is nothing that has to deal with either safety or efficacy.

And it's nothing that really concerns the clinical data, it's really more procedural in nature.

And and it has to do with the validation and verification type of activity is required on the device side.

We're very familiar and in fact, we have deal quality systems that we've maintained for that very reason, but again, we are not going to really go into too much detail. Because we were working very actively to fully understand every single item and coordinate and have a call with the FDA. So that we can make the resubmission as quick as possible.

But it doesn't change anything about the performance of the device of how the device works or the clinical.

Utility and the clinical performance, if it's mostly on the validation and verification side for the device.

I see Okay, and then maybe just one follow up.

You know, obviously allergens pilocarpine product recently got approval.

I was looking at their label and I guess the treatment effect from their studies versus the vehicles around I don't know give or take.

20% treatment effect.

Do you think that you'll have comparable.

Rates of efficacy with supermicro to line product in.

That sort of treatment effect about the same as what you received in the vision one study.

Right. So so we've reported our results on the vision of one study and that was a publicly available.

I would really hesitate to speculate about our overall data and envision too.

But on the flip side, we're going to have that very quickly and very soon I think ginger from the operations team is very optimistic we'll be able to enroll the study fairly quickly even quicker envision one there was such a high interest in the field of presbyopia, there's such high availability of patients and particularly when it comes to the ops.

There is really a competition for sites are competing to really get into the study because they appreciate how unique that technology is in that particular indication.

And especially as we reported in division one.

That we got only a less than 2% rate of headaches, which.

Which we now with the overdose or the topical treatment with the Eyedropper that is more in the vicinity of 12 to 14 and 15%. So I think there's a lot of things that we're encouraged by and I'm very excited when we see an hour and reported our vision one data we want a valley data.

With vision, two and ultimately again mid Combi part will we hope once we address that it will not impact in any way.

Hum.

Opiate Pilocarpine program for Us and we're very excited that Allergan is really validating that and has that pharmacologic therapy in all of the market developing the space for follow on therapeutic.

Okay, I've actually are Tim I want to add something to that.

Correctly pointed out that the delta between the three the three line or 15 character improvement and placebo was 20% and that's what's required for the FDA approval, but in this market even a two line 10 leather improvement could be the difference between I can read my cell phone and I can't read my cellphone.

So you know you have you have the barrier, where you have the bar that you have to get over for the approval, which is very high but an actual benefit for a patient. Many many more patients will benefit from the lower bar.

To do for example, with our product on demand to get to functional vision to get to that functional benefits. So you know there's just I just wanted to make it clear there's what's required by the F. D. A versus what it is that patients are going to be happy with Oh, Okay. That's really helpful.

Thanks, Sean.

Thanks, Michael for the additional color sure.

Our next question is from Matt Kaplan with Ladenburg Thalmann. Please proceed.

Hey, guys. Thanks for taking the questions just wanted to.

A follow up.

On the re filing.

Firm economy. If you if you look at the data year end and so that you already have in hand with respect to validation and verification how much more work do you need to do from a de novo from scratch to be able to re file I guess, where are you in that in that process do you think.

Hey, there its Michael.

I would say that we probably have 95% to 99% of it already.

And where we don't it's not like we have to do a clinical study it.

Maybe just going back to look up the rig and then finding the the validation studies that we had done and rewrite it to match whatever that regulation might be so there's there's nothing in terms of any clinical that we need to do and right now it really is going through all of the validation reports that we've already done and where there might be a piece of.

Two missing we just fill in the blanks for that.

Okay, that's great and when you re file which what's your what's your expectation in terms of the a class one or a class II. We're here at this point.

Okay.

Yeah, So Matt I would love to answer this but probably the best time to do it.

The next call when we have some feedback.

Seed back from the FDA I would hate to speculate now.

So what Michael said is absolutely correct and we're very encouraged by the fact that we do have the majority of the data and this is partially because our team and we've said that before that we'd maintain your quality systems and a lot of our engineering data.

And processes have built teams verification validation because of the fact that the FDA reclassified just does not make us less or more of a device. Then we've always been when it comes to utilization in the field and how this has to be made it has to be made with all the appropriate period.

Quality control systems, because ultimately it will be used by the patient.

We don't know obviously, the FDA will have an additional review team or additional reviewer from the device side and one part per month that really unclear is.

Given what we've developed on our own and what we have created following all of the device.

Regulations and specification you know how acceptable and how that would really be in line with their expectations. Because we've never had discussions with anybody from the device side. So again theres a couple of things that we want to absolutely ascertained before we provide them.

Information or I'll come back to you with something that May.

May or may not be truth may turn out that it's a very easy thing, but having dealt with the regulations and the F D a before.

It's always important to have very specific feedback and we intend to get back to them very quickly addressing all their points and showing them. The information we already have to make sure that we can expedite that.

Okay that makes sense. Thanks, and then a follow up on the micro.

Line program, given the recent approval al again, and and I guess the evolving competitive.

Space in terms of presbyopia in other other programs out there can you talk about the differentiation.

Michael line.

Versus versus other programs.

Sure Matt.

The differentiation is going to be on which of these products Beth best match. The patient's lifestyle. If you go to an optometrist and I believe they will be the principal prescriber of these these are generally patients who've never been into their offices before because of their entire life they've never had to wear glasses. So now they are coming in because they're having trouble with near <unk>.

And Theyre looking for options and what they don't want us to turn.

B O P into the disease. They want something that is easy to use his glasses, but its not classes. They are looking for like an invisible glasses and what micro line will give them is that ability to manage presbyopia. So so that they can use the product when they would like to in a way that they would like to easy to use and something with minimal.

Side effects and I think that's one of the biggest differentiation differentiators. So the ability to use the on demand number one instead of having to take it every day because right now people don't take their medications everyday to.

It happened very low side effect profile would be the other differentiator and the third one would be to make it easy and convenient for them, which the dispenser does and I think that'll make a real difference in the market research we've done.

Once you put the off the drip into somebody's hands.

That's really all you have to do it makes all the difference in the world when they see how good that technology, yes.

Okay that makes sense. Thanks, Thanks, Sean and thanks, Michael Thank you.

Our next question is from Glenn.

Doc partners. Please proceed. Thank you very much yeah. My concern I just wanted to heavy go over again, what I think is the critical point because it relates to micro line that just as you've talked about before is it.

A cosmetic product where people are often going to be using it in social situations.

It does not happen to wear reading glasses going out to a restaurant or being an event, where they're going to be photographed and they don't want to have to be photograph with glasses and therefore, the incidence of side effects with cosmetic is the greatest deterrent because people don't want to feel bad for a cut.

Medic gain so I was just wondering as I understand with Allergan, there E adverse events greater than equal to 3% of their trial included headache, blurred vision eye pain, and hyperemia and obviously as it relates to being photographed hyperemia would be a significant.

Correct could you discuss your specific adverse event profile that you've seen and to the extent that you think that this is.

An important differentiation. Thanks, so much.

Sure Lynne I'll start with hyperemia, because pilocarpine doesn't generally cause hyperemia, so even though it showed up in their trial and trace the mile showed up in hours at.

At least in our case that showed up because we ask people to look for it. So we specifically ask the investigators to get see any hyperemia.

And then I think something like 20% of cases, they say, yes takes the mile.

For that and it was transient and disappear very quickly I think the big one is going to be the headache of brow ache and that is directly related to how much drug you put onto the eye because what happens is you put excess drug it gets into the local circulation and you'll get the muscle between the eyes Tensing up and that's the brow ache and that is directly relation in relation to how much drug.

Yep.

So not surprisingly with Alabama, So I believe we're one of their trials, what's a headache or brow ache right up about 14, 8%.

Something close to that which is what you see for pilocarpine in general in and would be what's expected and in our trial, we saw about 2% and that's because of how much drug you're putting in.

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

Thank you and then just as a follow up as it relates to pediatric progressive myopia, which is virtually an epidemic worldwide and that's been exacerbated by COVID-19, with kids staying inside more and looking at near term computers or cell phones, how long a study do you think that.

It will be.

And where do you think you'll be positioned competitively versus any others, who may be looking at this market, which I think.

Far larger than presbyopia.

Yeah.

That's a.

Great question, because I'm here at the accelerate their meeting in New Orleans, and we just had a myopia panel that Sean was a part of and this is a big discussion.

These are three years with a fourth year in there as a follow up that's required by the FDA and they're staying firm on that there are two eye drops are ahead of us in Texas and never car.

And then we come out and then the other products that are coming or just going into phase. One so there were years and years and years away.

I'm, not particularly concerned if we come out a year or year and a half behind the drops number one there's plenty of patients coming in new patients all the time.

You said, it's an epidemic there are literally millions and millions of these kids, Unfortunately, who are going to be available.

Secondly, it's a kind of therapy that once we do come out, but that's the better mousetrap and I believe it is.

Can be switched because it'll be going from an atropine drops to an atropine and the object Spencer where some some of the benefits they may get because of that as lower systemic absorption, which is always nice for kids.

And it's more comfortable.

Because you're taking less it doesn't sting and also because the device itself can track compliance and adherence to therapy, which you know if the kid is not using the drug then they're not going to get the benefit.

So that's something else that can help them as well.

So right now I think we will probably be number three a close number three.

But again, such a big opportunity. Unfortunately, that's not something that's terribly concerns me.

Thanks very much.

Thank you.

With no more further questions I would like to turn the conference back over to.

As Shawn for closing remarks.

Yeah.

Yes, thank you to everybody for listening in.

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

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

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