Q3 2023 Eyenovia Inc Earnings Call

Good day, ladies and gentlemen, and welcome to I don't know if you can.

First quarter of 2023 earnings conference call.

At this time, all participants are in listen only mode.

A question and answer session will follow the formal presentation.

As a reminder, this conference is being recorded.

I will now turn the call over to claim Commons.

Go ahead Sir.

Thank you Judith good afternoon, and welcome everybody to <unk> third quarter 2023 earnings conference call and audio webcast with me today are <unk>, Chief Executive Officer, Michael Rowe, Chief Financial Officer, John Gandolfo, and Chief operating Officer, Brent curve.

This afternoon, we issued a press release announcing financial results for the three months ended September 32023, we encourage everybody to read today's press release as well as <unk> quarterly report on Form 10-Q for the quarter ended September 32023, which will be filed with the SEC Tomorrow November 14th and our most recent.

<unk> filed Form 10-K.

The company's press release and annual report are also available on our website at Www Dot <unk> Dot Com. In addition, this conference call is being webcast at 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 <unk> 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 discount.

This conference call contains time sensitive information that is accurate only as of the date of this live broadcast November 13th 2023.

<unk> 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 and with that said I'd like to turn the call over to Mike, Mike Rowe Iw's, Chief Executive Officer Michael.

Okay.

Thank you Glen and welcome everyone to our third quarter 2023 financial results Conference call.

I know you had a highly productive third quarter, both in terms of tangible results as well as setting the stage for our future success I am excited to share our progress and plans. This afternoon as we prepare for our targeted launch of med combi the potential approval and launch of a P. One three double O seven and future partnerships.

Glaucoma and dry eye to leverage and monetize the off to chip technology beyond our own development programs.

Let's start with our commercial preparations for the mid Combi launch for those of you who might not be familiar with Ms. Combi. It's the first and only FDA approved fixed combination of two popular pupil dilation drugs and the first electromechanical spray platform using the opted yet.

Earlier. This month, we were thrilled to announce that our contract manufacturer coastline International was approved by the FDA for mid Kabi commercial manufacturing production has already begun that coastline and we expect to receive finished product into our warehouse in January 2024, and.

In addition to manufacturing with Tommy we are also continuing to prepare the market and raise awareness about the product and the after jet technology.

Last week, we sponsored the course during the International Joint Commission on Allied Health personnel in ophthalmology as 51st annual continuing education program.

Of course was offered to ophthalmic technicians and provided hands on experience with our after jet dispensing technology and the use of Mcafee.

We also have a significant exhibition booth at the American Academy of Ophthalmology and collected many leads and product requests from doctors, who believe the technology addresses a significant unmet need in their practice.

Last month, we presented data at the American Academy of Optometry annual meeting demonstrating the after jeff's ability to maintain sterility, even when exposed to a high microbial load.

This presentation was particularly timely given all the recent news about contaminated over the counter eye drops being pulled off the shelves of major drugstore chains and retailers due to the risk of serious eye infection, and even blindness and conditions that far exceed the microbial load that the after jet would be exposed to in <unk>.

Actual daily use the device demonstrated its ability to maintain products sterility.

We are now in the process of validating the opt in jets ability to deliver topical medications without preservatives for an extended period of time.

Our activities at these professional meetings have been a great Avenue to continue socializing mid coffee to ophthalmologists, optometrists and technicians and positions us well for a broader commercial launch of <unk> Combi early next year. The current U S market for pupil dilation is valued at approximately $250 million.

And we feel we are poised to take a good portion of that market share over the coming years, especially when we move to our next generation device more information, including ordering instructions and customer reaction to this unique product will appear shortly on mid Combi dotcom and.

In 2024, we not only anticipate mid combi generating revenue for us, but we are looking forward to the potential FDA approval of a P. P 13 double O seven in early March 'twenty 'twenty four we received recently announced an agreement with Formosa pharmaceuticals to acquire the exclusive U S rights to distribute and sell.

A P. P 13, double O seven or Clobetasol propionate ophthalmic solution.

A P. P 13, <unk> seven is a potent potent steroid with a highly desirable safety and efficacy profile. It is currently under FDA review for post ocular surgery inflammation and pain.

Unlike almost all alternatives. This product is intended to be dosed twice daily without titration, which is significantly more convenient than the four times a day dosing regimens with titration for existing treatments there.

There are approximately 7 million ocular surgeries annually and almost all of these procedures utilized topical steroids during the recovery process.

This is potentially a significant market for us and we expect to leverage our planned 10 person sales force for both mid Kabi, an a P. P. One three double O seven and add significant value to optometry and ophthalmology offices in surgical centers.

In addition to providing near term revenue a P. P 13 double O seven has the potential for additional indications in the after jet, including dry eye, a multibillion dollar market opportunity.

Following the potential approval for the post surgical indication on March 4th of next year, we look forward to working with Formosa and the F. D. A to determine the most efficient path forward for this new product.

We continue to explore additional partnering opportunities that we believe will benefit our company and our shareholders specifically in glaucoma and dry eye and we will provide you with updates on these developments when appropriate.

I'll provide a brief regulatory update now we have always believed that the after jet due to its ergonomic design that eliminates the need for head tilting in handling small eyedropper bottles would be easier to use and many populations than currently available topical options and then our own market research that we shared with you in the past.

Consumers and patients reported using eyedrops was among the most difficult ways to use medication that they experienced with that in mind. We recently held a successful meeting with the FDA to ask how we might demonstrate this benefit we confirm with the agency that there was a path forward to include language in our labeling that covers <unk>.

<unk>, who have difficulty or cannot reliably use eye drops as long as we provide evidence of a clinical benefit either in efficacy or safety of the eye of the oxygen product compared to the eye drop product.

We believe such labeling would not only help prescribers select our future products and classes, such as glaucoma or dry eye, but this difference could lead to better formulary coverage dropped a jet products.

They would be the only products to provide an option for patients who have a challenging time with eye drops.

Now turning to <unk>, our our proprietary topical on demand pilocarpine based therapeutic candidate that we are developing for the temporary improvement in near vision associated with presbyopia.

<unk> is being designed with our more advanced Gen. Two after jet device, which has been optimized for in home use these will be manufactured in our Redwood City facility, which is currently prioritizing manufacturing the gen. Two device to supply our partners Bausch and Lomb and Arctic vision with product for use in their pediatric myopia studies at the begin.

F 2024 as a reminder, we are paid by our partners for producing the supply and then they become helps cover a portion of our overhead for that facility.

Because of this we have moved the manufacture of registration batches for aperture into the first quarter of 2024, we do not believe this change will materially impact the eventual timing of the aperture launch as the market for topical presbyopia treatments continues to evolve and mature as evidenced by the performance to date, the only presbyopia eye drops.

Currently on the market.

Finally for our corporate update we are pleased to announce the appointment of Mr. Michael <unk> Zeiler to our board of directors as an independent director and chair of our audit Committee.

Mike comes to us with more than 35 years of senior financial leadership experience, including his former Chief Financial Officer of ADT Corporation, New York Stock Exchange Euronext, Reader's Digest Association and AC Nielsen Mike previously served on the boards of Cypress Creek renewables and the Euro next supervise.

<unk> Board and is currently a board member for Madison Square Boys and Girls club and the University of Delaware. We're excited to have Mike on board and look forward to his guidance and insights.

At this point I'd like to turn the call over to our Chief operating officer, Brad Kern for our manufacturing update Bren.

Thank you Michael we have made significant progress in the third quarter as we continue to build out our manufacturing capabilities to support new Combi Aki jet.

Platforming agenda configuration.

Registration batches for aperture as Michael mentioned, we are delighted that the FDA approved the use of additional manufacturing site coastline international to support the mid Con relaunch.

As always already commenced manufacturing of commercial product in support of a broader commercial launch will be combi in the first quarter of 2024.

As our Redwood City facility is currently under review with the FDA as an additional commercial manufacturing site for me Combi with a <unk> date in February of 2024 are.

Our Redwood City facility is also working towards qualifying or Jim to fill and finish line for both the clinical trials supplier of micro pine and registration batches for apogee.

As Michael mentioned, we are targeting a delivery of a batches for our partners and the initiation of aperture registration batches in the fourth quarter of 2024. Additionally.

Additionally, our Reno facility continues to make significant progress in establishing peace and ejector manufacturing recall in our last earnings call. We indicated that we installed the manufacturing equipments. Since then the manufacturing team has been optimizing the operation of equipment, including generating qualification protocols.

And we are targeting the commencement of protocols execution before the end of the year.

We continue to make significant progress in increasing our manufacturing capacity I remain confident that we'll be well positioned to meet the anticipated demand for <unk> as well as for other <unk> based products in clinical development I would now like to turn the call over to our Chief Financial Officer, John Gandolfo to provide a financial update Jon.

Thank you Brian.

For the third quarter of 2023, net loss was approximately $7 $3 million or <unk> 18 per share compared to a net loss of approximately $7 $3 million with 21 per share for the third quarter of 2022.

The third quarter of 2023 includes approximately $400000 of nonrecurring expenses associated with the rework of replacement of certain clinical trial, Jim one devices, which were found to be defective after shipment to a licensee to rework. Our replacement is not expected to have any impact on the enrollment of our time.

<unk> Chaperone study.

Research and development expenses totaled approximately $3 $6 million for the third quarter of 2023 as compared to $3 9 million for the third quarter of 2022.

For the third quarter of 2023, G&A expenses were approximately $2 $9 million compared to $3 4 million for the third quarter of 2022.

Total operating expenses for the third quarter of 2023 were approximately $6 $5 million.

Compared to $7 2 million for the third quarter of 2022.

As of September 32023, the company's cash and cash equivalents were approximately $27 million compared to $22 9 million as of December 31 2022.

For a brief update on our licensing revenues. In addition to the cash balance noted above we have of receivables from our licensed partners of approximately $400000 as of September 32023, and then addition, we expect our product development milestone payment of approximately $1 $8 million for Mark.

The equation that we anticipate in the first quarter of 2024.

I'll now provide an update on our existing licensing program with Bausch health for micro <unk> in the U S and Canada and Arctic vision for all three of our products in China and South Korea.

Bausch and Lomb is continuing to enroll in the ongoing phase III chaperone trial of micro team our proprietary atropine formulation for the reduction of pediatric myopia progression because 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 ambition loss.

Our agreement with Arctic vision coverage, greater China, and South Korea and covers Microplane micro line in mid Combi and provides us sales.

<unk> royalties in addition to development milestones.

<unk> in particular is a significant opportunity in China for pediatric myopia.

If approved micro pain can be a significant source of non dilutive funding for our company over the long term.

To date, our license agreements have generated approximately $16 million on license fees and with the potential to earn an additional $60 million and net license and development milestones and Reimbursable expenses over the next four years.

Alex are approved upon commercialization I know <unk> is also eligible to earn significant sales royalties.

We are continuing to assess potential pipeline expansion opportunities similar to our promotion agreement and we will continue to leverage the opt to jet technology to address unmet needs in additional large ophthalmic indications in conclusion, we are very pleased with our performance in the third quarter of 2023 and.

And to summarize our key highlights today.

We acquired exclusive U S commercial rights to <unk> <unk> seven as a potential treatment for post surgical ocular pain and inflammation from promotional pharmaceuticals, we achieved our first commercial sale of <unk> in August 2023, and continue to carry out our targeted.

Launch.

<unk> production continues to advance and we're continuing to build out our manufacturing capabilities to support made combi production with coastline manufacturing now in production and our Redwood City facility anticipated to come online early 2024.

In our licensing agreements with Arctic vision, and passion loan are progressing well and remain a promising avenue for significant development and regulatory milestones as well as the potential for additional sales royalties.

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

Thank you, Sir ladies and gentlemen, we will now be conducting a question and answer session.

Because our cost of Christian Please press star one on your telephone keypad.

Confirmation Tien who indicate <unk> seen depletion kid.

You may please two T to lead the question Kim.

For participants, making use of <unk> equipment.

You can pick up the handset before pressing just talking is.

Oh, Thanks Christian comes from Tim Lugo of William Blair. Please go ahead.

Okay.

Hi, This is John on for Tim. Thanks, So much for taking my question.

So I was wondering if you could give any.

Any color on what if any gating factors that you have remaining to getting 13 double up that and into the clinic for dry eye disease.

Or are you just waiting for that to get that before moving forward.

And as a follow up just wondering if you could provide any early thoughts on the trial design for the indication.

We are waiting for the <unk>.

Because once that is done then we can reference that file.

For all of the product that preclinical and safety information saves us a lot of time. So the idea would be with the product. We could go directly into phase III, we've spoken with the FDA. It would be two relatively short term.

Phase III studies, because the initial indication would be an acute dry eye.

So this would be used as an adjunct for flare ups for example.

<unk>, which is common because the current dry eye products.

Don't do a particularly good job at solving the issue. So we've had the discussions we know what the design would be and we are waiting at this point for the approval because to go forward, we would want to reference the approved drug.

Very helpful. Thanks, so much.

Uh huh.

Our next question comes from Matt Kaplan.

Nathan Pig Tillman. Please go ahead.

Oh, Hi, this is Raymond in for Matt Thanks for taking our questions and congrats on all the progress I.

Just wanted to ask about perhaps the drivers in moving parts for <unk> revenue as the launch.

Uh huh.

In near term and I was wondering is it state licenses sales force rollout.

Additional color would be helpful and I just have one follow up question.

Sure and thanks for calling.

Eight licenses are falling into place. So at this point, it's manufacturing, which is underway. So we need to get the product into the warehouse in January the.

Two sales force leaders have been hired they are now going to higher the remainder of the sales force and Thats time for when the product actually is available.

So at this point everything is moving the way, we would expected and I would anticipate for sales at the end of January.

Do you see that.

And I guess.

And you mentioned in the prepared remarks, the Gen. Two device the FDA mentioned.

Clinical efficacy is that more superiority or non inferiority over eye drops.

Well I'll give you an example, and I'll use safety as an example, we know that the arbitrage it delivers one fourth or one fifth of the dose for example of conventional eyedrops. So if you use beta blockers as an example, if you take a beta blockers and eye drop and this is in the literature. It actually slows your heart rate.

By one or two beats per minute as a systemic side effects because the majority of that beta blocker youre going to end up drinking because youre overdosing. The eye. If you use the after jet you will have significantly less available systemically and it is likely that we would be able to show that you don't have that impact that safety impact.

Because you are getting the lower dose that's the kind of thing that could end up in the label to differentiate the product.

I appreciate the color and I'll hop back in the queue. Thanks.

Yeah.

Our next question comes from.

Stock comp is.

Please go ahead. Thank you very much hi, Mike I want to ask you a question about a P. P. One three bond.

And I was wondering I was very excited to talk about the dry eye application because that's.

Seemingly a very large market could you discuss to the extent you have data in the U S. The size of that market.

How much of it is hydro and restasis versus over the counter drops and you mentioned initially.

You'll be competing in the acute dry eye segment, how big of the total dry eye market is that and it seems like this would be a perfect drug to be putting the gen. Two oxygen device how much more.

Do you think that could potentially expand the use of.

The drug is given that you'd have it available and not forget thanks, so much.

Thank you Len and I think I'm going to steal that a P. <unk> <unk>.

One three bond from now on it's easier to say.

We think it's a tremendous opportunity and let me start with why in the after jet and I'll go back to when we talk to the FDA about.

Differentiating the after jet from an eye drop one of the issues with steroids as a class is that historically.

When you use them for an extended period of time, they can cause something called an IOP spike which is a transient intraocular pressure.

The increase which you don't want to see in patients who are sensitive like patients who have glaucoma. So the FDA is very concerned about that now cabela's. All the formulation we have in clinical trials, we only saw that in one patient out of 180, which is basically the same as you would see in the general population without drug. So we think this.

As a particularly good drug for dry eye, because you don't see the IOP spike to begin with but the benefit of using the after Jeff is because you're delivering one quarter of the once if the dose is that if these IOP spikes are related to dosing you should see it even less which would be the additional benefit while still getting the.

Dry eye.

In inflammation relief. So that's why we wanted to put it into the options yet to get that additional benefit as for the market opportunity for people who are on cyclosporin, there restasis or on let's say the grass. Many of you know that that's not enough and you're still using artificial tears and you're still having problems. So this.

Would be a product if approved that you would use for those those times, where it's getting just a little bit too much and you need something for 14 weeks to calm down the ocular surface.

In terms of market size it doesn't really compete with the other drugs. That's used in addition to them from.

From time to time, there are millions and millions of patients out there. So this could easily be a multibillion dollar opportunity for the right drug and we think we have something that is really special with AEP won three bonds.

Okay, and secondly could you comment on when the micro Pine studies would be complete either by Boucher optics. So the drug could be ready for filing given that that market, especially.

Post pandemic and younger folks spending so much time on their cell phones by either texting or playing video games for the incidence of progressive myopia is increasing it seems like it's a very large market.

Yes, I can't speak for either of those companies as they are operating their own studies I can tell you that in previous conversations I know that they would like to finish their enrollment in 2024. So assuming that's the case, it's three years to an efficacy endpoint.

After that which would take you to the end of 2027, So I think any kind of filing would probably be in 2028, great and when you referred to it as bond I'll take a little like CRP with my name afterwards, so [laughter]. Thank so much.

Fair enough. Thank you.

Yeah.

Thank you ladies and gentlemen, we have reached the end of the question and answer session I will now hand over to Michael.

Sure.

Yeah.

Thank you operator, and thank all of you for joining us today and that concludes today's call. We are very pleased with the year. We have had so far and we're excited to close out 2023 with strong momentum. So thank you again for joining US we look forward to our full fiscal year update in March or April of next year.

Thank you ladies and gentlemen that concludes today's event. Thank you for joining us and you may now disconnect your lines.

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