Eyenovia, Inc.
Q3 2018 Earnings Call Transcript

Published: 13 Nov 2018

[Operator:]

Good day ladies and gentlemen and welcome to the Eyenovia Incorporated Third Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Tram Bui of Ruth Group. You may begin.

[Tram Bui:]

Good morning, and welcome to Eyenovia's Third Quarter 2018 Earnings Conference Call and Audio Webcast. With me today are Dr. Sean Ianchulev, Eyenovia's Chief Executive Officer and Chief Medical Officer; and John Gandolfo, Eyenovia's Chief Financial Officer. Earlier this morning, Eyenovia issued a press release announcing financial results for the three months ended September 30, 2018. We encourage everyone to read today's press release as well as Eyenovia's quarterly report on Form 10-Q which will be filed with the SEC later today. The company's quarterly report and press release will also be available on Eyenovia's website at www.eyenoviabio.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 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 this 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 is subject to a number of risk including risk related to fluctuations in our financial results, risks of our clinical trials, including but not limited to the initiation, timing, progress and results of such trials, the timing and our ability to submit applications for obtain and maintain regulatory approvals for our product candidates. Estimates regarding the potential market opportunity for our product candidates, our ability to attract to maintain key personnel and other details in and qualified by the cautionary statements contained in Eyenovia's press releases and SEC filings including its most recent annual report on Form 10-K and subsequent filings. This conference call contains time sensitive information that is accurate only as of the date of this live broadcast November 13, 2018. 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 requisite applicable securities law. With that, I'd like now to turn the call over to Dr. Sean Ianchulev.

[Sean Ianchulev:]

Thank you, Tram, and welcome everyone to Eyenovia's Third Quarter 2018 Earnings Conference Call. Over the course of 2018, we've worked diligently to advance our clinical program and now with the acceptance of our IND application for MicroStat for mydriasis, we expect to initiate our first Phase III study later this month. We also look forward to initiating two other Phase III studies for MicroPine for myopia progression; and MicroProst for chronic-angle closure glaucoma over the next four to six months. As we work to further support this upcoming trial, we have continued to develop and solidate our proprietary high precision microdose technology platform, which we recently branded the Optejet and remain very excited in the prospect of ushering in a paradigm in the way we treat cramp and back of the eye conditions. We have been active this past quarter presenting at multiple ophthalmology conferences as well as getting our PG21 study recognized in the fourth coming publication by the peer review journal Clinical Ophthalmology. In addition, we are pleased to announce that we have settled our previously disclosed litigation with certain former shareholders of Corinthian. Before I dive into our clinical programs and recent activities at ophthalmology conferences, I would like to highlight again our trademark submission for Optejet, which we have selected as the brand name for our proprietary container closure system to deliver microdoses of ophthalmic therapeutics. After identifying potential brand names and meeting with physicians, we decided Optejet was not only appropriate for our enabling technology, but also helpful and memorable for physicians we spoke with. The name itself can be broken down into three parts

[John Gandolfo:]

Thank you, Sean. And once again, thank you, all, for joining us this morning. For the third quarter of 2018, we reported a net loss of approximately $4.3 million or $0.43 per share, compared to a net loss of approximately $900,000 or $0.10 per share for the third quarter of 2017. Research and development expenses totaled approximately $2.5 million for the third quarter 2018, compared to approximately $600,000 for the same period in 2017, an increase of 336%. Third quarter 2018 R&D expenses included approximately $240,000 of non-cash stock compensation expense. The increase in research and development expenses reflects increased personnel, clinical engineering and drug formulation expenses associated with the continuing development of the company's pipeline of drugs. For the third quarter of 2018, general and administrative expenses were approximately $1.8 million compared to approximately $300,000 for the third quarter of 2017, an increase of 482%. Third quarter 2018 general and administrative expenses include approximately $223,000 of non-cash stock compensation expense and $150,000 associated with the aforementioned Corinthian litigation settlement. The increase in 2018 general and administrative expenses is a result of increased personnel and professional fees as well as costs associated with being a public company. Total operating expenses for the third quarter of 2018 were approximately $4.3 million compared to total operating expenses of approximately $900,000 for the same period of 2017, an increase of 388%. As of September 30, 2018, the company's cash balance was approximately $21 million and we believe that we have sufficient cash balances for at least the next 12 months from the date the financial statements are issued allowing us to progress our pipeline of programs towards Phase III development and over-the-counter registration. That concludes our financial statement remarks. I would like to hand the call back over to Sean for closing remarks.

[Sean Ianchulev:]

Thank you, John. With multiple shots ongoing our clinical pipeline and our continuing success is validating our Optejet technology through ancillary studies such as the PG21, we believe that Eyenovia is well-positioned to execute on all of our stated milestones. Over the next several months, we expect to prepare IND applications for our MicroPine and MicroProst programs and look forward to initiating our Phase III trial for MicroStat for diagnostic mydriasis this month. In parallel, we are continuing to develop our commercialization strategy with the over-the-counter registration of MicroTears on the horizon. That concludes our prepared remarks. We'd now like to open the call for questions. Operator?

[Operator:]

Thank you. [Operator Instructions] Our first question comes from Scott Henry with Roth Capital. Your line is now open.

[Scott Henry:]

Thank you and good morning. For starters, on MicroStat, I believe the press release speaks of initiating your first Phase III study. I just wanted to confirm. I believe you're going to have to do two Phase IIIs. Were you still planning to do them concurrently and should we have data for both of them in the first half of 2019?

[Sean Ianchulev:]

Good morning, Scott. Yes. That's a good clarification. The program as I also mentioned earlier, the Phase III program includes two Phase III studies. Those studies will be operationalized quite simultaneously -- maybe not exactly at the same time, but within weeks of each other. And yes, we do expect to have the results of both trials sometime in the first half, maybe first quarter of 2019. This is a very fast-paced program and it's a really big indication with a lot of patients. We're talking about meaning also 80 million dilations happening every year. But ultimately, the outcome we're looking at is a very immediate outcome, which is the pupil dilation. In this case, within 30 minutes, which is the relevant outcome for the endoscopic [ph] exam. So, Ginger Classby who is our VP of Clinical Operations and who has done that for decades, she has really prepared a really acute program of execution and we look at the time line. I think there is a fair amount of confidence that we'll be able to execute on those trials in fairly short sequence of each other and have the results of the Phase III bulk studies sometime in 2019.

[Scott Henry:]

And congratulations on the MicroStat IND. I apologize if you mentioned this in your prepared remarks, but could you give us the time line for the INDs for MicroProst and MicroPine?

[Sean Ianchulev:]

Yes. I'll now start with MicroPine because we really prioritize that program quite a bit. We've had some very good success on the formulation fronts for MicroPine and again, in talking to investors over the past few years and months, we understand the urgency of that program and also the significance. Definitely myopia and progressive myopia, we appreciate is a very big unmet need not only in the U.S., but globally. I think the goal in the next few months, she submits both the INDs for MicroPine and for MicroProst, and ultimately to have the enabling trial initiations of both programs in the first half of 2019. Again, the INDs really follow and the whole point of the INDs is to enable the precipitation in [ph] and the initiation of the Phase IIIs and we are looking to initiate both the MicroProst and the MicroPine Phase IIIs as we've mentioned before in the first half of next year.

[Scott Henry:]

Okay, great. And then just a final question on the income statement. R&D, should we expect that to ramp up significantly in Q4? And then with regards to G&A, if I pull out the $150,000 for the litigation, is that a reasonable run rate for Q4 or perhaps a little lower than that? Thank you.

[John Gandolfo:]

I think that the G&A, once you take out the litigation-related expense and the non-cash stock compensation expense we alluded to, we expect it to run at those levels as we look through to the end of 2019. In terms of the R&D, we do expect that to increase as we start getting more involved in the Phase III studies. So we anticipate it to be roughly in the areas probably about $2.5 million to $3 million per quarter going forward.

[Scott Henry:]

Okay. So the $223,000 non-cash comp, was that a one-time event, or will that be a recurring expense in that line in the G&A?

[John Gandolfo:]

I wanted to describe it as a one-time event, but it's an extent that it's tied to the stock price of the company, so it's hard to estimate. It's associated with the non-cash value of stock options prior to the company's stock price. It fluctuate from one quarter to the next quarter. That's why I highlight it because it is [indiscernible] for one; and secondarily, because it's absolutely tied to the stock price, so it's hard to progress [ph].

[Operator:]

[Operator Instructions] Our next question comes from Yi Chen with H.C. Wainwright. Your line is now open.

[Yi Chen:]

Thank you for taking my question. My first question is can you please elaborate, design of the Phase III MicroStat trial and how is that different from the previous one or three trials?

[Sean Ianchulev:]

Hi, Yi. Again, this is a registrational study and the design of our Phase III program was really down with in collaboration and very close working with the FDA. Again, the design or the Phase III program here includes two -- one of them is the microdose. It's a randomized control study of the microdose fixed combination, phenylephrine and tropicamide versus the microdose of the components. So, versus microdose phenylephrine, versus microdose tropicamide. And again, the outcome of that study is the amount of pupil dilation change from baseline. This is also done in photopic conditions which is very different than the study which we did earlier on dilation where we used scotopic conditions. The difference between photopic and scotopic conditions is really the ambiant illumination. When you have photopic conditions, you do have very bright light and your baseline starting point of your pupil is at about 1 to 2 millimeters versus 4 to 5 millimeters in scotopic condition, which was the case for our earlier study. So the dynamic range of pupillary response we're going to have in photopic would be much greater which allows us a lot more run rate with the outcome. Second, the second study is really another validation trial which was required by the FDA where you use the fixed combination of microdose tropicamide and phenylephrine. Again, artificial tears against a true control, placebo control. And again, that is a study that would run with the same outcome which is 30 minutes pupil dilation. Again, those studies are specific to pupil dilation in mydriasis and when we've reviewed the literature and our prior studies on the pharmacodynamic response, we are very much optimistic that we will demonstrate the dilation effect that we've seen before. Although those trials are different in terms of the exact time points and the exact combination formulation that we have before, again, we can definitely wait for the results and see. But again, the results should be available hopefully in the first quarter of 2019.

[Yi Chen:]

Got it. Just to clarify. Conventional eye drops will not be used in Phase III trial. Is that correct?

[Sean Ianchulev:]

Yes, that's a good point. The first trial is purely microdose comparison. You have microdose fixed combination versus microdose components. And there is no eyedropper because as the requirements from the FDA phase, you need to show the contribution of components, but it could be in the same form. So we're not running eyedroppers, we're just doing the fixed combination microdose versus component microdose, which is also the case for the other second study against control. Yes, you're right, we're not running those against eye drops.

[Yi Chen:]

Got it. Okay. Regarding the OTC registration for MicroTears, do you expect any hurdles at all for that process, or is it simply a filing of the forms?

[Sean Ianchulev:]

Yes. My job is to expect hurdles every day and deal with hurdles. I think again, we will have to see how the program comes through. One of the benefits of artificial tears is really over-the-counter and it follows the monograph registration. We will not be doing clinical studies per se to enable registration, but at the same time, I can foresee how down the road once we registered, we can run multiple post marketing studies because we think the technology is so different in the way it delivers coding and microdosing of the tears and the ocular surface directly versus the artificial tears where you do an indirect application through the [indiscernible]. So we'll probably do a lot of studies down the road post marketing to highlight the benefits of the technology, but from a registration perspective, it follows the standard pathway of artificial tears. I think my team is really focused to make sure that all of our scale up, manufacturing, quality assurance, all these things that go in a very harmonized way to ensure you have an effective launch of successful product, they all have to happen. But again, the regulatory stage is [ph] very different than all of our other programs.

[Yi Chen:]

Got it. Thank you.

[Sean Ianchulev:]

Thank you, Yi.

[Operator:]

Thank you. This concludes today's Q&A session. I would now like to turn the call back over to Sean Ianchulev for closing remarks.

[Sean Ianchulev:]

We have no further remarks here. Thank you very much.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.