Eyenovia, Inc. (EYEN) on Q2 2021 Results - Earnings Call Transcript
Operator: Thank you for standing by. This is the conference operator. Welcome to the Eyenovia's Second Quarter 2021 Earnings Call. As a reminder all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would like to now turn the conference over to Eric Ribner, Investor Relations. Go ahead please.
Eric Ribner: Thank you. Thank you. Good afternoon, everyone, and welcome to Eyenovia's second quarter 2021 earnings conference call and audio webcast. With me today are Eyenovia's Chief Operating Officer, Michael Rowe; and Eyenovia's Chief Financial Officer, John Gandolfo; Dr. Sean Ianchulev; Eyenovia's Chief Executive Officer and Chief Medical Officer, has an unavoidable conflict, which rose and is not able to join today's call. Earlier this afternoon, Eyenovia issued a press release announcing financial results for the three and six months period ended June 30, 2021. We encourage everyone to read today's press release, as well as Eyenovia's quarterly report on Form 10-Q for the quarter ending June 31, 2021, which will be filed with the SEC. The company's press release and quarterly report also will be available on Eyenovia's website at 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 products, 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 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 are subject to a number of risks, including risks related to fluctuations in our financial results, 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 a going concern, our estimates regarding the potential market opportunity for our product candidates and potential revenue from licensing transactions, reliance on third parties, the ability of us and our partners to timely develop, implement, and maintain manufacturing, commercialization, and marketing capabilities and strategies for our product candidates, risks of our and our licensees clinical trials including, but not limiting to, the cost, design, initiation, and enrollment, which could be adversely impacted by COVID-19 and resulting social distancing, timing, progress, and results of such trials. The potential impact of COVID-19 and related economic disruptions on our supply chain, including the availability and sufficient components and materials used in our product candidates, the timing of and our licensees ability to submit applications for, obtain and maintain regulatory approvals for our product candidates, changes in legal regulatory and legislative 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, August 11, 2021. 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 Chief Operating Officer, Michael Rowe. Michael?
Michael Rowe: Thank you, Eric, and welcome everyone to our second quarter 2021 earnings conference call. The clear highlight since our last quarterly update is the positive data from our Phase 3 VISION-1 study that we announced in May. VISION-1 evaluated the safety and efficacy of our proprietary pilocarpine solution, MicroLine, versus placebo with both being administered using our novel Optejet dispenser. VISION-1 met its primary endpoint with a 7.7 fold higher rate, a three or more line responders in mesopic distance corrected near visual acuity for the MicroLine 2% arm compared to placebo, which was statistically significant and enabled us to select this dose for our second registration trial called VISION-2. In this study, MicroLine have a favorable safety profile. Adverse events were all mild in nature, and there were no serious adverse events. Headache, a frequent issue with pilocarpine delivered as an eye drop was seen in fewer than 3% of patients treated with MicroLine. This compares very favorably with the up to 20% that has been observed with other pilocarpine eye drop formulations. In a post-study survey, 71% of study participants reported strong interest in using MicroLine for near vision improvement should it be approved. These patients said that they would expect to use the product three or four times per week on average. We are very proud of these study results, which is why we are moving rapidly into VISION-2, which I will discuss later. MicroLine is not the only drug being developed for presbyopia. We believe however that MicroLine will offer the best combination of attributes that will lead it to be a treatment of choice. First, in the VISION-1 study, MicroLine has been proven to work in the Phase 3 rigorous FDA registration study under highly controlled and validated conditions. Further VISION-1 produced efficacy outcomes under mesopic or low-light conditions. Some other presbyopia treatments in development reports photopic treatment outcomes such as bright ambient light conditions, which can significantly inflate the therapeutic effect due to the avid stimulation of bright light and higher contrast, both of which can increase visual acuity measurements. This is an important distinction because in actual practice, presbyopia is more likely to impact functional vision in lower light conditions such as when trying to read a restaurant menu. Another important distinction of MicroLine versus other therapeutics in development is MicroLine is the only one being developed for on-demand use. In other words, there is no need for chronic dosing every day or even twice a day for this therapy to work. Finally, MicroLine is administered by our Optejet dispenser, which is far easier to use and more accurate than traditional eyedroppers and has been shown in multiple studies to achieve the same or better efficacy as an eyedrop with better tolerability due to 80% less exposure to drug and preservatives. Needless to say these results strongly support continued developments of MicroLine and to that end we are planning a second Phase 3 study, VISION-2 that we expect to initiate by the end of the year. VISION-2 will be a registrational double-masked placebo-controlled superiority trial of 2% micro-array print pilocarpine versus placebo. We aim to enroll about 100 subjects into the study and anticipate top-line data in mid-2022. With a positive outcome of VISION-2, we plan on moving towards a new drug application or NDA later in the year. The presbyopia market is significant. In the U.S. alone, there are estimated to be 18 million people between the ages of 40 and 55, who suffer from presbyopia, who never had to wear glasses prior to having difficulty with near vision. This translates into a multi-billion dollar potential marketing opportunity. MicroLine is also intended as an on-demand companion product to reading glasses, for instances when readers is inconvenient or undesirable. When you look at the clinical results, our plans for VISION-2 and the benefits of our Optejet dispenser, we believe we can capture a significant share of the market should MicroLine be approved. Turning now to MydCombi, which is our unique fixed combination of two leading mydriatic medications or pupil dilation agents. As we announced last quarter, the FDA has confirmed our PDUFA date for October 28th of this year. MydCombi is a diagnostic agent with meaningful potential benefits to both the practitioner and the patient. For the practitioner, there is the potential to increase patient throughput without increasing costs. With MydCombi doctors and staff can spend less time putting different eyedrops into patients, including those that help minimize the sting of the current formulations. On a daily basis we believe that over an hour of exam room time could be reclaimed just by switching for this faster, more comfortable option. And for patients, since there were no protruding parts with the Optejet and a recess nozzle, MydCombi is far less likely to touch the surface of the eye as compared to a conventional eyedropper. This results in a potential decrease in cross-contamination and improved patient safety, something that resonates loudly in the COVID-19 era. Also as mentioned, the product was reported to be very comfortable in use in our clinical studies. All of these benefits we hope will translate to more people being willing to undergo a comprehensive eye exam. Market research suggests that millions of people fail to get a comprehensive eye exam every year due to the discomfort and other side effects of traditional mydriatic drops. MydCombi may be able to address these issues and doctors may be able to further encourage people to take better care of themselves by having a comprehensive eye exam. The market opportunity for MydCombi is substantial though an estimate of 100 million office-based comprehensive and diabetic eye exams, and 4 million ophthalmic surgical dilations performed annually in the United States alone. We estimate this market to be approximately $250 million annually. If approved, we plan to target high volume practices in the 10 largest U.S. metropolitan areas with just 10 sales professionals to be hired initially. To help maximize this efficiency and create the opportunity for quick payback, our salesforce will initially address the top 20% of eyecare practices in terms of total patient volume and expand from there. Together with our agreement with EVERSANA, we believe we are well positioned to initiate a commercial launch soon after approval pending no disruptions due to COVID-19 on our supply chain. We're called the MydCombi as a cash pay model and purchased directly by the doctor's practice and this means no interaction with managed care plans, pharmacy benefit managers, and others who may control formulary placement and reimbursement. In addition to the commercial benefits associated with MydCombi approval, there's also the strategic importance of demonstrating that our Optejet technology can be reviewed and approved by the drug division of the FDA. This technology underscores all of our projects and the approval would help de-risk those projects as well. Now I'd like to share some exciting news about our Optejet digital health system and our ongoing efforts to enable a remote therapeutic monitoring platform for all of our smart microarray print pharmacologic projects. Earlier this year, we shared exciting compliance data from one of our Phase 3 trials showing that subjects were on average 90% compliant using the Optejet dispenser. This compares favorably to the 50% compliance rate typically recorded for eyedropper bottles. Since the technology in the Optijet has the potential to become the first smart delivery system for pharmacologic eye treatments. With fully embedded digital health functions, we will be able to track therapeutic compliance and adherence almost 100%. And our demonstration project from our ongoing Phase 3 trial was well informative to that effect. The Optejet digital health system could be the first to enable smart pharmacological eye therapy and digital health for chronic eye diseases. This will not only open a new pathway for smaller, more personalized eyecare, but may enable a new reimbursable paradigm for remote therapeutic monitoring. The American medical association manages the procedure code set that physicians and other health professionals use to identify the services for which they bill. These codes are commonly known as the CPT code set, which stands for current procedural terminology and our standard billing Lexicon for medical services. During a recent meeting of its editorial panel, new CPT codes for remote therapeutic monitoring were approved with five new codes that will become effective in January, 2022. Some will cover acquisition and review of compliance and adherence data for pharmacotherapy. And this may provide a pathway for providers and clinics to get reimbursed for such care. We are closely monitoring the CMS and payer adoptions of remote therapy monitoring and other Telehealth initiatives, as we work to create and enable the first pipeline of smart eye therapeutics with our Optijet remote therapeutic monitoring platform. We look forward to a time in the near future when doctors will be able to deliver better smarter care that is covered under a potential remote therapeutic monitoring CPT code. I would now like to turn the call over to our Chief Financial Officer, John Gandolfo, to provide a brief update on our licensee agreements as well as our financial update. John?
John Gandolfo: Thanks, Michael. I'll start with a brief update on our licensing agreements with Bausch Health and Arctic Vision. Recall that we entered into agreements to further development of our investigational treatment for the reduction of Pediatric Myopia progression, which we call MicroPine. MicroPine is a preparatory atropine formulation that 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, and vision loss. Our agreement with the Arctic Vision covers greater China and Korea, while our agreement with Bausch covers the U.S. and Canada. To-date, we have received $16 million in upfront and milestone payments and we have the potential to earn up to $100 million in development milestones over the next four years, as well as significant sales royalties and cost savings, if ultimately approved. Development is progressing as planned, and we are continuing to evaluate potential licensing partners covering other key geographical territories. We are also assessing pipeline expansion opportunities as we believe we can leverage the Optijet technology to address unmet needs and additional large ophthalmic indications. As we indicated the last quarter, some examples include anti-infectives, anti-inflammatories, dry eye and glaucoma each with significant market opportunities. Interestingly, as Michael noted above, we have also seen recent news that physician charges and payments to telemonitoring of things like medication compliance that become routine in the near future, which is a perfect match with the capabilities of our Optijet dispenser. This could be especially important in a disease like glaucoma, where medication compliance with traditional eyedroppers is notoriously poor. We have nothing to definitive to share on this front today, but we do look forward to keeping you apprised of our progress. Of course, the beauty here is that these development activities would be at least partly funded by outsourcing opportunities such as those just described. Now, I would like to review our financial results for the three months ended June 30, 2021. But the second quarter of 2021, we reported a net loss of approximately $4.9 million or $0.19 per share, and this compares to a net loss of approximately $5 million or $0.25 per share for the second quarter of 2020. But the second quarter of 2021, the company reported licensee revenues from an Arctic Vision license agreement of $2 million and a corresponding cost of revenue representing payments to send you a $800,000. Research and development expenses totaled approximately $3.6 million for the second quarter of 2021. And this compares to approximately $2.9 million for the same period in 2020, an increase of approximately 24%. But a second quarter of 2021 G&A expenses were approximately $2.4 million compared with approximately $2.1 million for the second quarter of 2020 and increase of approximately 14.3%. Total operating expenses for the second quarter of 2021 were approximately $6 million compared to a total operating expenses of $5 million for the same period in 2020. This represents an increase of approximately 20%. I would like to note that operating expenses included approximately 637,000 of non-cash stock compensation expense as of June 30th, 2021, the company's cash bound for the approximately $27.2 million, and this figure includes approximately $7.5 million in initial net proceeds from the $25 million credit facility with Silicon Valley Bank that we received in May of this year. We believe our current cash resources and the initial SVB loan proceeds provide the company with sufficient cash into the end of the third quarter of 2022. Our current cash resources inclusive of the SVB was sufficient to bring out MydCombi, Mydriasis product through the NDA process and commercial launch, complete our presbyopia, our clinical programs for MicroLine and complete the preparation of our pilot manufacturing facility, In closing, we are very pleased with our performance during the second quarter and subsequent period. To summarize our key highlights today, results for our VISION-1 presbyopia study were positive, and we are rapidly advancing our Phase 3 presbyopia program. We anticipate initiating a second Phase 3 trial VISION-2 by the end of the year with top-line data expected in mid-2022. We look forward to in October 28th PDUFA date pertaining to our MydCombi NDA, which if approved gives us our first commercial product and validates our Optejet dispensing technology. Our licensing agreements with Arctic vision and Bausch Health are progressing well and continue to offer the potential for meaningful development and regulatory milestones, which represents non-dilutive funding that if realized we can use to expand and advance our pipeline of novel therapeutics leveraging our MAP technology. We believe we are well positioned to achieve multiple commercial, regulatory and development catalysts this year and next for the benefits of patients and shareholders alike. That concludes our prepared remarks. We would now like to open the call to questions. Operator?
Operator: We will now begin the question-and-answer session. The first question comes from Tim Chiang, Northland Capital. Go ahead please.
Tim Chiang: Hi, thanks. Michael, could you talk a little bit about some of the learnings coming out of the ASCRS conference that recently happened, obviously Allergan did show some additional data on their presbyopia product. I think what – incidence of headache was around 14%. So, obviously, you have a product here that has a much more favorable side effect profiles. So I think that's a positive. But could you provide – I don't know, just some commentary posts that conference.
Michael Rowe: Yes. Hi, Tim, and thanks for the question. I think the thing that was most striking to me was the increase in interest of presbyopia therapies and of drug therapies to treat presbyopia and just the last year just seeing how really the interest has exploded, how the interest by prescribers, by practitioners, how they are thinking about including these therapies into their practice and seeing them as a potential opportunity to bring in patients who the otherwise never would have seen because they just go to the drugstore to get their readers. So everybody is very much excited about it. In terms of the studies, and I'm glad that Allergan was able to share their data. And when we're in a position to file our NDA, I'm looking forward to being able to do the same. What I did notice is that each of these studies are somewhat different from each other. So it's very hard to make a cross study comparison between the results. For example Allergan and we did our studies in mesopic or dark light conditions where some of the other people did theirs in bright light, which is much easier to get a positive answer, the different age groups that are included, the different amount of presbyopia that people have between the different studies. We did take a look at our data and try to see, well, if we included patients similar to what you saw in the Allergan study, which is not a scientific way to do things because it's post hoc and it's not a lot of people, but basically the results we saw in terms of efficacy were very much the same as what Allergan did. So I think in the end, the important thing is that I see a number of products that could end up getting approved. But in the end, I believe that doctors are going to prescribe based on what the patient's match is for that product, whether they want something they can use on demand or use it once a day, or if they want someone – if someone wants to use it twice a day, it's really going to come down to matching the patient with the product, which eye doctors are very used to doing. Hope that helps. Thank you.
Tim Chiang: You know that helps. Thanks, Michael.
Michael Rowe: Thanks, Tim.
Operator: The next call comes from Matt Kaplan, Ladenburg Thalmann. Go ahead, please.
Matt Kaplan: Hi, Thanks for taking my questions, Michael and John. Just wanted to – can you give us a quick update in terms of where you are with respect to MydCombi, I guess, with the PDUFA date now quickly approaching in October. How are your commercial plans coming along and any thoughts on pricing at this point?
Michael Rowe: Yes. Thanks, Matt. Well, we're still going for a date of October 28th. We've got nothing to make us think that's going to be any different, things are going along. We hope to get some labeling from the FDA in the next four, five or six weeks, which will really indicate that things are happening quickly. In terms of commercial progress, we're preparing – we have a new head of sales and marketing. He is going to be hiring his salespeople within the next six weeks. We're going to start hiring those people and putting them into place. Our plans are still to only go with 10 people and the largest population areas. We are working to collect our prospects ahead of time, so that we have places to go when we're not making cold calls coming out the door. EVERSANA, our partner on the distribution, meaning they're the ones that are going to be doing the e-commerce, taking in the orders and fulfilling the orders. We're in close contact with them. So that's moving along well. I would say everything is progressing the way that we would hope and no hiccups. In terms of pricing, we're operating on a price at launch of about somewhere between 110 and 120 a cartridge and you get about 75 patients out of each cartridge. So, that's coming out to about $1.25 or $1.35 per patient. We've now been testing this price with potential customers. They find it to be very, very reasonable. And at that price with a cost of goods of about $18 a cartridge, it's a very nice margin for us. What else can I tell you?
Matt Kaplan: No, that's very helpful.
John Gandolfo: And that's the same pricing basically that they're spending today for the eyedropper bottles on dilation. So, basically, they get a – what we believe to be a superior product for the same pricing.
Matt Kaplan: Same price point, okay. And since there's no need to secure reimbursement and coverage that way, how should we think about kind of the trajectory of the launch once it's out there?
Michael Rowe: Yes, it's unlike a normal "normal pharmaceutical product" where you have to wait for patients to come in. This is limited by how fast we can go and train the offices because we do want to physically go and train people and make sure they have a great experience with the product. So I would look at this as – and our assumptions are – or our plan is to be able to get to about 10% of the offices converted within the first year.
Matt Kaplan: Okay, okay. That's great. Thanks. And then just switching gears to the MicroLine and your second of Phase 3 of the VISION-2 study. Any learnings on VISION-1 that you're applying to VISION-2 at your – you got very successful results from the first study. Anything that you're modifying in the second?
Michael Rowe: I think VISION-2 is going to look very much like VISION-1, except we don't need to have the 1%, so we know which dose we're going with. John, do you want to add anything to that?
John Gandolfo: No, I think that's basically pretty accurate. I think that's currently the plan. It's going to look similar except we're only going to have the windows at.
Matt Kaplan: Okay, good. And then last question, in your prepared remarks, John, you spoke about potential expansion using the Optejet delivery technology into other products. What – how should we think about the timing on potential additional products either via licensing or organically internally developed?
John Gandolfo: So I would say that we have multiple discussions ongoing. It's tough to handicap the exact timing of things. I think because we have multiple ongoing, I think that I'd like to see us get one in place by the end of this year. I'm not sure that time we'll work out, but we feel pretty confident that we'll be able to move forward with different collaborations.
Matt Kaplan: Great. Well, thanks for all the detail and good luck going into your PDUFA date in October.
John Gandolfo: Thank you, Matt.
Michael Rowe: Thanks, Matt.
Operator: Our next question comes from Len Yaffe, Stoc*Doc Partners. Please go ahead.
Len Yaffe: Thank you very much. Michael, I was going to ask several questions. I'm trying to square the circle between the current valuation of the company and the market opportunity. So I'll just throw out a couple of questions and please answer then how you'd like. The first is at the ASCRS Conference that Tim was referencing. One of the things that impressed me was the group of people you've assembled in terms of the sales and marketing, customer interaction all across the board until FDA interaction. So I just thought it might be a value to go through the number of years of experience and prior associations that you've all had together working at some of the top companies? The second thing I was wondering is with MydCombi, you talk about it being a $250 million U.S. opportunity. Could that drug potentially with Optejet add a breakeven or profitable level to Eyenovia exiting its first year in the market? And if that's the case given again that it's not a large salesforce with significant detailing, it could end up just defying the current market cap pre-MicroLine and MicroPine. And then on MicroLine with the alleging data that we saw and perhaps it might be Allergan, AbbVie have talked about the speed of $500 million to a $1 billion market. It seems like with the alliances study, they had a very large placebo effect, which I thought was odd in terms of patients who were not on active drug in the clinical study. I think it was 10% we're actually getting three lines of improvement. And I thought that was odd given that these are presbyopia patients and it would be tough to generate that unless you were seeing near 2040, and then maybe want to leading of the eyedrop. So I was wondering if you could talk about your understanding if I'm right about that with the high placebo effect and to the extent that that could skew the data that they were able to show in terms of the net benefit and how you're positioned with the patients that you have in your study where you may not get as high a placebo effect, but you may show a greater net difference? Thank you so much.
Sean Ianchulev: Wow. Thank you, Len. I've been taking notes furiously through that, let me start with the last question about the alleging results, and I think – the thing I would probably look at is the entry criteria. So they had patients in their study that could have had VISION at 2040. And we had patients in our study where the best you could have coming into our study is 2050. And I would guess if you have patients coming in at 2040, it could be possible on any given day, they may be able to read something without any help. So you might find a larger placebo rate just due to that. But I think that what they're looking at, and I don't want to talk for Allergan, AbbVie, but they're looking at the Delta between their active group, and their placebo group, which I think was 20 percentage points and that's what they would point to. And as I said, we don't have enough of the patients to match theirs. For example, we don't have anybody with 2040 in our study. But just kind of looking sort of, kind of, we see results that, we're very happy with compared to their results. And that's the best I can say about that. So I hope in the end they get approved. I'd love to see them get approved and open this market up. I think it's a lot bigger than $500 million to $1 billion, and that will only help us when we eventually get to the market. The question about the money, I think I'd like to turn that over to John. John, do you want to take that now? Or do you want me to talk about placebo? Go ahead, John.
John Gandolfo: Now, I can talk about, certainly talk about it. So the question basically was that we think at the end of the one year that it will be providing positive contribution margin to the company? I think the first year is difficult to do that because usually you start off with a controlled launch. I would say, I think by the fourth quarter, if you look at it on a quarterly basis, we could be at a point where and in our internal model we've seen this, we think that MydCombi will be contributing positive contribution, meaning that revenue less cost of goods sold, then direct sales and marketing expenses will be positive. At that point in time, I don't think it will cover the first 12 months because I think you'll start-off in a, and I know you'll start off in a loss position.
Len Yaffe: Look four quarters out one-year out.
Sean Ianchulev: Yes. So one way to look at it is, if you think about it as 2023, we definitely show our – show on our internal model that that in that year it's definitely generating a positive contribution margin for the company.
Len Yaffe: Okay.
Sean Ianchulev: So, Mike, I don't know if you want to answer the last piece.
Michael Rowe: I'll answer the next one, about the people and Len, I appreciate the kudos. They are a fantastic team. We have people here with many, many years of experience, not just in drugs but specifically in ophthalmology and optometry and for people who are involved in eyecare, they understand that eyecare is different. And people tend to stay in it for a very long-time. And people know the nuances and our team, and very proud to have them here come from backgrounds in much larger eyecare companies. And now have mainly come here because they want to be able to bring their learning’s and their relationships and their expertise and be part of something they see that's going to hopefully create a revolution in eyecare. So thank you again for that. And for anybody, from I know, view who might be listening and we all appreciate when we're – when we recognized for that. So thank you Len.
Len Yaffe: Yes. Thank you.
Sean Ianchulev: Operator?
Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Rowe for any closing remarks.
Michael Rowe: Thank you. And thank you everybody. This concludes today's call. Thank you for joining us and have a good and safe rest of your day. Bye-bye.
John Gandolfo: Thank you everyone.
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
