Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to COMMISSION FILE NUMBER: 001-38365 EYENOVIA, INC. | --- | --- | --- | --- | --- | |------------------------------------------------------------------- ...

eyenovia Making it Possible | April 2022 eyenovia.com Forward-Looking Statements Except for historical information, all the statements, expectations and assumptions contained in this presentation are forward-looking statements. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions, including estimated market opportunities ...

Eyenovia, Inc. (NASDAQ:EYEN) Q3 2021 Earnings Conference Call November 11, 2021 5:00 PM ET Company Participants Eric Ribner - Investor Relations Dr. Sean Ianchulev - Chief Executive officer and CMO Michael Rowe - Chief Operating Officer John Gandolfo - Chief Financial Officer Conference Call Participants Tim Chiang - Northland Capital Matt Kaplan - Ladenburg Thalmann Len Yaffe - Stoc*Doc Partners Operator Greetings. Welcome to Eyenovia’s Third Quarter 2021 Earnings Call. At this time, all participants are i ...

Making it Possible May 2021 Forward-Looking Statements 1 Except for historical information, all of the statements, expectations and assumptions contained in this presentation are forward-looking statements. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions, including estimated market opportunities for our product candi ...

Financial Data and Key Metrics Changes - For Q1 2021, the company reported a net loss of approximately $5.4 million or $0.21 per share, compared to a net loss of approximately $5.5 million or $0.31 per share for Q1 2020, indicating a slight improvement in loss per share [25] - Research and development expenses totaled approximately $4.2 million for Q1 2021, an increase of approximately 16.9% from approximately $3.6 million in the same period in 2020 [26] - General and administrative expenses were approximately $2.3 million for Q1 2021, up approximately 25.2% from approximately $1.8 million in Q1 2020 [26] - Total operating expenses for Q1 2021 were approximately $6.5 million, representing an increase of 19.7% compared to $5.5 million for the same period in 2020 [26] - As of March 31, 2021, the company's cash balance was approximately $24.9 million, excluding approximately $7.5 million in initial net proceeds from a $25 million credit facility with Silicon Valley Bank [27][28] Business Line Data and Key Metrics Changes - The company completed enrollment in its VISION-1 study of MicroLine, a proprietary pilocarpine formulation for improving near vision in presbyopia patients, with results expected shortly [9][18] - MydCombi, a fixed combination of two mydriatic medications, has a PDUFA date set for October 28, 2021, and is anticipated to transition the company to a commercial stage if approved [7][11] Market Data and Key Metrics Changes - The market opportunity for MydCombi is estimated at approximately $250 million annually in the U.S., with 80 million comprehensive diabetic eye exams and 4 million ophthalmic surgical dilations performed annually [14][15] - The presbyopia market, which affects approximately 113 million people in the U.S., has an estimated market potential of nearly $8 billion [20] Company Strategy and Development Direction - The company has entered into an exclusive agreement with EVERSANA to manage the distribution and order fulfillment of MydCombi, aiming for a streamlined launch process [8][17] - Eyenovia is focusing on out-licensing opportunities and pipeline expansion, leveraging Optejet technology for unmet needs in ophthalmic indications such as anti-infectives and glaucoma [24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the upcoming PDUFA date for MydCombi and the potential for significant market opportunities in presbyopia and myopia treatments [30] - The company believes its current cash resources are sufficient to support operations through the third quarter of 2022, enabling the advancement of its clinical programs [28] Other Important Information - The company announced the addition of Dr. Julia Haller to its Board of Directors, which is expected to provide valuable insights as the company advances its programs [10] Q&A Session Summary Question: Comment on Allergan's Phase 3 study and its implications for Eyenovia - Management noted that while Allergan's study has been completed, they have not yet seen the data to make a comparative analysis, and they are optimistic about their own study's broader age range [34][35] Question: Plans for the VISION-2 study design - Management indicated that they plan to analyze VISION-1 results before finalizing the design for VISION-2, potentially making it more efficient based on the data [38][39] Question: Key endpoints to look for in VISION-1 results - Management highlighted that the primary endpoint is a three-line vision gain at near, but they also emphasized the importance of secondary endpoints and the side effect profile, particularly regarding brow ache [42][44]

PART I [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) The report contains forward-looking statements involving risks and uncertainties that may cause actual results to differ - Forward-looking statements in the report involve risks and uncertainties that could cause actual results to differ materially from projections[13](index=13&type=chunk) - Statements cover estimates for expenses, future revenue, capital requirements, product development, and economic conditions[13](index=13&type=chunk) - The company undertakes no obligation to update any forward-looking statements to reflect subsequent events or circumstances[13](index=13&type=chunk) [Summary Risk Factors](index=5&type=section&id=Summary%20Risk%20Factors) The company faces material risks related to its financial position, product development, and regulatory compliance - The company faces risks related to its financial position, including the ability to continue as a **going concern** and the need for additional capital, which may cause dilution or restrict operations[17](index=17&type=chunk)[18](index=18&type=chunk) - Development and commercialization risks include potential **delays or failures in clinical trials**, difficulties in patient enrollment, inability to develop marketable products, and intense competition[19](index=19&type=chunk)[20](index=20&type=chunk) - Regulatory and legal compliance risks involve potential failure to obtain marketing approval, penalties for non-compliance, and the impact of new legislation[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) [RISKS RELATED TO OUR FINANCIAL POSITION AND NEED FOR ADDITIONAL CAPITAL](index=5&type=section&id=RISKS%20RELATED%20TO%20OUR%20FINANCIAL%20POSITION%20AND%20NEED%20FOR%20ADDITIONAL%20CAPITAL) - The company may not be able to continue as a **going concern**, potentially leading to significant loss for stockholders[17](index=17&type=chunk) - **Additional capital is required** for product development, manufacturing, and commercialization, and failure to secure it could force delays or termination of efforts[18](index=18&type=chunk) - Raising capital may **dilute existing stockholders**, restrict operations, or require relinquishing rights to technologies[18](index=18&type=chunk) - The company has incurred **operating losses since inception** and expects to continue doing so, with no guarantee of future profitability[18](index=18&type=chunk) [RISKS RELATED TO DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCT CANDIDATES](index=5&type=section&id=RISKS%20RELATED%20TO%20DEVELOPMENT%20AND%20COMMERCIALIZATION%20OF%20OUR%20PRODUCT%20CANDIDATES) - Substantial **delays or failures in clinical trials** by the company or its licensees are possible[19](index=19&type=chunk) - Difficulty in enrolling or maintaining patient participation in clinical trials could occur[20](index=20&type=chunk) - The company may not be able to develop marketable products using its technology or successfully implement alternative development strategies[20](index=20&type=chunk) - The **marketing approval process is expensive, time-consuming, and uncertain**, potentially preventing commercialization[20](index=20&type=chunk) - Product candidates may cause undesirable side effects, and market opportunities might be smaller than anticipated[20](index=20&type=chunk) - Commercial success depends on market acceptance, and licensing partners may not exert commercially reasonable efforts[20](index=20&type=chunk) - The company faces **intense competition** and risks from rapid technological change[20](index=20&type=chunk) - Failure to establish and maintain effective manufacturing and distribution processes, and exposure to product liability claims, are significant risks[20](index=20&type=chunk) [RISKS RELATED TO REGULATORY APPROVAL AND LEGAL COMPLIANCE MATTERS](index=5&type=section&id=RISKS%20RELATED%20TO%20REGULATORY%20APPROVAL%20AND%20LEGAL%20COMPLIANCE%20MATTERS) - Inability or delays in obtaining required **regulatory approvals** could prevent commercialization of product candidates[21](index=21&type=chunk) - Failure to obtain marketing approval in foreign jurisdictions would prevent product marketing there[22](index=22&type=chunk) - Term restrictions for products in the U.S. and other licensed jurisdictions may limit manufacturing and marketing[22](index=22&type=chunk) - Substantial penalties may be incurred for **non-compliance with regulatory requirements** or unanticipated product problems[22](index=22&type=chunk) - Recently enacted and future legislation may affect the ability to commercialize products and their prices[22](index=22&type=chunk) - Failure to comply with laws governing operations could lead to penalties, remedial measures, or restrictions on product development and sales[22](index=22&type=chunk)[23](index=23&type=chunk) [RISKS RELATED TO OUR BUSINESS OPERATIONS AND MANAGING GROWTH](index=7&type=section&id=RISKS%20RELATED%20TO%20OUR%20BUSINESS%20OPERATIONS%20AND%20MANAGING%20GROWTH) - High dependence on **senior management team** services[25](index=25&type=chunk) - Limited corporate infrastructure and potential difficulties in managing growth[25](index=25&type=chunk) - Reliance on information technology, with risks of failure, inadequacy, interruption, or **cybersecurity incidents**[25](index=25&type=chunk) [RISKS RELATED TO OUR DEPENDENCE ON THIRD PARTIES](index=7&type=section&id=RISKS%20RELATED%20TO%20OUR%20DEPENDENCE%20ON%20THIRD%20PARTIES) - Limited clinical trial experience and **reliance on third parties** for conducting and managing clinical trials[26](index=26&type=chunk) - Potential need to contract with additional third parties for manufacturing product candidates, especially for commercialization[26](index=26&type=chunk) [RISKS RELATED TO OUR INTELLECTUAL PROPERTY AND POTENTIAL LITIGATION](index=7&type=section&id=RISKS%20RELATED%20TO%20OUR%20INTELLECTUAL%20PROPERTY%20AND%20POTENTIAL%20LITIGATION) - Success depends on the ability to **protect intellectual property**, proprietary technology, and trade secrets[27](index=27&type=chunk) - Patents covering proprietary technology may be challenged, narrowed, circumvented, or invalidated by third parties[28](index=28&type=chunk) - Uncertainty regarding being the first to invent or file for patent protection[28](index=28&type=chunk) - The patent application process is risky, with no assurance of successful patent obtainment[28](index=28&type=chunk) - Changes to patent law could diminish patent value, impairing product protection[28](index=28&type=chunk) - Risk of expensive, time-consuming, and unsuccessful lawsuits to protect or enforce intellectual property[28](index=28&type=chunk) - Failure to comply with intellectual property license obligations could lead to loss of important license rights[28](index=28&type=chunk) - Inadequate protection of trademarks and trade names could adversely affect business and name recognition[28](index=28&type=chunk) [RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK](index=7&type=section&id=RISKS%20RELATED%20TO%20OWNERSHIP%20OF%20OUR%20COMMON%20STOCK) - Management and Board of Directors can substantially influence all matters submitted to stockholders for approval[29](index=29&type=chunk) - Potential for a significant portion of outstanding shares to be sold, causing a drop in common stock market price[29](index=29&type=chunk) - The price of common stock may be **volatile** and fluctuate substantially[29](index=29&type=chunk) - Broad discretion in the use of cash[29](index=29&type=chunk) - Business is subject to changing regulations regarding corporate governance and disclosure controls, increasing costs and noncompliance risk[29](index=29&type=chunk) - Failure to develop and maintain adequate financial controls could lead to material weaknesses[29](index=29&type=chunk) - Provisions in corporate charter documents and Delaware law could make an acquisition more difficult[29](index=29&type=chunk) - Certificate of incorporation designates the Delaware Court of Chancery as the sole forum for most disputes[29](index=29&type=chunk) [Item 1. Business](index=8&type=section&id=Item%201.%20Business) The company develops ophthalmic therapeutics using its proprietary Optejet® microdose delivery platform - Eyenovia is a clinical-stage ophthalmic company developing advanced therapeutics based on its proprietary microdose array print (MAP™) platform technology, Optejet®[32](index=32&type=chunk) - The Optejet® system aims to improve safety and delivery success by achieving high-precision microdosing with up to a **75% reduction in ocular drug exposure**[32](index=32&type=chunk)[52](index=52&type=chunk)[56](index=56&type=chunk) - The company's pipeline focuses on late-stage development for progressive myopia (MicroPine), presbyopia (MicroLine), and mydriasis (MydCombi™)[33](index=33&type=chunk) [Corporate Information](index=8&type=section&id=Corporate%20Information) - Eyenovia, Inc. was organized in Florida on March 12, 2014, and reincorporated in Delaware on October 6, 2014[31](index=31&type=chunk) - Principal executive office is located at 295 Madison Avenue, Suite 2400, New York, NY 10017[31](index=31&type=chunk) [Overview](index=8&type=section&id=Overview) - Eyenovia is a clinical-stage ophthalmic company developing advanced therapeutics using its proprietary microdose array print (MAP™) platform technology, Optejet®[32](index=32&type=chunk) - The Optejet® system aims to improve safety and patient compliance by delivering micro-volume doses with up to a **75% reduction in ocular drug and preservative topical dosing**[32](index=32&type=chunk) - The company's pipeline includes MicroPine for progressive myopia (Phase III), MicroLine for presbyopia (Phase III initiated), and MydCombi™ for mydriasis (NDA accepted by FDA)[33](index=33&type=chunk)[34](index=34&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - License agreements were signed for MicroPine with Bausch Health (**$10.0M upfront**) and for MicroPine and MicroLine with Arctic Vision (**$4.0M upfront**)[35](index=35&type=chunk)[38](index=38&type=chunk) [Our Strategy](index=9&type=section&id=Our%20Strategy) - Establish a portfolio of first-in-class micro-therapeutic products for multiple eye treatments through the **505(b)(2) pathway** with the FDA[41](index=41&type=chunk) - Improve clinical outcomes and patient experiences by providing an improved tolerability profile with microdose therapeutics[43](index=43&type=chunk) - Leverage electronic, smartphone-enabled 'e-health' technology (Optejet) for patient-specific compliance monitoring[44](index=44&type=chunk) - Develop next-generation targeted microdose treatments for other ophthalmic diseases independently or in collaboration with third parties[45](index=45&type=chunk)[46](index=46&type=chunk) [Limitations of Conventional Eye Therapies](index=10&type=section&id=Limitations%20of%20Conventional%20Eye%20Therapies) - Conventional eye drops suffer from issues like **overdosing, poor compliance, and imprecise dosing**, with low correct administration rates (22%-30%)[47](index=47&type=chunk) - Traditional eye drops (30-50 µL) severely overdose the eye, leading to ocular and potential systemic side effects[48](index=48&type=chunk) - MydCombi microdosing demonstrated **few ocular adverse events and no systemic adverse events** in Phase III studies, suggesting improved tolerability[50](index=50&type=chunk) [Our Solution: The Optejet](index=11&type=section&id=Our%20Solution%3A%20The%20Optejet) - The Optejet dispenser delivers precise 6-8 µL doses, reducing drug and toxic preservative exposure by **over 75%**[52](index=52&type=chunk)[56](index=56&type=chunk) - The technology is based on high-precision inkjet printing (MAP™) and includes smart electronics with Bluetooth connectivity to track patient medication administration[54](index=54&type=chunk)[60](index=60&type=chunk) - The FDA classifies Eyenovia's products as **drugs, not medical devices**, meaning the Optejet dispenser does not require separate FDA approval[32](index=32&type=chunk)[55](index=55&type=chunk) - Key advantages include precise volumetric control, targeted delivery, fast delivery (less than 100 milliseconds), and smart electronics for compliance tracking[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk) [Clinical Trial Results](index=13&type=section&id=Clinical%20Trial%20Results) - Preclinical and clinical studies suggest that an **8 µL microdose provides comparable clinical efficacy** to traditional eye drops with fewer side effects[61](index=61&type=chunk) - A canine glaucoma model showed **>40% IOP lowering** with an 8-9 µL latanoprost microdose, and a study demonstrated a 3 µL timolol microdose reduced systemic plasma levels by a factor of 17[62](index=62&type=chunk) - Phase II EYN-1601 trial for mydriasis showed microdosed phenylephrine 10% achieved similar dilation to drops with **35-40% lower plasma levels** and fewer ocular adverse events[65](index=65&type=chunk)[68](index=68&type=chunk)[70](index=70&type=chunk) Ocular Adverse Events by Treatment (EYN-1601) | Adverse Event Description | PE 10% (Eyedrops) | EYN (PE 10% microdose) | |:---|:---|:---| | Ocular blurriness | 1 | 0 | | Ocular burning/stinging/irritation | 4 | 1 | | Ocular dryness | 2 | 0 | | **Subtotal by Treatment Group** | **7** | **1** | - The EYE-103 study showed equivalent pupil dilation to eye drops, with **91% of participants preferring Optejet** administration and nearly two times better ocular comfort scores[71](index=71&type=chunk) - EYN-POC-PG-21 trial (latanoprost 0.005% microdose) demonstrated **mean diurnal IOP reduction similar to traditional eye drops** (35.5% on Day 3 vs. 35.0% for drops)[73](index=73&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) - Optejet administration success rate was **96% on the first attempt**, and almost 90% of subjects demonstrated accurate self-administration after training[77](index=77&type=chunk)[79](index=79&type=chunk) [Our Product Candidates](index=17&type=section&id=Our%20Product%20Candidates) - Eyenovia's current focus is on three programs: MicroLine (presbyopia), MicroPine (progressive myopia), and MydCombi (mydriasis)[82](index=82&type=chunk) [MicroLine](index=17&type=section&id=MicroLine) MicroLine is a proprietary microdosed pilocarpine formulation for presbyopia, an age-related near vision impairment - MicroLine is a proprietary microdosed version of pilocarpine, designed to induce miosis and improve near visual acuity in individuals with presbyopia[83](index=83&type=chunk)[84](index=84&type=chunk) - Presbyopia affects approximately **113 million people in the United States**, representing a significant unmet medical need as there are no known FDA-approved drugs for this indication[37](index=37&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - The company has initiated two **Phase III VISION trials** to evaluate the safety, tolerability, and efficacy of Optejet-administered pilocarpine microdosing[37](index=37&type=chunk)[87](index=87&type=chunk) [MicroPine](index=18&type=section&id=MicroPine) MicroPine is a first-in-class topical micro-formulation of low-dose atropine for progressive myopia - MicroPine is a first-in-class topical micro-formulation of low-dose atropine for progressive myopia, a disease affecting an estimated **25 million children in the U.S.**[34](index=34&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[95](index=95&type=chunk) - The FDA accepted an IND for the **Phase III CHAPERONE study** in February 2019, with enrollment resuming after initial COVID-19 related delays[34](index=34&type=chunk)[96](index=96&type=chunk) - Low-dose atropine has **Level 1 evidence of efficacy** in reducing myopia progression, but conventional 1% atropine has undesirable side effects that MicroPine aims to mitigate[93](index=93&type=chunk)[95](index=95&type=chunk) - The CHAPERONE study is a U.S.-based, multi-center, randomized, double-masked trial enrolling over 400 children[96](index=96&type=chunk) [MydCombi](index=19&type=section&id=MydCombi) MydCombi is a fixed-combination micro-formulation of phenylephrine-tropicamide for mydriasis - MydCombi (MicroStat) is a fixed-combination micro-formulation for mydriasis, designed for over **100 million annual office-based eye exams** in the U.S., with an estimated market exceeding **$250 million**[39](index=39&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk) - The company completed two **Phase III trials (MIST-1 and MIST-2)** in November 2019, demonstrating positive results for pupil dilation[39](index=39&type=chunk)[103](index=103&type=chunk) - In MIST-1, MicroStat showed statistically significant pupil dilation, achieving ≥6.0 mm pupil diameter in **95.2% of right eyes** and **93.5% of left eyes** at 35 minutes[109](index=109&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) - In MIST-2, MydCombi achieved highly statistically significant pupil dilation, with ≥6.0 mm pupil diameter in **92.8% of right eyes** and **94.2% of left eyes** at 35 minutes[118](index=118&type=chunk)[121](index=121&type=chunk)[123](index=123&type=chunk) Efficacy of MydCombi in MIST-1 and MIST-2 Studies (PP Populations) | | MIST-1 | MIST-2 | |:---|:---|:---| | Mean change in pupil diameter from baseline at 35 minutes | 4.6 mm right eyes, 4.7 mm left eyes | 4.7 mm right eyes, 4.8 mm left eyes | | Proportion of eyes with pupil diameter ≥ 6.0 mm at 35 minutes | 95.2% of right eyes, 93.5% of left eyes | 92.8% of right eyes, 94.2% of left eyes | | Median time to maximum post-baseline pupil diameter with ≥ 1.0 mm increase from baseline | 73.0 minutes | 71.0 minutes | - The FDA accepted the NDA for MydCombi in March 2021, with an expected Prescription Drug User Fee Act (PDUFA) date of **October 28, 2021**[39](index=39&type=chunk)[126](index=126&type=chunk) [Our Technology](index=23&type=section&id=Our%20Technology) - The Optejet system consists of a reusable base and a disposable cartridge with a piezo-driven ejector nozzle[127](index=127&type=chunk) - Patients self-administer by aligning with an illuminated circle and pressing a button to emit a micro-jet of micro-droplets in **less than 100 milliseconds**[128](index=128&type=chunk) - The system minimizes drug waste and preservative delivery to the eye, and the rechargeable base provides consistent dose delivery[128](index=128&type=chunk) - The technology is based on piezo-driven printer technology, adapted for therapeutic delivery to the eye[130](index=130&type=chunk) [Sales and Marketing](index=25&type=section&id=Sales%20and%20Marketing) - Eyenovia employs a staged commercialization approach, retaining rights for MydCombi and partnering for products requiring larger sales forces[131](index=131&type=chunk) - MydCombi, as a **cash-pay pharmaceutical** for in-office use, is expected to have significantly lower sales and marketing costs[132](index=132&type=chunk)[140](index=140&type=chunk) - MicroLine is also expected to be a cash-pay product, with plans to expand the U.S. sales force to 50 people[133](index=133&type=chunk)[142](index=142&type=chunk) - MicroPine is a standard therapeutic, likely reimbursed by payers, and its commercialization is handled by licensees (Arctic Vision, Bausch Health)[134](index=134&type=chunk)[143](index=143&type=chunk) [Manufacturing](index=25&type=section&id=Manufacturing) - For clinical supply, the company relies on a combination of limited internal manufacturing capacity and **third-party manufacturers**[135](index=135&type=chunk) - The company does not have long-term agreements with current manufacturers and plans to use multiple **contract manufacturing organizations (CMOs)** for commercialization[135](index=135&type=chunk)[137](index=137&type=chunk) - Potential replacements for existing third-party suppliers exist, but delays in sourcing materials or services could occur[135](index=135&type=chunk) [Competition](index=26&type=section&id=Competition) - The biotechnology and pharmaceutical industries are **highly competitive**, characterized by rapid technological advancements[138](index=138&type=chunk) - Competitors include large pharmaceutical/biotechnology companies and specialty/generic drug companies, many with significantly greater resources[139](index=139&type=chunk) - For MydCombi, there are **no known FDA-approved micro-therapeutics or fixed-combination products**, but competitive macrodose drops exist[140](index=140&type=chunk) - For MicroLine, there are **no FDA-approved drugs for presbyopia**, though other companies are developing therapies without microdosing technology[141](index=141&type=chunk) - For MicroPine, there are **no FDA-approved drugs to slow myopia progression**, but other traditional eye drop atropine versions are under development[143](index=143&type=chunk) [Intellectual Property](index=26&type=section&id=Intellectual%20Property) - The company's success depends on its ability to obtain, maintain, and enforce proprietary rights related to its products and technologies[144](index=144&type=chunk) [Patents](index=26&type=section&id=Patents) As of December 31, 2020, Eyenovia owned nine U.S. issued utility patents and 53 issued foreign patents - As of December 31, 2020, Eyenovia owned **nine U.S. issued utility patents**, one issued design patent, 53 issued foreign patents, and multiple pending applications[145](index=145&type=chunk) - Patent coverage includes piezoelectric devices for micro-droplet ejection, methods of delivering medicament, and devices with specially shaped openings for laminar flow[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - U.S. patents are expected to expire between **2031 and 2033**, with potential for patent term extension under the Hatch-Waxman Act[147](index=147&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) - In Asia, patents have been granted in China, South Korea, and Japan for piezoelectric devices and methods of use[157](index=157&type=chunk) [Trademarks](index=28&type=section&id=Trademarks) Eyenovia markets its products under trademarks and service marks, including EYENOVIA® and OPTEJET™ - Trademarks in the company's portfolio include **EYENOVIA®, OPTEJET™, EYELATOVA™, and EYETANO™**, which are registered or applied for in the United States[158](index=158&type=chunk) - The company plans to file additional trademark applications to protect its market positions globally[159](index=159&type=chunk) [Proprietary Technology](index=28&type=section&id=Proprietary%20Technology) Beyond patents, Eyenovia relies on trade secrets and proprietary know-how to protect its technology - The company relies on **trade secrets and proprietary know-how** to protect its technology, including methods of manufacture and systems[160](index=160&type=chunk) - Protection measures include non-disclosure and confidentiality agreements with employees, consultants, and third parties[160](index=160&type=chunk) - Invention assignment agreements are required with employees, consultants, and contractors[160](index=160&type=chunk) [Government Regulation and Product Approvals](index=28&type=section&id=Government%20Regulation%20and%20Product%20Approvals) - Pharmaceutical products are extensively regulated by government authorities in the United States (FDA) and other countries[161](index=161&type=chunk) - Obtaining regulatory approvals and ensuring compliance requires substantial time and financial resources[161](index=161&type=chunk)[162](index=162&type=chunk) [Review and Approval of Drugs in the United States](index=28&type=section&id=Review%20and%20Approval%20of%20Drugs%20in%20the%20United%20States) The FDA regulates drug products under the FDCA, requiring a multi-stage approval process - The FDA regulates drug products under the Food, Drug, and Cosmetic Act (FDCA), requiring extensive and costly processes for approval and compliance[162](index=162&type=chunk) - The typical approval process involves preclinical studies, IND submission, human clinical trials, NDA submission, and post-approval requirements[163](index=163&type=chunk)[164](index=164&type=chunk) - The **505(b)(2) NDA pathway** allows applicants to rely on the FDA's previous findings of safety and efficacy for a similar product, potentially expediting approval[195](index=195&type=chunk) - Generic drugs are approved via Abbreviated New Drug Applications (ANDAs) by demonstrating bioequivalence to a reference-listed drug (RLD)[196](index=196&type=chunk)[197](index=197&type=chunk) - Exclusivity periods (e.g., 5 years for New Chemical Entities, 3 years for new clinical investigations) impact market entry[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[210](index=210&type=chunk) - The **21st Century Cures Act** (2016) aims to modernize healthcare, spur innovation, and streamline drug development[213](index=213&type=chunk)[214](index=214&type=chunk) [Review and Approval of Drug Products in the European Union](index=37&type=section&id=Review%20and%20Approval%20of%20Drug%20Products%20in%20the%20European%20Union) Marketing products outside the U.S. requires compliance with lengthy and varied foreign regulatory requirements - Marketing products outside the U.S. requires compliance with numerous and varying foreign regulatory requirements[215](index=215&type=chunk) - In the European Union, clinical trials require approval from competent national authorities and favorable ethics committee opinions[216](index=216&type=chunk)[224](index=224&type=chunk) - Marketing authorization applications (MAAs) can be submitted via **centralized (single EU-wide approval)** or decentralized procedures[217](index=217&type=chunk)[218](index=218&type=chunk)[220](index=220&type=chunk) - New chemical entities in the EU receive **8 years of data exclusivity** and an additional **2 years of market exclusivity**[229](index=229&type=chunk) - Post-marketing, products are subject to comprehensive regulatory oversight, including pharmacovigilance and cGMP compliance[230](index=230&type=chunk)[231](index=231&type=chunk) [Pharmaceutical Coverage, Pricing and Reimbursement](index=40&type=section&id=Pharmaceutical%20Coverage%2C%20Pricing%20and%20Reimbursement) - MydCombi and MicroLine are intended as **'cash pay' products**, likely exempt from complex coverage and reimbursement issues[233](index=233&type=chunk) - MicroPine's sales will depend on **third-party payor coverage** and adequate reimbursement levels[233](index=233&type=chunk)[234](index=234&type=chunk) - Obtaining coverage and reimbursement may require expensive pharmacoeconomic studies[234](index=234&type=chunk) - Governments globally are implementing cost-containment programs, which could limit revenue from approved products[235](index=235&type=chunk)[236](index=236&type=chunk)[237](index=237&type=chunk) [Healthcare Law and Regulation](index=41&type=section&id=Healthcare%20Law%20and%20Regulation) - The company's arrangements with healthcare providers are subject to various federal and state healthcare laws, including **anti-kickback statutes and HIPAA**[239](index=239&type=chunk) - Non-compliance with these laws could result in substantial penalties, fines, or exclusion from government programs[239](index=239&type=chunk)[240](index=240&type=chunk) - State and foreign laws also govern health information privacy and security, often differing from HIPAA[240](index=240&type=chunk) [Changes in the Healthcare Marketplace](index=41&type=section&id=Changes%20in%20the%20Healthcare%20Marketplace) - The U.S. healthcare industry is driven by cost containment, with legislative changes impacting pharmaceutical pricing[241](index=241&type=chunk) - The **Affordable Care Act (ACA)** included provisions expanding Medicaid rebates and imposing fees on branded manufacturers[243](index=243&type=chunk) - Future reform efforts are expected to continue prioritizing reductions in Medicare and other healthcare spending[244](index=244&type=chunk)[245](index=245&type=chunk)[330](index=330&type=chunk) [Employees](index=43&type=section&id=Employees) - As of March 29, 2021, the company had **31 full-time and 3 part-time employees**, and also engages various consultants and contractors[246](index=246&type=chunk) [Available Information](index=43&type=section&id=Available%20Information) - Annual, Quarterly, and Current Reports are available free of charge on the company's website and the SEC's website[247](index=247&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) The company faces comprehensive risks related to its financial stability, product development, and regulatory hurdles - Investing in Eyenovia's common stock involves a **high degree of risk**[249](index=249&type=chunk) - There is **substantial doubt about the company's ability to continue as a going concern** without additional funding[251](index=251&type=chunk) - The company has incurred approximately **$77.4 million in net losses since inception** and expects to continue incurring substantial losses[258](index=258&type=chunk)[488](index=488&type=chunk) - Key risks include the need for substantial additional capital, potential dilution, delays or failures in clinical trials, and intense competition[252](index=252&type=chunk)[255](index=255&type=chunk)[267](index=267&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk) [Item 1B. Unresolved Staff Comments](index=73&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) As a smaller reporting company, Eyenovia is not required to provide this information - Smaller reporting companies are not required to provide information for this item[454](index=454&type=chunk) [Item 2. Properties](index=73&type=section&id=Item%202.%20Properties) The company maintains offices and facilities in New York, Nevada, and California - Principal executive offices: approximately **3,800 sq ft** in New York City, NY[455](index=455&type=chunk) - Research and development activities: approximately **1,000 sq ft** in Reno, Nevada[455](index=455&type=chunk) - Planned commercial manufacturing facility: approximately **4,500 sq ft** in Redwood City, California[455](index=455&type=chunk) - Clinical and marketing team offices: **120 sq ft** in Newport Beach, California[455](index=455&type=chunk) - The company believes existing facilities are adequate and suitable additional spaces will be available on commercially reasonable terms[456](index=456&type=chunk) [Item 3. Legal Proceedings](index=74&type=section&id=Item%203.%20Legal%20Proceedings) Eyenovia reported no legal proceedings as of the filing date - The company has no legal proceedings to report[459](index=459&type=chunk) [Item 4. Mine Safety Disclosures](index=74&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Eyenovia - This item is not applicable to the company[461](index=461&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=76&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq, and no cash dividends have been declared or are planned - Eyenovia's common stock trades on the Nasdaq Capital Market under the symbol **"EYEN"**[471](index=471&type=chunk) - As of March 29, 2021, there were approximately **130 holders of record** of the company's common stock[471](index=471&type=chunk) - The company has **never declared cash dividends** and does not plan to in the foreseeable future, intending to retain future earnings for business growth[472](index=472&type=chunk)[451](index=451&type=chunk) - No recent sales of unregistered securities or issuer purchases of equity securities were reported[474](index=474&type=chunk)[475](index=475&type=chunk) [Item 6. Selected Financial Data](index=76&type=section&id=Item%206.%20Selected%20Financial%20Data) As a smaller reporting company, Eyenovia is not required to provide selected financial data - Smaller reporting companies are not required to provide information for this item[477](index=477&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation](index=76&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operation) Management discusses financial results, highlighting revenue from licensing, R&D expenses, and going concern uncertainty - Eyenovia is a clinical-stage ophthalmic company developing advanced therapeutics based on its proprietary microdose array print (MAP™) platform technology, Optejet®[480](index=480&type=chunk) - The company's pipeline includes MicroPine for progressive myopia, MicroLine for presbyopia, and MydCombi™ for mydriasis, all utilizing the Optejet® system[480](index=480&type=chunk) - Historically, operations have been financed through equity offerings and, more recently, licensing arrangements[487](index=487&type=chunk) - There is **substantial doubt about the company's ability to continue as a going concern** for at least the next twelve months due to recurring net losses[487](index=487&type=chunk)[502](index=502&type=chunk) [Overview](index=77&type=section&id=Overview_77) - Eyenovia is a clinical-stage ophthalmic company developing microdose therapeutics via its Optejet® platform, which has demonstrated **~90% delivery success**[480](index=480&type=chunk) - The pipeline includes MicroPine (Phase III), MicroLine (Phase III initiated), and MydCombi™ (NDA accepted with PDUFA date of October 28, 2021)[481](index=481&type=chunk)[482](index=482&type=chunk)[483](index=483&type=chunk)[484](index=484&type=chunk)[485](index=485&type=chunk) - The company has incurred net losses of **$19.8 million (2020)** and **$21.2 million (2019)**, with an accumulated deficit of **$77.4 million** as of December 31, 2020[488](index=488&type=chunk) [Financial Overview](index=78&type=section&id=Financial%20Overview) - Revenue is generated from upfront licensing fees, development/regulatory milestones, and royalties on sales of licensed products[489](index=489&type=chunk) - Research and development expenses are expensed as incurred and are expected to increase with ongoing initiatives[490](index=490&type=chunk)[491](index=491&type=chunk)[492](index=492&type=chunk) - General and administrative expenses are anticipated to increase due to headcount growth and public company compliance costs[493](index=493&type=chunk) [Results of Operations](index=79&type=section&id=Results%20of%20Operations) [Year Ended December 31, 2020 Compared with Year Ended December 31, 2019](index=79&type=section&id=Year%20Ended%20December%2031%2C%202020%20Compared%20with%20Year%20Ended%20December%2031%2C%202019) [Revenue and Cost of Revenue](index=79&type=section&id=Revenue%20and%20Cost%20of%20Revenue_79) In 2020, Eyenovia recognized $2.0 million in revenue from a milestone under the Arctic Vision License Agreement - In August 2020, received **$4.0 million upfront payment** from Arctic Vision License Agreement, recorded as deferred license fee[495](index=495&type=chunk) - In October 2020, received **$10.0 million upfront payment** from Bausch Health License Agreement, recorded as deferred license fee[495](index=495&type=chunk) - In December 2020, recognized **$2.0 million in revenue** from an Arctic Vision milestone, with an accrued **$0.8 million cost of revenue** to Senju[495](index=495&type=chunk) [Research and Development Expenses](index=79&type=section&id=Research%20and%20Development%20Expenses_79) Research and development expenses decreased by $0.8 million (6%) to $13.3 million in 2020 Research and Development Expenses | | For the Year Ended December 31, 2020 | For the Year Ended December 31, 2019 | |:---|:---|:---| | Direct clinical and non-clinical expenses | $6,717,452 | $7,830,488 | | Personnel-related expenses | 3,688,948 | 3,136,860 | | Supplies and materials | 1,438,928 | 1,666,284 | | Non-cash stock-based compensation expenses | 1,350,894 | 1,459,055 | | Other | 67,595 | 9,762 | | **Total research and development expenses** | **$13,263,817** | **$14,102,449** | - Overall R&D expenses **decreased by $0.8 million (6%)** from $14.1 million in 2019 to $13.3 million in 2020[496](index=496&type=chunk) - The decrease was primarily driven by cost reimbursements from Arctic Vision and Bausch Health and reduced activity due to COVID-19[496](index=496&type=chunk) - Offsetting factors included an increase in personnel-related expenses due to new hires and increased depreciation[496](index=496&type=chunk) [General and Administrative Expenses](index=79&type=section&id=General%20and%20Administrative%20Expenses_79) General and administrative expenses increased by $0.5 million (7%) to $7.7 million in 2020 - General and administrative expenses **increased by $0.5 million (7%)** from $7.2 million in 2019 to $7.7 million in 2020[497](index=497&type=chunk) - Key drivers of the increase were **$0.2 million in payroll-related expenses**, **$0.4 million in patent expense**, and **$0.8 million in legal costs**[497](index=497&type=chunk) - These increases were partially offset by decreases in travel and meeting expenses due to COVID-19[497](index=497&type=chunk) [Liquidity and Going Concern](index=79&type=section&id=Liquidity%20and%20Going%20Concern) Recurring losses and negative cash flows raise substantial doubt about the company's ability to continue as a going concern Key Financial Position Data (as of December 31, 2020) | Metric | Amount (USD) | |:---|:---| | Cash and cash equivalents | $28.4 million | | Working capital | $15.2 million | | Stockholders' equity | $15.3 million | | Accumulated deficit | $77.4 million | - The company incurred a **net loss of $19.8 million** and used **$6.4 million in operating activities** for the year ended December 31, 2020[488](index=488&type=chunk)[503](index=503&type=chunk) - These conditions raise **substantial doubt about the company's ability to continue as a going concern**, requiring additional capital[502](index=502&type=chunk) Cash Flow Summary (Years Ended December 31) | Cash Flow Activity | 2020 (USD) | 2019 (USD) | |:---|:---|:---| | Net Cash Used In Operating Activities | $(6,384,276) | $(18,919,308) | | Net Cash Used In Investing Activities | $(261,257) | $(166,643) | | Net Cash Provided By Financing Activities | $20,864,760 | $13,510,352 | | Net Increase (Decrease) in Cash and Cash Equivalents | $14,219,227 | $(5,575,599) | | Cash and cash equivalents - End of Year | $28,371,828 | $14,152,601 | [Risks and Uncertainties](index=80&type=section&id=Risks%20and%20Uncertainties_80) - The COVID-19 pandemic caused initial delays in trial enrollment and initiation for the MicroPine CHAPERONE study[506](index=506&type=chunk) - Enrollment in the CHAPERONE study has since resumed[506](index=506&type=chunk) [Off-Balance Sheet Arrangements](index=80&type=section&id=Off-Balance%20Sheet%20Arrangements) Eyenovia has no material off-balance sheet arrangements - The company has no off-balance sheet arrangements that have a material effect on its financial conditions or results of operations[507](index=507&type=chunk) [Critical Accounting Policies](index=80&type=section&id=Critical%20Accounting%20Policies) Eyenovia's critical accounting policies are detailed in Note 2 of its financial statements - Critical accounting policies are included in Note 2 – Summary of Significant Accounting Policies of the financial statements[508](index=508&type=chunk) [Recently Issued Accounting Standards](index=81&type=section&id=Recently%20Issued%20Accounting%20Standards) Information on recently issued accounting standards is provided in Note 2 of the financial statements - Recently issued accounting standards are included in Note 2 – Summary of Significant Accounting Policies of the financial statements[510](index=510&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=81&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Eyenovia is not required to provide this information - Smaller reporting companies are not required to provide information for this item[511](index=511&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=81&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The financial statements and supplementary data are included at the end of the report - Financial statements and supplementary data are included at the end of this report, beginning on page F-1[513](index=513&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures](index=81&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) Eyenovia reported no changes in or disagreements with accountants - Not applicable, indicating no changes in or disagreements with accountants on accounting and financial disclosures[515](index=515&type=chunk) [Item 9A. Controls and Procedures](index=81&type=section&id=Item%209A.%20Controls%20and%20Procedures) [Evaluation of Disclosure Controls and Procedures](index=81&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that its disclosure controls and procedures were effective as of December 31, 2020 - As of December 31, 2020, management concluded that **disclosure controls and procedures were effective**[519](index=519&type=chunk) - Disclosure controls are designed to provide reasonable assurance that required information for SEC reports is recorded, processed, summarized, and reported timely[519](index=519&type=chunk) [Management's Report on Internal Control over Financial Reporting](index=81&type=section&id=Management%27s%20Report%20on%20Internal%20Control%20over%20Financial%20Reporting) Management concluded that the company's internal control over financial reporting was effective as of December 31, 2020 - Management is responsible for establishing and maintaining adequate internal control over financial reporting[520](index=520&type=chunk) - Based on an evaluation using the COSO 2013 Framework, management concluded that **internal control over financial reporting was effective** as of December 31, 2020[522](index=522&type=chunk) [Changes in Internal Control over Financial Reporting](index=82&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no material changes in internal control over financial reporting during the fourth quarter of 2020 - **No material changes** in internal control over financial reporting occurred during the fourth quarter of 2020[523](index=523&type=chunk) [Attestation Report of Registered Public Accounting Firm](index=82&type=section&id=Attestation%20Report%20of%20Registered%20Public%20Accounting%20Firm) This report does not include an attestation report due to an exemption for emerging growth companies - An attestation report from the independent registered public accounting firm is not included due to the **JOBS Act exemption** for emerging growth companies[524](index=524&type=chunk) [Item 9B. Other Information](index=82&type=section&id=Item%209B.%20Other%20Information) Eyenovia reported no other information for this item - No other information is reported for this item[526](index=526&type=chunk) PART III [Item 10. Directors, Executive Officers, and Corporate Governance](index=83&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) Information regarding directors and corporate governance is incorporated by reference from the proxy statement - Information on directors, executive officers, and corporate governance is **incorporated by reference** from the 2021 Annual Meeting of Stockholders proxy statement[530](index=530&type=chunk)[532](index=532&type=chunk) - Information concerning the Audit Committee is incorporated by reference from the proxy statement[531](index=531&type=chunk) - The company has adopted a code of business conduct and ethics for all employees, executive officers, and directors, available on its website[531](index=531&type=chunk) [Item 11. Executive Compensation](index=83&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the proxy statement - Information on executive and director compensation is **incorporated by reference** from the proxy statement[532](index=532&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=83&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section provides information on security ownership, with details incorporated by reference from the proxy statement - Information on security ownership of certain beneficial owners and management is **incorporated by reference** from the proxy statement[534](index=534&type=chunk) Equity Compensation Plan Information (as of December 31, 2020) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | |:---|:---|:---|:---| | Equity compensation plans approved by security holders: 2014 Equity Incentive Plan, as amended | 1,140,630 | $2.88 | 15,333 | | Amended and Restated 2018 Omnibus Stock Incentive Plan | 2,423,993 | $3.57 | 502,853 | | Equity compensation plans not approved by security holders | - | - | - | | **Total** | **3,564,623** | **$3.34** | **518,186** | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=83&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related-party transactions and director independence is incorporated by reference from the proxy statement - Information on certain relationships, related-party transactions, and director independence is **incorporated by reference** from the proxy statement[535](index=535&type=chunk) [Item 14. Principal Accounting Fees and Services](index=84&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the proxy statement - Information on principal accounting fees and services is **incorporated by reference** from the proxy statement[537](index=537&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=85&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the report, including financial statements and an exhibit index - The report includes financial statements and related reports of the independent registered public accounting firm[540](index=540&type=chunk) - No financial statement schedules are filed[541](index=541&type=chunk) - An exhibit index lists various documents, including corporate charter documents, license agreements, and certifications[542](index=542&type=chunk)[543](index=543&type=chunk)[544](index=544&type=chunk)[545](index=545&type=chunk)[546](index=546&type=chunk)[547](index=547&type=chunk)[548](index=548&type=chunk)[549](index=549&type=chunk)[550](index=550&type=chunk) [Item 16. Form 10-K Summary](index=87&type=section&id=Item%2016.%20Form%2010-K%20Summary) Eyenovia did not provide a Form 10-K Summary - No Form 10-K Summary is provided[551](index=551&type=chunk) [SIGNATURES](index=88&type=section&id=SIGNATURES) The report is signed on behalf of Eyenovia, Inc. by its CEO and CFO as of March 30, 2021 - The report is signed by Tsontcho Ianchulev (CEO, CMO, Director) and John Gandolfo (CFO, Secretary) on behalf of Eyenovia, Inc.[556](index=556&type=chunk)[558](index=558&type=chunk) - Signatures are dated **March 30, 2021**[557](index=557&type=chunk)[558](index=558&type=chunk) INDEX TO FINANCIAL STATEMENTS [Report of Independent Registered Public Accounting Firm](index=90&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor issued an unqualified opinion but highlighted substantial doubt about the company's ability to continue as a going concern - Marcum LLP issued an **unqualified opinion** on Eyenovia's financial statements for 2020 and 2019[562](index=562&type=chunk) - An explanatory paragraph was included, citing **substantial doubt about the company's ability to continue as a going concern**[563](index=563&type=chunk) - The financial statements do not include adjustments that might result from the outcome of this going concern uncertainty[563](index=563&type=chunk) [Balance Sheets](index=91&type=section&id=Balance%20Sheets) The balance sheets present the company's financial position as of December 31, 2020 and 2019 Balance Sheet Summary (as of December 31) | Item | 2020 (USD) | 2019 (USD) | |:---|:---|:---| | **Assets** | | | | Cash and cash equivalents | $28,371,828 | $14,152,601 | | Deferred license costs | $1,600,000 | - | | License receivable | $2,966,039 | - | | Total Current Assets | $33,391,345 | $14,349,281 | | Property and equipment, net | $396,380 | $230,538 | | Total Assets | $33,906,760 | $14,697,619 | | **Liabilities** | | | | Accounts payable | $1,461,665 | $1,541,358 | | Accrued compensation | $1,150,672 | $916,873 | | Accrued expenses and other current liabilities | $1,480,692 | $453,430 | | Deferred license fee | $14,000,000 | - | | Notes payable - current portion | $97,539 | - | | Total Current Liabilities | $18,198,377 | $2,911,661 | | Total Liabilities | $18,602,875 | $2,957,012 | | **Stockholders' Equity** | | | | Common stock | $2,498 | $1,710 | | Additional paid-in capital | $92,742,306 | $69,409,949 | | Accumulated deficit | $(77,440,919) | $(57,671,052) | | Total Stockholders' Equity | $15,303,885 | $11,740,607 | | Total Liabilities and Stockholders' Equity | $33,906,760 | $14,697,619 | - Cash and cash equivalents increased significantly from **$14.15 million** in 2019 to **$28.37 million** in 2020[569](index=569&type=chunk) - Deferred license fees of **$14.0 million** were recorded in 2020, contributing to a substantial increase in total liabilities[569](index=569&type=chunk) - The accumulated deficit grew from **$57.67 million** in 2019 to **$77.44 million** in 2020, reflecting ongoing operating losses[569](index=569&type=chunk) [Statements of Operations](index=92&type=section&id=Statements%20of%20Operations) The company recognized $2.0 million in revenue in 2020, leading to a net loss of $19.8 million Statements of Operations Summary (Years Ended December 31) | Item | 2020 (USD) | 2019 (USD) | |:---|:---|:---| | Revenue | $2,000,000 | $- | | Cost of revenue | $(800,000) | $- | | Gross Profit | $1,200,000 | $- | | Research and development expenses | $13,263,817 | $14,102,449 | | General and administrative expenses | $7,725,408 | $7,206,095 | | Total Operating Expenses | $20,989,225 | $21,308,544 | | Loss From Operations | $(19,789,225) | $(21,308,544) | | Net Loss | $(19,769,867) | $(21,156,758) | | Net Loss Per Share - Basic and Diluted | $(0.94) | $(1.47) | | Weighted Average Number of Common Shares Outstanding - Basic and Diluted | 21,054,706 | 14,349,738 | - The company recognized **$2.0 million in revenue** in 2020, with a gross profit of **$1.2 million**, compared to no revenue in 2019[571](index=571&type=chunk) - **Net loss improved** from $21.2 million in 2019 to **$19.8 million** in 2020[571](index=571&type=chunk) - **Net loss per share decreased** from $(1.47) in 2019 to **$(0.94)** in 2020, partly due to an increase in weighted average common shares outstanding[571](index=571&type=chunk) [Statements of Changes in Stockholders' Equity](index=93&type=section&id=Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased to $15.3 million in 2020, driven by proceeds from public offerings and private placements Statements of Changes in Stockholders' Equity Summary (Years Ended December 31) | Item | Common Shares (2020) | Common Stock Amount (2020) | Additional Paid-In Capital (2020) | Accumulated Deficit (2020) | Total Stockholders' Equity (2020) | |:---|:---|:---|:---|:---|:---| | Balance - January 1, 2019 | 11,468,996 | $1,147 | $53,388,216 | $(36,514,294) | $16,875,069 | | Issuance of common stock in public offering [1] | 5,046,763 | $505 | $12,958,070 | - | $12,958,575 | | Exercise of stock options on cashless basis | 236,466 | $24 | $(24) | - | - | | Exercise of stock options | 348,501 | $34 | $551,743 | - | $551,777 | | Stock-based compensation | - | - | $2,511,944 | - | $2,511,944 | | Net loss | - | - | - | $(21,156,758) | $(21,156,758) | | **Balance - December 31, 2019** | **17,100,726** | **$1,710** | **$69,409,949** | **$(57,671,052)** | **$11,740,607** | | Issuance of common stock and warrants in private placement [2] | 2,675,293 | $267 | $5,451,475 | - | $5,451,742 | | Issuance of common stock in public offering [3] | 3,833,334 | $383 | $12,495,325 | - | $12,495,708 | | Exercise of stock warrants | 1,332,841 | $134 | $2,820,228 | - | $2,820,362 | | Exercise of stock options | 36,391 | $4 | $82,157 | - | $82,161 | | Stock-based compensation | - | - | $2,483,172 | - | $2,483,172 | | Net loss | - | - | - | $(19,769,867) | $(19,769,867) | | **Balance - December 31, 2020** | **24,978,585** | **$2,498** | **$92,742,306** | **$(77,440,919)** | **$15,303,885** | - Total stockholders' equity increased from **$11.74 million** in 2019 to **$15.30 million** in 2020[573](index=573&type=chunk) - This increase was primarily driven by net proceeds from public offerings (**$12.5 million**) and private placements (**$5.57 million**) of common stock and warrants[573](index=573&type=chunk) - The accumulated deficit increased by **$19.77 million** in 2020 due to the net loss[573](index=573&type=chunk) [Statements of Cash Flows](index=94&type=section&id=Statements%20of%20Cash%20Flows) Cash and cash equivalents increased to $28.37 million in 2020, driven by financing activities Statements of Cash Flows Summary (Years Ended December 31) | Cash Flow Activity | 2020 (USD) | 2019 (USD) | |:---|:---|:---| | Net Cash Used In Operating Activities | $(6,384,276) | $(18,919,308) | | Net Cash Used In Investing Activities | $(261,257) | $(166,643) | | Net Cash Provided By Financing Activities | $20,864,760 | $13,510,352 | | Net Increase (Decrease) in Cash and Cash Equivalents | $14,219,227 | $(5,575,599) | | Cash and cash equivalents - End of Year | $28,371,828 | $14,152,601 | - Net cash used in operating activities **decreased from $18.9 million in 2019 to $6.4 million in 2020**[503](index=503&type=chunk)[580](index=580&type=chunk) - Net cash provided by financing activities **increased from $13.5 million in 2019 to $20.9 million in 2020**, driven by proceeds from public offerings and warrant exercises[505](index=505&type=chunk)[580](index=580&type=chunk) - The company's cash and cash equivalents increased by **$14.2 million** in 2020, ending the year at **$28.4 million**[580](index=580&type=chunk) [Notes to Financial Statements](index=96&type=section&id=Notes%20to%20Financial%20Statements) [Note 1 – Business Organization and Nature of Operations](index=96&type=section&id=Note%201%20%E2%80%93%20Business%20Organization%20and%20Nature%20of%20Operations) Eyenovia is a clinical-stage ophthalmic company developing microdose therapeutics using its proprietary Optejet® delivery system - Eyenovia, Inc. was organized in Florida on March 12, 2014, and reincorporated in Delaware on October 6, 2014[584](index=584&type=chunk) - The company is a clinical-stage ophthalmic company developing advanced therapeutics based on its proprietary microdose array print (MAP) platform technology[585](index=585&type=chunk) - Eyenovia's products are classified by the FDA as **drugs, not medical devices**[585](index=585&type=chunk) - The COVID-19 pandemic caused initial delays in the MicroPine CHAPERONE study, but enrollment has since resumed[586](index=586&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=96&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines Eyenovia's significant accounting policies, including liquidity and going concern - The company's accounting policies cover liquidity and going concern, use of estimates, revenue recognition, and stock-based compensation[592](index=592&type=chunk)[594](index=594&type=chunk)[596](index=596&type=chunk)[597](index=597&type=chunk)[600](index=600&type=chunk)[601](index=601&type=chunk)[604](index=604&type=chunk)[609](index=609&type=chunk)[617](index=617&type=chunk)[618](index=618&type=chunk)[619](index=619&type=chunk)[620](index=620&type=chunk)[621](index=621&type=chunk) - As of December 31, 2020, the company had **$28.4 million in cash** and an accumulated deficit of **$77.4 million**, raising substantial doubt about its ability to continue as a going concern[587](index=587&type=chunk)[588](index=588&type=chunk) - Revenue from licensing agreements is recognized upon satisfaction of performance obligations, with upfront payments recorded as deferred license fees[609](index=609&type=chunk)[614](index=614&type=chunk)[617](index=617&type=chunk) - Recently adopted and issued accounting standards had no material impact or are being evaluated for future impact[625](index=625&type=chunk)[626](index=626&type=chunk)[627](index=627&type=chunk)[630](index=630&type=chunk)[631](index=631&type=chunk) [Note 3 – Prepaid Expenses and Other Current Assets](index=102&type=section&id=Note%203%20%E2%80%93%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) Prepaid expenses and other current assets increased to $453,478 in 2020 Prepaid Expenses and Other Current Assets (as of December 31) | Item | 2020 (USD) | 2019 (USD) | |:---|:---|:---| | Payroll tax receivable | $151,942 | $95,233 | | Prepaid insurance expenses | $110,094 | $33,923 | | Prepaid research and development expenses | - | $17,978 | | Prepaid licenses and subscriptions | $57,051 | - | | Prepaid patent expenses | - | $12,404 | | Prepaid conference expenses | $29,403 | $10,600 | | Prepaid board of directors expenses | $68,250 | - | | Prepaid rent and security deposit | $25,004 | $2,463 | | Other | $11,734 | $24,079 | | **Total prepaid expenses and other current assets** | **$453,478** | **$196,680** | - Total prepaid expenses and other current assets **increased by $256,798** from 2019 to 2020[632](index=632&type=chunk) - Significant increases were observed in payroll tax receivable, prepaid insurance expenses, and prepaid board of directors expenses[632](index=632&type=chunk) [Note 4 – Property and Equipment, Net](index=103&type=section&id=Note%204%20%E2%80%93%20Property%20and%20Equipment%2C%20Net) Net property and equipment increased to $396,380 in 2020 due to additions in equipment and leasehold improvements Property and Equipment, Net (as of December 31) | Item | 2020 (USD) | 2019 (USD) | |:---|:---|:---| | Equipment | $435,521 | $229,529 | | Leasehold improvements | $137,765 | $82,500 | | Less: accumulated depreciation and amortization | $(176,906) | $(81,491) | | **Property and equipment, net** | **$396,380** | **$230,538** | - Net property and equipment **increased by $165,842** from 2019 to 2020[634](index=634&type=chunk) - Depreciation and amortization expense was **$95,415 in 2020**, with $67,595 allocated to R&D and $27,820 to G&A[634](index=634&type=chunk) [Note 5 – Accrued Expenses and Other Current Liabilities](index=103&type=section&id=Note%205%20%E2%80%93%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued expenses and other current liabilities increased significantly to $1,480,692 in 2020 Accrued Expenses and Other Current Liabilities (as of December 31) | Item | 2020 (USD) | 2019 (USD) | |:---|:---|:---| | Accrued research and development expenses | $348,254 | $208,175 | | Accrued consulting and professional services | $235,355 | $97,396 | | Credit card payable | $50,002 | $56,979 | | Leasehold improvements | - | $42,500 | | Accrued franchise tax | $32,480 | $40,995 | | Accrued travel and entertainment expenses | - | $7,385 | | Accrued licensing fees | $804,447 | - | | Accrued interest | $3,068 | - | | Accrued expense reimbursements | $5,459 | - | | Other | $1,627 | - | | **Total accrued expenses and other current liabilities** | **$1,480,692** | **$453,430** | - Total accrued expenses and other current liabilities **increased by over $1 million** from 2019 to 2020[635](index=635&type=chunk) - Key increases include accrued R&D expenses, accrued consulting services, and new **accrued licensing fees ($804,447)**[635](index=635&type=chunk) [Note 6 – Accrued Compensation](index=103&type=section&id=Note%206%20%E2%80%93%20Accrued%20Compensation) Accrued compensation increased to $1,150,672 in 2020, driven by higher accrued payroll expenses Accrued Compensation (as of December 31) | Item | 2020 (USD) | 2019 (USD) | |:---|:---|:---| | Accrued bonus expenses | $938,873 | $897,839 | | Accrued payroll expenses | $211,799 | $19,034 | | **Total accrued compensation** | **$1,150,672** | **$916,873** | - Total accrued compensation **increased by $233,799** from 2019 to 2020[636](index=636&type=chunk) - The increase was mainly driven by a significant rise in **accrued payroll expenses ($192,765)**[636](index=636&type=chunk) [Note 7 – Notes Payable](index=104&type=section&id=Note%207%20%E2%80%93%20Notes%20Payable) As of December 31, 2020, Eyenovia had $463,353 in notes payable from a Paycheck Protection Program loan Notes Payable (as of December 31) | Item | 2020 Current Portion (USD) | 2020 Non-Current Portion (USD) | 2020 Total (USD) | 2019 Current Portion (USD) | 2019 Non-Current Portion (USD) | 2019 Total (USD) | |:---|:---|:---|:---|:---|:---|:---| | Paycheck Protection Program loan | $97,539 | $365,814 | $463,353 | - | - | - | | **Total** | **$97,539** | **$365,814** | **$463,353** | **-** | **-** | **-** | - As of December 31, 2020, total notes payable were **$463,353**, entirely from a PPP Loan received on May 8, 2020[639](index=639&type=chunk)[640](index=640&type=chunk) - The PPP Loan has a fixed interest rate of **1.00% per annum**, with a maturity date of May 3, 2022[640](index=640&type=chunk) - The company intends to apply for **loan forgiveness** on the PPP Loan[641](index=641&type=chunk) - A separate note payable for a D&O insurance policy was fully repaid during 2020[639](index=639&type=chunk) [Note 8 – Income Taxes](index=104&type=section&id=Note%208%20%E2%80%93%20Income%20Taxes) The company reported no provision for income taxes due to a full valuation allowance against its deferred tax assets Provision for Income Taxes (Years Ended December 31) | Item | 2020 (USD) | 2019 (USD) | |:---|:---|:---| | Deferred tax provision (benefit): Federal | $(3,797,052) | $(4,999,920) | | Deferred tax provision (benefit): State and local | $(434,082) | $68,762 | | Change in valuation allowance | $4,231,134 | $4,931,158 | | **Provision for income taxes** | **$-** | **$-** | Deferred Tax Assets (as of December 31) | Item | 2020 (USD) | 2019 (USD) | |:---|:---|:---| | Net operating loss carryforwards | $12,972,865 | $9,479,512 | | Stock-based compensation | $1,385,554 | $943,370 | | Intangible assets | $409,705 | $328,773 | | Research and development tax credits | $1,861,938 | $1,584,75

Financial Data and Key Metrics Changes - For Q4 2020, the company reported a net loss of approximately $4.2 million or $0.17 per share, compared to a net loss of approximately $5.2 million or $0.31 per share in Q4 2019 [29] - For the full year 2020, the net loss was approximately $19.8 million or a loss of $0.94 per share, compared to a net loss of approximately $21.2 million or $1.47 per share for 2019 [29] - Revenue for Q4 and the full year 2020 was $2 million, representing a milestone payment related to a collaboration with Arctic Vision, with no revenue recognized in the same periods of 2019 [29] Business Line Data and Key Metrics Changes - Research and development expenses for Q4 2020 totaled approximately $3.4 million, roughly flat compared to $3.3 million in Q4 2019 [30] - For the full year 2020, R&D expenses decreased by 6% to approximately $13.3 million from $14.1 million in 2019 [30] - General and administrative expenses for Q4 2020 were approximately $2.1 million, an increase of 5% from $2 million in Q4 2019 [30] Market Data and Key Metrics Changes - The company anticipates a PDUFA date of October 28, 2021, for MydCombi, which, if approved, would be its first commercially available product [20][34] - The market potential for MicroLine, aimed at treating presbyopia, is estimated to exceed $7 billion in the U.S. alone [26] Company Strategy and Development Direction - The company aims to efficiently market MydCombi with a small, targeted salesforce and a specialty pharmacy network, rather than a large conventional sales force [9][18] - The strategy includes leveraging partnerships with organizations that have significant reach to augment sales efforts [19] - The company is focused on advancing its proprietary microdosing technology, Optejet, to improve drug delivery and patient experience [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the progress made in 2020 and the momentum entering 2021, with multiple potential value-creating milestones on the horizon [13][34] - The company is aware of the risks associated with the evolving COVID-19 pandemic and its impact on operations and clinical trials [6] Other Important Information - The company has outlicensed MicroPine and MicroLine to Arctic Vision in Greater China and South Korea, generating approximately $16 million in upfront and milestone-based fees [12] - The cash balance as of December 31, 2020, was approximately $28.4 million, expected to last into the middle of Q1 2022 [32] Q&A Session Summary Question: Are there any secondary outcome measures in the VISION-1 study? - Yes, the study is collecting secondary and exploratory endpoints, and a wealth of data is anticipated [36][37] Question: When will specialized salespeople be brought in for MydCombi? - Specialized salespeople are not expected to be onboarded before August, in preparation for the October approval [41] Question: How does the agreement with EVERSANA fit into the marketing plans for MydCombi? - EVERSANA will handle invoicing, billing, and customer service, allowing the company to maintain a leaner infrastructure [43][44] Question: What are the plans for the VISION-2 study? - The company plans to initiate VISION-2 by the end of the year, learning from VISION-1 results [47][48] Question: What is the initial pricing for MydCombi? - The anticipated price is about $100 per cartridge, which should treat at least 75 patients, aligning closely with current spending by doctors [54]

Financial Data and Key Metrics Changes - For Q2 2020, the company reported a net loss of approximately $5 million or $0.25 per share, compared to a net loss of approximately $5.3 million or $0.44 per share for Q2 2019, indicating an improvement in loss per share [31] - Research and development expenses totaled approximately $2.9 million for Q2 2020, a decrease of 18.3% from approximately $3.6 million in the same period of 2019 [32] - General and administrative expenses were approximately $2.1 million for Q2 2020, an increase of 16.3% compared to approximately $1.8 million in Q2 2019 [32] - Total operating expenses for Q2 2020 were approximately $5 million, a decrease of 6.7% from approximately $5.4 million in Q2 2019 [33] Business Line Data and Key Metrics Changes - The company successfully resumed recruitment for its Phase III CHAPERONE study for progressive myopia, which is set to enroll over 400 children [24] - The MicroStat Phase III trials were completed, and the company anticipates initiating the presbyopia Phase III programs in the coming months [9][12] Market Data and Key Metrics Changes - The exclusive license agreement with Arctic Vision for the development and commercialization of MicroPine and MicroLine in Greater China and South Korea is expected to provide payments of up to $45.75 million, enhancing the company's market potential in Asia [11][13] Company Strategy and Development Direction - The company is focused on building its U.S. operations and expanding its late-stage clinical pipeline in the ophthalmic space [9] - The Arctic Vision agreement is part of the company's international distribution strategy, aimed at addressing significant markets for progressive myopia and presbyopia [15] - The company plans to submit a new drug application for MicroStat by the end of 2020 and initiate Phase III VISION studies for MicroLine [12][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing clinical initiatives despite the COVID-19 pandemic, highlighting the importance of patient safety during recruitment [8] - The company anticipates that the COVID-19 pandemic may increase the incidence of progressive myopia due to children spending more time indoors [65] - Management emphasized the need to expedite the development of their products to address the growing unmet needs in the market [64] Other Important Information - The company had a cash balance of approximately $10.2 million as of June 30, 2020, which is expected to be sufficient through at least the end of Q1 2021 [34] - The Opteject dispenser has been highlighted as a potential solution to reduce contamination risks associated with traditional eyedropper bottles, especially in the context of COVID-19 [20][22] Q&A Session Summary Question: Update on the MicroStat NDA process and its timing - Management confirmed that stability studies for MicroStat have not been materially impacted by COVID-19, and they are on track to submit the NDA by the end of the year [37] Question: Thoughts on commercializing MicroStat - Management noted significant interest from clinicians in the Opteject dispenser, which is expected to facilitate commercialization efforts [38] Question: Impact of the Arctic Vision deal on cash runway - The upfront payment from the Arctic Vision deal is expected to help extend the company's cash runway, but additional capital will still be required for long-term strategy execution [41] Question: Speed of enrollment for the CHAPERONE trial - Management indicated that nearly all clinical sites are operational and enrollment is progressing well, with expectations to complete enrollment in the next nine months [45] Question: Competitive position regarding other companies working on atropine for progressive myopia - Management acknowledged competition but emphasized the unique advantages of their delivery system, which minimizes systemic absorption and improves patient compliance [62][64]

Financial Data and Key Metrics Changes - For Q1 2020, the company reported a net loss of approximately $5.5 million, or $0.31 per share, compared to a net loss of approximately $5.9 million, or $0.50 per share, for the same period in 2019, indicating a slight improvement in loss per share [20] - Research and development expenses totaled approximately $3.6 million, a decrease of 9.3% from approximately $4 million in Q1 2019 [20] - General and administrative expenses were approximately $1.8 million, down 5.5% from approximately $1.9 million in Q1 2019 [20] - Total operating expenses for Q1 2020 were approximately $5.5 million, a decrease of 8.1% from approximately $6 million in Q1 2019 [20] - As of March 31, 2020, the company's cash balance was approximately $13.7 million, including approximately $5.4 million from a private placement [21] Business Line Data and Key Metrics Changes - The company continues to advance its late-stage therapeutic pipeline, particularly focusing on MicroStat for pharmacologic mydriasis, which is on track for NDA submission by the end of 2020 [9][10] - The MicroLine program for presbyopia is anticipated to initiate once conditions improve, with a focus on a rapid Phase II program [10] - The CHAPERONE study for progressive myopia has been delayed due to COVID-19, but the company is maintaining virtual follow-ups with enrolled patients [14] Market Data and Key Metrics Changes - The company highlights a significant increase in progressive myopia rates, with over 9% of children in the U.S. and more than 80% in Asia affected, potentially impacting future market opportunities [11][12] - The pandemic has led to a decrease in outdoor activities, which is linked to an increased risk of myopia, further emphasizing the need for the company's products [12][47] Company Strategy and Development Direction - The company aims to submit the MicroStat NDA this year and is preparing to initiate Phase III studies for MicroLine and CHAPERONE when safe [23] - The management emphasizes the importance of maintaining health and safety while navigating the challenges posed by COVID-19 [23] - The company is focusing on virtual engagement and partnerships to support the commercialization of its products [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing impact of COVID-19 on operations and clinical trials, but remains optimistic about resuming activities as conditions improve [7][8] - The company is prepared for a potential reduction in cash burn to approximately $3.5 million to $4 million per quarter until full-scale operations resume [39] - Management expresses confidence in the strength of their clinical data and the readiness of their team to resume operations [28] Other Important Information - The company has conducted a national survey indicating that 85% of parents of myopic children had a positive reaction to the CHAPERONE study, which will aid in future commercialization efforts [17] - The management is closely monitoring the situation and adapting strategies to ensure continued progress despite the pandemic [7][8] Q&A Session Summary Question: Timeline for MicroLine Phase III program - Management indicated that once conditions are safe, the study could produce results within three to six months after enrollment begins [25][26] Question: Rate-limiting step for MicroStat NDA filing - The primary rate-limiting step is the completion of stability studies, which are on track for timely NDA submission [27][28] Question: Enrollment status of MicroPine Phase III study - Enrollment has been delayed, but the company is maintaining contact with enrolled patients and ensuring supply continuity [29][30] Question: Clinical sites in affected areas - About one-sixth of clinical sites are in heavily affected areas, but many sites in less affected areas are preparing to resume activities [36] Question: Expected cash burn before resumption of studies - Cash burn is expected to be reduced to approximately $3.5 million to $4 million per quarter until operations ramp back up [39]

Financial Performance and Funding - The company has incurred net losses of approximately $57.7 million since inception, with net losses of $21.2 million and $17.3 million for the years ended December 31, 2019 and 2018, respectively [237]. - As of December 31, 2019, the company had federal net operating loss carry-forwards of approximately $45.0 million, with about $10.8 million expiring between 2034 and 2037 [243]. - The company requires substantial additional funding to continue research and development activities and advance commercialization efforts, which may not be available on acceptable terms [231]. - A recent private placement raised approximately $6 million, but additional capital may cause dilution to existing stockholders [234]. - The company has not generated any product sales revenue and expects to continue incurring substantial losses while preparing product candidates for the market [236]. - The company has substantial doubt about its ability to continue as a going concern without additional funding [229]. - The company may need to significantly scale back or reprioritize research and development activities if additional capital is not available [231]. Research and Development Challenges - The company may face significant delays in clinical trials due to various factors, including patient enrollment challenges and regulatory approvals [249]. - The company’s approach to developing therapeutic product candidates is new and may never lead to marketable products, increasing investment risks [256]. - The company’s research and development activities may be impeded by scientific or technological difficulties, potentially delaying commercialization [258]. - The company is preparing for Phase III clinical trials for its lead product candidates, MicroLine and MicroPine, which are critical for obtaining regulatory approval and launching commercial sales [260]. - The success of the company's business strategy relies on developing several pipeline product candidates over the next 3-4 years, requiring substantial investment and regulatory approvals [263]. - The company faces significant competition in the specialty pharma market, which is characterized by rapid technological change and the potential for competitors to achieve regulatory approval before the company [271]. Market and Commercialization Risks - The commercial success of the product candidates will depend on market acceptance among ophthalmologists, optometrists, and third-party payors, as well as the safety and efficacy of the products [269]. - The company must establish effective distribution processes and maintain adequate sales and marketing capabilities to achieve commercial success [276]. - Regulatory approvals are essential for commercialization, and any delays or failures in obtaining these approvals could materially impair the company's ability to generate revenue [283]. - The company is exposed to risks related to product liability claims, which could divert resources and limit commercialization of its products [279]. - The company must comply with extensive regulatory requirements, including post-marketing studies and safety monitoring, which can be costly and time-consuming [291]. - The company may face penalties for non-compliance with regulatory requirements, which could include fines, product recalls, or withdrawal of marketing approvals [293]. Legal and Regulatory Environment - The company is subject to various federal and state healthcare fraud and abuse laws, which could lead to substantial penalties if compliance is not achieved [296]. - The U.S. federal anti-kickback statute prohibits remuneration for referrals related to services covered by federal healthcare programs, impacting business arrangements [296]. - Legislative changes, including the Medicare Modernization Act, have altered reimbursement methodologies, potentially reducing coverage and prices for approved products [304]. - The Affordable Care Act (ACA) includes provisions that impose fees on manufacturers and increase rebate requirements, affecting profitability [305]. - The Budget Control Act of 2011 mandates up to 2% reductions in Medicare payments to providers, impacting revenue streams [308]. Operational and Management Considerations - The company relies on a small workforce of 27 full-time employees as of March 25, 2020, and may face challenges in managing growth and infrastructure [323]. - Future performance is contingent on the ability to attract and retain qualified personnel amidst intense competition in the pharmaceutical industry [321]. - Compliance with anti-corruption laws, such as the FCPA and the Bribery Act, is critical and may incur significant costs and legal risks [312]. - The company may face delays in product launches due to pricing regulations in foreign markets, affecting revenue generation [311]. - The potential for legislative measures aimed at reducing drug costs could adversely impact anticipated revenue from product candidates [310]. Intellectual Property Risks - The company’s success depends on its ability to protect intellectual property, with potential challenges from competitors that could harm its competitive advantage [344]. - The patent application process is expensive and time-consuming, and there is no guarantee that patents will be issued to protect the company's technology [344][354]. - The company may face challenges in enforcing patent rights, which could limit its ability to prevent competitors from commercializing similar technologies [350]. - The company cannot be certain it was the first to file for patent protection, which could lead to disputes over patent rights with third parties [353]. - The patent application process is subject to numerous risks and uncertainties, which may result in partial or complete loss of patent rights in relevant jurisdictions [355]. - Competitors may seek or have already obtained patents that could limit the company's ability to make, use, and sell its potential product candidates [357]. - The company cannot assure that any of its patent applications will be found patentable or will issue as patents, which could materially harm its business [361]. - The lifespan of patents is generally 20 years after filing, and the company may not obtain adequate protection for its products if patents expire before commercialization [369]. - The company may face challenges in enforcing its intellectual property rights globally, particularly in jurisdictions with less favorable patent laws [376]. - Legal proceedings to enforce patent rights could result in substantial costs and divert resources from other business aspects [379]. - The company’s commercial success depends on its ability to develop and market product candidates without infringing third-party intellectual property rights [383]. - The company may face substantial intellectual property litigation risks, including potential infringement claims from third parties [384]. - If found to infringe on third-party intellectual property rights, the company could be forced to cease development or obtain licenses that may not be commercially reasonable [385]. - The company relies on licenses for certain patent rights and proprietary technology, which may not provide exclusive rights, potentially allowing competitors to develop similar products [396]. - The company may be unable to control patent prosecution or maintenance under licensing agreements, risking the validity and enforceability of necessary patents [397]. Stockholder and Market Considerations - The company’s management and Board of Directors beneficially owned approximately 23% of the capital stock as of March 25, 2020, allowing them to influence stockholder decisions significantly [407]. - A significant portion of the company's outstanding shares may be sold into the market in the near future, potentially causing a significant drop in stock price [408]. - As of March 25, 2020, the company had 19,776,019 shares of common stock outstanding, including 2,675,293 shares issued in a recent private placement [409]. - The per share trading price of the company's common stock has fluctuated between $1.77 and $10.74 from the IPO in January 2018 to March 25, 2020 [412]. - The company is required to file a resale registration statement with the SEC within the next 30 days for shares issued in the private placement and warrants [409]. - The company has broad discretion in the use of cash from financings, which could impact operational results if not applied effectively [414]. - The company is subject to increased legal, accounting, and financial compliance costs due to regulations such as the Sarbanes-Oxley Act [417]. - The company identified material weaknesses in internal controls in 2017, which have since been remedied, but future weaknesses may arise [421]. - The company is classified as an "emerging growth company," allowing it to delay adopting new accounting standards [424]. - The company will remain an emerging growth company until certain financial thresholds are met, including a market value exceeding $700 million or total annual gross revenue of $1.07 billion [426]. - The stock market has experienced extreme price fluctuations, which could affect the company's stock price and trading activity [412]. - The company may face challenges in maintaining effective internal controls, which could adversely affect financial reporting and investor confidence [422].