Eyenovia(EYEN) - 2023 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section provides the company's unaudited condensed financial statements and related disclosures for the periods ended June 30, 2023, and December 31, 2022 Item 1. Financial Statements. This section presents the unaudited condensed financial statements, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining the company's financial position, performance, and significant accounting policies for the periods ended June 30, 2023, and December 31, 2022 Condensed Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2023, and December 31, 2022 Condensed Balance Sheet Highlights (June 30, 2023 vs. December 31, 2022) | Metric | June 30, 2023 | December 31, 2022 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Cash and cash equivalents | $17,468,088 | $22,863,520 | -$5,395,432 | | Total Current Assets | $23,276,793 | $27,642,506 | -$4,365,713 | | Total Assets | $29,346,899 | $31,036,413 | -$1,689,514 | | Total Current Liabilities | $4,064,210 | $4,512,328 | -$448,118 | | Total Liabilities | $18,824,952 | $13,801,848 | +$5,023,104 | | Total Stockholders' Equity | $10,521,947 | $17,234,565 | -$6,712,618 | Unaudited Condensed Statements of Operations This section outlines the company's financial performance, including revenues, expenses, and net loss for the three and six months ended June 30, 2023 and 2022 Condensed Statements of Operations Highlights (Unaudited) | Metric | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development | $2,811,061 | $3,586,866 | $5,333,011 | $7,299,450 | | General and administrative | $3,149,809 | $3,534,590 | $6,086,695 | $7,009,555 | | Total Operating Expenses | $5,960,870 | $7,121,456 | $11,419,706 | $14,309,005 | | Loss From Operations | $(5,960,870) | $(7,121,456) | $(11,419,706) | $(14,309,005) | | Net Loss | $(6,215,860) | $(7,239,100) | $(11,955,226) | $(14,578,765) | | Net Loss Per Share - Basic and Diluted | $(0.16) | $(0.22) | $(0.32) | $(0.46) | Unaudited Condensed Statements of Changes in Stockholders' Equity This section details changes in the company's equity, including common stock issuance, stock-based compensation, and net loss, for the six months ended June 30, 2023 Condensed Statements of Changes in Stockholders' Equity Highlights (Unaudited) | Metric | Balance - January 1, 2023 | Issuance of common stock in ATM offering [1] | Stock-based compensation | Net loss | Balance - June 30, 2023 | | :------------------------------------ | :------------------------ | :------------------------------------------- | :----------------------- | :--------- | :---------------------- | | Common Stock Shares | 36,668,980 | 1,299,947 (Q1) + 121,989 (Q2) | — | — | 38,169,398 | | Common Stock Amount | $3,667 | $130 (Q1) + $13 (Q2) | — | — | $3,817 | | Additional Paid-In Capital | $135,461,361 | $3,499,462 (Q1) + $403,107 (Q2) | $819,064 (Q1) + $493,632 (Q2) | — | $140,703,819 | | Accumulated Deficit | $(118,230,463) | — | — | $(5,739,366) (Q1) + $(6,215,860) (Q2) | $(130,185,689) | | Total Stockholders' Equity | $17,234,565 | $3,499,592 (Q1) + $403,120 (Q2) | $819,064 (Q1) + $493,632 (Q2) | $(5,739,366) (Q1) + $(6,215,860) (Q2) | $10,521,947 | Unaudited Condensed Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 Condensed Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net Cash Used In Operating Activities | $(11,673,476) | $(12,883,603) | | Net Cash Used In Investing Activities | $(2,122,197) | $(399,640) | | Net Cash Provided By Financing Activities | $8,400,241 | $15,327,975 | | Net (Decrease) Increase in Cash and Cash Equivalents | $(5,395,432) | $2,044,732 | | Cash, cash equivalents and restricted cash - End of Period | $17,468,088 | $29,381,582 | Notes to Unaudited Condensed Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed financial statements Note 1 – Business Organization, Nature of Operations and Basis of Presentation This note describes the company's business, its ophthalmic technology focus, and the basis for financial statement presentation - Eyenovia, Inc. is an ophthalmic technology company developing the Optejet® delivery system for drug-device therapeutic programs in mydriasis, presbyopia, and pediatric progressive myopia[24] - The company's investigational products are classified by the FDA as drug-device combination products, with the Center for Drug Evaluation and Research (CDER) designated as the lead center for review and approval under new drug applications (NDAs)[24] Note 2 – Going Concern and Summary of Significant Accounting Policies This note addresses the company's going concern status and outlines significant accounting policies, including recent standard adoptions - As of June 30, 2023, the Company had approximately $17.5 million in cash and cash equivalents[27] - The Company incurred net losses of approximately $12.0 million and used cash in operations of approximately $11.7 million for the six months ended June 30, 2023[27] - These circumstances raise substantial doubt about the Company's ability to continue as a going concern for at least one year, necessitating further capital raising through licensing, equity, or debt securities[27][28] - The Company adopted ASU 2016-13 (Credit Losses) and early adopted ASU 2020-06 (Convertible Instruments) effective January 1, 2023, with no material impact on its financial position, results of operations, or cash flows[38][39] Note 3 – Prepaid Expenses and Other Current Assets This note details the composition of prepaid expenses and other current assets as of June 30, 2023, and December 31, 2022 Prepaid Expenses and Other Current Assets | Category | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Payroll tax receivable | $645,566 | $660,891 | | Prepaid insurance expenses | $600,607 | $201,082 | | Prepaid general and administrative expenses | $310,701 | $87,982 | | Total prepaid expenses and other current assets | $1,801,373 | $1,190,719 | Note 4 – Accrued Compensation This note provides a breakdown of accrued compensation, including bonus and payroll expenses, for the periods presented Accrued Compensation | Category | June 30, 2023 | December 31, 2022 | | :------------------- | :------------ | :---------------- | | Accrued bonus expenses | $695,450 | $1,447,643 | | Accrued payroll expenses | $317,668 | $299,548 | | Total accrued compensation | $1,013,118 | $1,747,191 | Note 5 – Accrued Expenses and Other Current Liabilities This note details accrued expenses and other current liabilities, such as consulting, R&D, and leasehold improvement costs Accrued Expenses and Other Current Liabilities | Category | June 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------ | :---------------- | | Accrued consulting and professional services | $142,915 | $320,000 | | Accrued research and development expenses | $117,983 | $35,524 | | Accrued leasehold improvements | — | $92,528 | | Total accrued expenses and other current liabilities | $363,431 | $503,076 | Note 6 – Notes Payable This note outlines the company's notes payable, including current and non-current portions, and recent debt funding activities Notes Payable (Net of Debt Discount) | Category | June 30, 2023 | December 31, 2022 | | :------------------------------------ | :------------ | :---------------- | | Total current portion (net) | $947,163 | $348,896 | | Total non-current portion (net) | $13,176,524 | $8,381,876 | - On May 22, 2023, the Company received an additional $5,000,000 tranche of non-convertible debt funding from Avenue Capital Management II, L.P[47] - The additional funding extended the interest-only period for the entire outstanding balance under the Loan and Security Agreement to 18 months (through May 2024)[47] Note 7 – Commitments and Contingencies This note describes the company's contractual obligations, including lease commitments and potential contingencies - The Company extended its New York office lease from November 1, 2023, to December 31, 2026[49] - The Company renewed three leases in Redwood City, California, from September 1, 2023, to August 31, 2025[50] Future Minimum Operating Lease Payments | For the Year Ending December 31, | Minimum Lease Payments | | :------------------------------- | :--------------------- | | 2023 | $445,025 | | 2024 | $660,923 | | 2025 | $675,400 | | 2026 | $560,996 | | 2027 | $214,619 | | Total future minimum lease payments | $2,556,963 | Note 8 – Stockholders' Equity This note details changes in stockholders' equity, including stock plan amendments, ATM offerings, and stock-based compensation - Stockholders approved an amendment to the 2018 Omnibus Stock Incentive Plan, reserving an additional 1,000,000 shares of common stock for issuance[55] - The Company received approximately $3.9 million in net proceeds from the sale of 1,421,936 common shares through an At-the-Market offering during the six months ended June 30, 2023[56] Stock-Based Compensation Expense | Period | 2023 | 2022 | | :------------------------------------ | :----------- | :----------- | | Three Months Ended June 30, | $493,632 | $1,036,926 | | Six Months Ended June 30, | $1,312,696 | $1,945,913 | - As of June 30, 2023, there was $2,868,023 of unrecognized stock-based compensation expense related to stock options, to be recognized over a weighted average period of 1.7 years[65] Note 9 – Employee Benefit Plans This note describes the company's 401(k) plan, including matching contributions and related expenses - The Company's 401(k) Plan includes a matching contribution equal to 100% of elective deferrals up to 4% of eligible earnings[66] 401(k) Matching Contributions Expense | Period | 2023 | 2022 | | :------------------------------------ | :---------- | :---------- | | Three Months Ended June 30, | $46,196 | $47,883 | | Six Months Ended June 30, | $125,164 | $133,982 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This section provides management's perspective on the company's financial condition and results of operations, highlighting the FDA approval of Mydcombi™, an overview of its Optejet® delivery system and product pipeline, financial performance, liquidity challenges, and future capital requirements FDA Approval of Mydcombi™ This section highlights the FDA approval of Mydcombi™ and its initial commercial launch, marking a significant milestone for the company - The FDA approved Mydcombi™ on May 5, 2023, as the only fixed combination of two leading mydriatic agents in the United States delivered as an ophthalmic spray[69] - The first commercial sale of Mydcombi™ occurred on August 3, 2023, as part of a targeted launch, with a broader launch anticipated in 2024 when internal manufacturing capabilities are expected to be online[69] Overview of Business and Products This section provides an overview of Eyenovia's ophthalmic technology, the Optejet® delivery system, and its product pipeline, including Mydcombi™, MicroPine, and MicroLine - Eyenovia is an ophthalmic technology company developing the Optejet® delivery system for its drug-device therapeutic programs (mydriasis, presbyopia, pediatric progressive myopia) and out-licensing[70] - The Optejet® device delivers a precise, low-volume (7-9 microliters) columnar spray, achieving a 98% successful administration rate on the first attempt in clinical trials, aiming to reduce side effects and improve tolerability[72][73] - The product pipeline includes Mydcombi™ (FDA-approved), MicroPine (for progressive myopia, licensed to Bausch + Lomb in US/Canada), and MicroLine (for presbyopia, positive Phase III results)[75][78][79] - The Company has licensing agreements with Bausch + Lomb for MicroPine in the US and Canada, and with Arctic Vision for MicroPine, MicroLine, and Mydcombi in Greater China and South Korea[76][81] Financial Overview This section summarizes the company's historical financing, recent net losses, accumulated deficit, and ongoing going concern challenges - Historically, operations have been financed through equity offerings, licensing arrangements, and credit facilities[83] - The Company incurred net losses of $6.2 million for the three months and $12.0 million for the six months ended June 30, 2023, with an accumulated deficit of $130.2 million[84] - There is substantial doubt about the Company's ability to continue as a going concern, requiring additional capital or cost reductions[83] - Research and development expenses are expected to increase with ongoing initiatives[86] Results of Operations This section analyzes the company's financial performance, comparing key operating expenses for the three and six months ended June 30, 2023 and 2022 Three Months Ended June 30, 2023 Compared with Three Months Ended June 30, 2022 This section compares research and development and general and administrative expenses for the three months ended June 30, 2023 and 2022 - Research and development expenses decreased by $0.8 million (22%) to $2.8 million, primarily due to the conclusion of the VISION-2 Study and changes in stock-based compensation allocation[88] - General and administrative expenses decreased by $0.4 million (11%) to $3.1 million, mainly due to lower professional fees (legal and recruiting) and reduced sales and marketing promotional expenses[89] Six Months Ended June 30, 2023 Compared with Six Months Ended June 30, 2022 This section compares research and development and general and administrative expenses for the six months ended June 30, 2023 and 2022 - Research and development expenses decreased by $2.0 million (27%) to $5.3 million, attributed to the conclusion of the VISION-2 Study, changes in stock-based compensation allocation, and increased cost reimbursements for clinical supplies[90] - General and administrative expenses decreased by $0.9 million (13%) to $6.1 million, primarily due to lower professional fees (legal and recruiting) and reduced sales and marketing promotional expenses[91] Liquidity and Capital Resources and Going Concern This section discusses the company's cash position, working capital, and financing activities, highlighting the ongoing going concern risk and capital needs Liquidity Metrics | Metric | June 30, 2023 | December 31, 2022 | | :------------------------ | :------------ | :---------------- | | Cash and cash equivalents | $17,468,088 | $22,863,520 | | Working capital | $19,212,583 | $23,130,178 | | Notes payable (gross) | $15,842,950 | $10,425,000 | - As of June 30, 2023, the accumulated deficit was $130.2 million[94] - Net cash used in operating activities for the six months ended June 30, 2023, was $11.7 million[96] - Net cash provided by financing activities for the six months ended June 30, 2023, totaled $8.4 million, primarily from a $4.0 million At-the-Market Offering Program and $5.0 million from an additional debt tranche[98] - These conditions raise substantial doubt about the Company's ability to continue as a going concern, necessitating additional capital or cost reductions[95] Contractual Obligations and Commitments This section outlines the company's short-term and long-term contractual obligations, including accounts payable, lease commitments, and notes payable - Within the next twelve months, commitments include: $2.7 million for accounts payable, accrued compensation, and other current liabilities; $0.4 million for non-cancelable operating lease commitments; and $1.0 million for notes payable[99] - After twelve months, commitments include: an additional $1.6 million for non-cancelable operating lease commitments and $14.8 million for notes payable[100] - Potential executive severance pay of $1.5 million under certain termination conditions[99] Off-Balance Sheet Arrangements This section confirms the absence of material off-balance sheet arrangements that would significantly impact the company's financial statements - The Company has no material off-balance sheet arrangements that would significantly affect its financial condition or results of operations[102] Critical Accounting Policies and Estimates This section states that there have been no material changes to the company's critical accounting policies and estimates - There have been no material changes to the Company's critical accounting policies and estimates from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022[105] Recently Adopted Accounting Standards This section refers to Note 2 for details on recently adopted accounting standards - For a description of recently adopted accounting standards, refer to Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q[106] Item 3. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company, Eyenovia is exempt from providing quantitative and qualitative disclosures about market risk - Eyenovia, as a smaller reporting company, is not required to provide quantitative and qualitative disclosures about market risk[107] Item 4. Controls and Procedures. Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control over financial reporting - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2023, providing reasonable assurance for timely and accurate reporting[111] - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2023[112] PART II - OTHER INFORMATION This section covers other information including legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits Item 1. Legal Proceedings. The company is not currently involved in any material legal proceedings, though it acknowledges that ordinary course litigation, regardless of outcome, can have adverse impacts - The Company is not currently a party to any material legal proceedings[115] - Litigation, even if not material, can adversely impact the company due to defense and settlement costs, diversion of management resources, and reputational harm[115] Item 1A. Risk Factors. There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes to the risk factors set forth in the Annual Report on Form 10-K for the year ended December 31, 2022[116] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. The company reported no unregistered sales of equity securities and no purchases of equity securities by the issuer or affiliated purchasers during the period - No unregistered sales of equity securities occurred during the period[117] - No purchases of equity securities by the issuer or affiliated purchasers were made[118] Item 3. Defaults Upon Senior Securities. This item is not applicable to the company - This item is not applicable[119] Item 4. Mine Safety Disclosures. This item is not applicable to the company - This item is not applicable[120] Item 5. Other Information. No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the three months ended June 30, 2023 - No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the three months ended June 30, 2023[121] Item 6. Exhibits. This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, the equity incentive plan, and certifications from the principal executive and financial officers - Includes certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[123] - Lists corporate governance documents (Certificate of Incorporation, Bylaws) and the Amended and Restated 2018 Omnibus Stock Incentive Plan[123] SIGNATURES This section contains the duly authorized signatures for the report SIGNATURES The report is duly signed on behalf of Eyenovia, Inc. by John Gandolfo, Chief Financial Officer, on August 11, 2023 - The report was signed by John Gandolfo, Chief Financial Officer, on August 11, 2023[127]