Eyenovia(EYEN) - 2020 Q4 - Annual Report

PART I CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 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] - Statements cover estimates for expenses, future revenue, capital requirements, product development, and economic conditions[13] - The company undertakes no obligation to update any forward-looking statements to reflect subsequent events or circumstances[13] Summary Risk Factors 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][18] - 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][20] - Regulatory and legal compliance risks involve potential failure to obtain marketing approval, penalties for non-compliance, and the impact of new legislation[21][22][23] RISKS RELATED TO OUR FINANCIAL POSITION AND NEED FOR ADDITIONAL CAPITAL - The company may not be able to continue as a going concern, potentially leading to significant loss for stockholders[17] - Additional capital is required for product development, manufacturing, and commercialization, and failure to secure it could force delays or termination of efforts[18] - Raising capital may dilute existing stockholders, restrict operations, or require relinquishing rights to technologies[18] - The company has incurred operating losses since inception and expects to continue doing so, with no guarantee of future profitability[18] RISKS RELATED TO DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCT CANDIDATES - Substantial delays or failures in clinical trials by the company or its licensees are possible[19] - Difficulty in enrolling or maintaining patient participation in clinical trials could occur[20] - The company may not be able to develop marketable products using its technology or successfully implement alternative development strategies[20] - The marketing approval process is expensive, time-consuming, and uncertain, potentially preventing commercialization[20] - Product candidates may cause undesirable side effects, and market opportunities might be smaller than anticipated[20] - Commercial success depends on market acceptance, and licensing partners may not exert commercially reasonable efforts[20] - The company faces intense competition and risks from rapid technological change[20] - Failure to establish and maintain effective manufacturing and distribution processes, and exposure to product liability claims, are significant risks[20] RISKS RELATED TO REGULATORY APPROVAL AND LEGAL COMPLIANCE MATTERS - Inability or delays in obtaining required regulatory approvals could prevent commercialization of product candidates[21] - Failure to obtain marketing approval in foreign jurisdictions would prevent product marketing there[22] - Term restrictions for products in the U.S. and other licensed jurisdictions may limit manufacturing and marketing[22] - Substantial penalties may be incurred for non-compliance with regulatory requirements or unanticipated product problems[22] - Recently enacted and future legislation may affect the ability to commercialize products and their prices[22] - Failure to comply with laws governing operations could lead to penalties, remedial measures, or restrictions on product development and sales[22][23] RISKS RELATED TO OUR BUSINESS OPERATIONS AND MANAGING GROWTH - High dependence on senior management team services[25] - Limited corporate infrastructure and potential difficulties in managing growth[25] - Reliance on information technology, with risks of failure, inadequacy, interruption, or cybersecurity incidents[25] RISKS RELATED TO OUR DEPENDENCE ON THIRD PARTIES - Limited clinical trial experience and reliance on third parties for conducting and managing clinical trials[26] - Potential need to contract with additional third parties for manufacturing product candidates, especially for commercialization[26] RISKS RELATED TO OUR INTELLECTUAL PROPERTY AND POTENTIAL LITIGATION - Success depends on the ability to protect intellectual property, proprietary technology, and trade secrets[27] - Patents covering proprietary technology may be challenged, narrowed, circumvented, or invalidated by third parties[28] - Uncertainty regarding being the first to invent or file for patent protection[28] - The patent application process is risky, with no assurance of successful patent obtainment[28] - Changes to patent law could diminish patent value, impairing product protection[28] - Risk of expensive, time-consuming, and unsuccessful lawsuits to protect or enforce intellectual property[28] - Failure to comply with intellectual property license obligations could lead to loss of important license rights[28] - Inadequate protection of trademarks and trade names could adversely affect business and name recognition[28] RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK - Management and Board of Directors can substantially influence all matters submitted to stockholders for approval[29] - Potential for a significant portion of outstanding shares to be sold, causing a drop in common stock market price[29] - The price of common stock may be volatile and fluctuate substantially[29] - Broad discretion in the use of cash[29] - Business is subject to changing regulations regarding corporate governance and disclosure controls, increasing costs and noncompliance risk[29] - Failure to develop and maintain adequate financial controls could lead to material weaknesses[29] - Provisions in corporate charter documents and Delaware law could make an acquisition more difficult[29] - Certificate of incorporation designates the Delaware Court of Chancery as the sole forum for most disputes[29] Item 1. Business 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] - 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][52][56] - The company's pipeline focuses on late-stage development for progressive myopia (MicroPine), presbyopia (MicroLine), and mydriasis (MydCombi™)[33] Corporate Information - Eyenovia, Inc. was organized in Florida on March 12, 2014, and reincorporated in Delaware on October 6, 2014[31] - Principal executive office is located at 295 Madison Avenue, Suite 2400, New York, NY 10017[31] Overview - Eyenovia is a clinical-stage ophthalmic company developing advanced therapeutics using its proprietary microdose array print (MAP™) platform technology, Optejet®[32] - 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] - 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][34][37][39][40] - License agreements were signed for MicroPine with Bausch Health ($10.0M upfront) and for MicroPine and MicroLine with Arctic Vision ($4.0M upfront)[35][38] Our Strategy - Establish a portfolio of first-in-class micro-therapeutic products for multiple eye treatments through the 505(b)(2) pathway with the FDA[41] - Improve clinical outcomes and patient experiences by providing an improved tolerability profile with microdose therapeutics[43] - Leverage electronic, smartphone-enabled 'e-health' technology (Optejet) for patient-specific compliance monitoring[44] - Develop next-generation targeted microdose treatments for other ophthalmic diseases independently or in collaboration with third parties[45][46] Limitations of Conventional Eye Therapies - Conventional eye drops suffer from issues like overdosing, poor compliance, and imprecise dosing, with low correct administration rates (22%-30%)[47] - Traditional eye drops (30-50 µL) severely overdose the eye, leading to ocular and potential systemic side effects[48] - MydCombi microdosing demonstrated few ocular adverse events and no systemic adverse events in Phase III studies, suggesting improved tolerability[50] Our Solution: The Optejet - The Optejet dispenser delivers precise 6-8 µL doses, reducing drug and toxic preservative exposure by over 75%[52][56] - The technology is based on high-precision inkjet printing (MAP™) and includes smart electronics with Bluetooth connectivity to track patient medication administration[54][60] - The FDA classifies Eyenovia's products as drugs, not medical devices, meaning the Optejet dispenser does not require separate FDA approval[32][55] - Key advantages include precise volumetric control, targeted delivery, fast delivery (less than 100 milliseconds), and smart electronics for compliance tracking[56][57][58][60] Clinical Trial Results - Preclinical and clinical studies suggest that an 8 µL microdose provides comparable clinical efficacy to traditional eye drops with fewer side effects[61] - 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] - 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][68][70] 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] - 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][74][76] - Optejet administration success rate was 96% on the first attempt, and almost 90% of subjects demonstrated accurate self-administration after training[77][79] Our Product Candidates - Eyenovia's current focus is on three programs: MicroLine (presbyopia), MicroPine (progressive myopia), and MydCombi (mydriasis)[82] 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][84] - 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][85][86] - The company has initiated two Phase III VISION trials to evaluate the safety, tolerability, and efficacy of Optejet-administered pilocarpine microdosing[37][87] 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][89][90][95] - The FDA accepted an IND for the Phase III CHAPERONE study in February 2019, with enrollment resuming after initial COVID-19 related delays[34][96] - 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][95] - The CHAPERONE study is a U.S.-based, multi-center, randomized, double-masked trial enrolling over 400 children[96] 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][97][98] - The company completed two Phase III trials (MIST-1 and MIST-2) in November 2019, demonstrating positive results for pupil dilation[39][103] - 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][112][113] - 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][121][123] 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][126] Our Technology - The Optejet system consists of a reusable base and a disposable cartridge with a piezo-driven ejector nozzle[127] - 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] - The system minimizes drug waste and preservative delivery to the eye, and the rechargeable base provides consistent dose delivery[128] - The technology is based on piezo-driven printer technology, adapted for therapeutic delivery to the eye[130] Sales and Marketing - Eyenovia employs a staged commercialization approach, retaining rights for MydCombi and partnering for products requiring larger sales forces[131] - MydCombi, as a cash-pay pharmaceutical for in-office use, is expected to have significantly lower sales and marketing costs[132][140] - MicroLine is also expected to be a cash-pay product, with plans to expand the U.S. sales force to 50 people[133][142] - MicroPine is a standard therapeutic, likely reimbursed by payers, and its commercialization is handled by licensees (Arctic Vision, Bausch Health)[134][143] Manufacturing - For clinical supply, the company relies on a combination of limited internal manufacturing capacity and third-party manufacturers[135] - The company does not have long-term agreements with current manufacturers and plans to use multiple contract manufacturing organizations (CMOs) for commercialization[135][137] - Potential replacements for existing third-party suppliers exist, but delays in sourcing materials or services could occur[135] Competition - The biotechnology and pharmaceutical industries are highly competitive, characterized by rapid technological advancements[138] - Competitors include large pharmaceutical/biotechnology companies and specialty/generic drug companies, many with significantly greater resources[139] - For MydCombi, there are no known FDA-approved micro-therapeutics or fixed-combination products, but competitive macrodose drops exist[140] - For MicroLine, there are no FDA-approved drugs for presbyopia, though other companies are developing therapies without microdosing technology[141] - For MicroPine, there are no FDA-approved drugs to slow myopia progression, but other traditional eye drop atropine versions are under development[143] Intellectual Property - The company's success depends on its ability to obtain, maintain, and enforce proprietary rights related to its products and technologies[144] 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] - Patent coverage includes piezoelectric devices for micro-droplet ejection, methods of delivering medicament, and devices with specially shaped openings for laminar flow[147][148][149][150][151] - U.S. patents are expected to expire between 2031 and 2033, with potential for patent term extension under the Hatch-Waxman Act[147][149][150][151][153][154] - In Asia, patents have been granted in China, South Korea, and Japan for piezoelectric devices and methods of use[157] 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] - The company plans to file additional trademark applications to protect its market positions globally[159] Proprietary Technology 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] - Protection measures include non-disclosure and confidentiality agreements with employees, consultants, and third parties[160] - Invention assignment agreements are required with employees, consultants, and contractors[160] Government Regulation and Product Approvals - Pharmaceutical products are extensively regulated by government authorities in the United States (FDA) and other countries[161] - Obtaining regulatory approvals and ensuring compliance requires substantial time and financial resources[161][162] Review and Approval of Drugs in the United States 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] - The typical approval process involves preclinical studies, IND submission, human clinical trials, NDA submission, and post-approval requirements[163][164] - 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] - Generic drugs are approved via Abbreviated New Drug Applications (ANDAs) by demonstrating bioequivalence to a reference-listed drug (RLD)[196][197] - Exclusivity periods (e.g., 5 years for New Chemical Entities, 3 years for new clinical investigations) impact market entry[200][201][202][203][204][205][206][210] - The 21st Century Cures Act (2016) aims to modernize healthcare, spur innovation, and streamline drug development[213][214] Review and Approval of Drug Products in the European Union 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] - In the European Union, clinical trials require approval from competent national authorities and favorable ethics committee opinions[216][224] - Marketing authorization applications (MAAs) can be submitted via centralized (single EU-wide approval) or decentralized procedures[217][218][220] - New chemical entities in the EU receive 8 years of data exclusivity and an additional 2 years of market exclusivity[229] - Post-marketing, products are subject to comprehensive regulatory oversight, including pharmacovigilance and cGMP compliance[230][231] Pharmaceutical Coverage, Pricing and Reimbursement - MydCombi and MicroLine are intended as 'cash pay' products, likely exempt from complex coverage and reimbursement issues[233] - MicroPine's sales will depend on third-party payor coverage and adequate reimbursement levels[233][234] - Obtaining coverage and reimbursement may require expensive pharmacoeconomic studies[234] - Governments globally are implementing cost-containment programs, which could limit revenue from approved products[235][236][237] Healthcare Law and Regulation - The company's arrangements with healthcare providers are subject to various federal and state healthcare laws, including anti-kickback statutes and HIPAA[239] - Non-compliance with these laws could result in substantial penalties, fines, or exclusion from government programs[239][240] - State and foreign laws also govern health information privacy and security, often differing from HIPAA[240] Changes in the Healthcare Marketplace - The U.S. healthcare industry is driven by cost containment, with legislative changes impacting pharmaceutical pricing[241] - The Affordable Care Act (ACA) included provisions expanding Medicaid rebates and imposing fees on branded manufacturers[243] - Future reform efforts are expected to continue prioritizing reductions in Medicare and other healthcare spending[244][245][330] 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] Available Information - Annual, Quarterly, and Current Reports are available free of charge on the company's website and the SEC's website[247] Item 1A. Risk Factors 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] - There is substantial doubt about the company's ability to continue as a going concern without additional funding[251] - The company has incurred approximately $77.4 million in net losses since inception and expects to continue incurring substantial losses[258][488] - Key risks include the need for substantial additional capital, potential dilution, delays or failures in clinical trials, and intense competition[252][255][267][290][291][292][293][294][303][304][305][306][361][362] Item 1B. Unresolved Staff Comments 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] Item 2. Properties 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] - Research and development activities: approximately 1,000 sq ft in Reno, Nevada[455] - Planned commercial manufacturing facility: approximately 4,500 sq ft in Redwood City, California[455] - Clinical and marketing team offices: 120 sq ft in Newport Beach, California[455] - The company believes existing facilities are adequate and suitable additional spaces will be available on commercially reasonable terms[456] Item 3. Legal Proceedings Eyenovia reported no legal proceedings as of the filing date - The company has no legal proceedings to report[459] Item 4. Mine Safety Disclosures This item is not applicable to Eyenovia - This item is not applicable to the company[461] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 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] - As of March 29, 2021, there were approximately 130 holders of record of the company's common stock[471] - 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][451] - No recent sales of unregistered securities or issuer purchases of equity securities were reported[474][475] Item 6. Selected Financial Data 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] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation 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] - The company's pipeline includes MicroPine for progressive myopia, MicroLine for presbyopia, and MydCombi™ for mydriasis, all utilizing the Optejet® system[480] - Historically, operations have been financed through equity offerings and, more recently, licensing arrangements[487] - 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][502] Overview - Eyenovia is a clinical-stage ophthalmic company developing microdose therapeutics via its Optejet® platform, which has demonstrated ~90% delivery success[480] - The pipeline includes MicroPine (Phase III), MicroLine (Phase III initiated), and MydCombi™ (NDA accepted with PDUFA date of October 28, 2021)[481][482][483][484][485] - 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] Financial Overview - Revenue is generated from upfront licensing fees, development/regulatory milestones, and royalties on sales of licensed products[489] - Research and development expenses are expensed as incurred and are expected to increase with ongoing initiatives[490][491][492] - General and administrative expenses are anticipated to increase due to headcount growth and public company compliance costs[493] Results of Operations Year Ended December 31, 2020 Compared with Year Ended December 31, 2019 Revenue and Cost of Revenue 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] - In October 2020, received $10.0 million upfront payment from Bausch Health License Agreement, recorded as deferred license fee[495] - 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] Research and Development Expenses 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] - The decrease was primarily driven by cost reimbursements from Arctic Vision and Bausch Health and reduced activity due to COVID-19[496] - Offsetting factors included an increase in personnel-related expenses due to new hires and increased depreciation[496] General and Administrative Expenses 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] - 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] - These increases were partially offset by decreases in travel and meeting expenses due to COVID-19[497] Liquidity and Going Concern 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][503] - These conditions raise substantial doubt about the company's ability to continue as a going concern, requiring additional capital[502] 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 - The COVID-19 pandemic caused initial delays in trial enrollment and initiation for the MicroPine CHAPERONE study[506] - Enrollment in the CHAPERONE study has since resumed[506] Off-Balance Sheet Arrangements 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] Critical Accounting Policies 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] Recently Issued Accounting Standards 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] Item 7A. Quantitative and Qualitative Disclosures About Market Risk 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] Item 8. Financial Statements and Supplementary Data 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] Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures 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] Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures 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] - Disclosure controls are designed to provide reasonable assurance that required information for SEC reports is recorded, processed, summarized, and reported timely[519] Management's Report on Internal Control over Financial Reporting 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] - 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] Changes in Internal Control over Financial Reporting 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] Attestation Report of Registered Public Accounting Firm 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] Item 9B. Other Information Eyenovia reported no other information for this item - No other information is reported for this item[526] PART III Item 10. Directors, Executive Officers, and Corporate Governance 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][532] - Information concerning the Audit Committee is incorporated by reference from the proxy statement[531] - The company has adopted a code of business conduct and ethics for all employees, executive officers, and directors, available on its website[531] Item 11. Executive Compensation 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] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 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] 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 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] Item 14. Principal Accounting Fees and Services 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] PART IV Item 15. Exhibits, Financial Statement Schedules 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] - No financial statement schedules are filed[541] - An exhibit index lists various documents, including corporate charter documents, license agreements, and certifications[542][543][544][545][546][547][548][549][550] Item 16. Form 10-K Summary Eyenovia did not provide a Form 10-K Summary - No Form 10-K Summary is provided[551] 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][558] - Signatures are dated March 30, 2021[557][558] INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm 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] - An explanatory paragraph was included, citing substantial doubt about the company's ability to continue as a going concern[563] - The financial statements do not include adjustments that might result from the outcome of this going concern uncertainty[563] Balance Sheets 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] - Deferred license fees of $14.0 million were recorded in 2020, contributing to a substantial increase in total liabilities[569] - The accumulated deficit grew from $57.67 million in 2019 to $77.44 million in 2020, reflecting ongoing operating losses[569] Statements of Operations 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] - Net loss improved from $21.2 million in 2019 to $19.8 million in 2020[571] - 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] Statements of Changes in Stockholders' Equity 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] - 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] - The accumulated deficit increased by $19.77 million in 2020 due to the net loss[573] Statements of Cash Flows 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][580] - 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][580] - The company's cash and cash equivalents increased by $14.2 million in 2020, ending the year at $28.4 million[580] Notes to Financial Statements Note 1 – Business Organization and Nature of Operations 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] - The company is a clinical-stage ophthalmic company developing advanced therapeutics based on its proprietary microdose array print (MAP) platform technology[585] - Eyenovia's products are classified by the FDA as drugs, not medical devices[585] - The COVID-19 pandemic caused initial delays in the MicroPine CHAPERONE study, but enrollment has since resumed[586] Note 2 – Summary of Significant Accounting Policies 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][594][596][597][600][601][604][609][617][618][619][620][621] - 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][588] - Revenue from licensing agreements is recognized upon satisfaction of performance obligations, with upfront payments recorded as deferred license fees[609][614][617] - Recently adopted and issued accounting standards had no material impact or are being evaluated for future impact[625][626][627][630][631] Note 3 – Prepaid Expenses and Other Current Assets 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] - Significant increases were observed in payroll tax receivable, prepaid insurance expenses, and prepaid board of directors expenses[632] Note 4 – Property and Equipment, Net 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] - Depreciation and amortization expense was $95,415 in 2020, with $67,595 allocated to R&D and $27,820 to G&A[634] Note 5 – Accrued Expenses and Other Current Liabilities 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] - Key increases include accrued R&D expenses, accrued consulting services, and new accrued licensing fees ($804,447)[635] Note 6 – Accrued Compensation 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] - The increase was mainly driven by a significant rise in accrued payroll expenses ($192,765)[636] Note 7 – Notes Payable 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][640] - The PPP Loan has a fixed interest rate of 1.00% per annum, with a maturity date of May 3, 2022[640] - The company intends to apply for loan forgiveness on the PPP Loan[641] - A separate note payable for a D&O insurance policy was fully repaid during 2020[639] Note 8 – Income Taxes 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