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: SeptemberJune 30, 20222023
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.
(Exact name of Registrant as Specified in Its Charter)
DELAWARE |
| 47-1178401 |
(State or Other Jurisdiction of |
| (I.R.S. Employer |
|
|
|
295 Madison Avenue, Suite 2400 |
| 10017 |
(Address of Principal Executive Offices) |
| (Zip Code) |
Registrant’s telephone number, including area code: (833) 393-6684
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
Common Stock, par value $0.0001 |
| EYEN |
| Nasdaq Capital Market |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | | |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| | | |
| | Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any news or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The number of outstanding shares of the registrant’s common stock was38,211,80836,112,987 as of November 10, 2022August 8, 2023.
EYENOVIA, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBERJUNE 30, 20222023
TABLE OF CONTENTS
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Condensed Balance Sheets as of | 2 | |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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Item 3. Quantitative and Qualitative Disclosures About Market Risk. |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. |
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1
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
EYENOVIA, INC.
Condensed Balance Sheets
| | | | | | |
|
| September 30, |
| December 31, | ||
|
| 2022 |
| 2021 | ||
|
| (unaudited) | | | | |
Assets |
| |
|
| |
|
|
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| |
|
Current Assets: |
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|
| |
|
Cash and cash equivalents | | $ | 17,398,605 | | $ | 19,461,850 |
Restricted cash | | | 7,875,000 | | | 7,875,000 |
Deferred clinical supply costs | | | 1,871,096 | | | — |
License fee and expense reimbursements receivable | | | 809,430 | | | 1,805,065 |
Prepaid expenses and other current assets | |
| 1,463,020 | |
| 721,438 |
| |
| | |
| |
Total Current Assets | |
| 29,417,151 | |
| 29,863,353 |
| | | | | | |
Property and equipment, net | |
| 1,342,657 | |
| 1,271,225 |
Security deposits | |
| 200,153 | |
| 132,539 |
Equipment deposits | |
| 445,530 | |
| 391,941 |
| | | | | | |
Total Assets | | $ | 31,405,491 | | $ | 31,659,058 |
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|
Liabilities and Stockholders’ Equity | |
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Current Liabilities: | |
| | |
|
|
Accounts payable | | $ | 1,104,959 | | $ | 1,614,104 |
Accrued compensation | |
| 1,268,009 | |
| 1,543,618 |
Accrued expenses and other current liabilities | |
| 1,384,803 | |
| 845,719 |
Deferred rent - current portion | | | 28,999 | | | 18,685 |
Notes payable | | | 7,229,013 | | | 7,150,368 |
Total Current Liabilities | |
| 11,015,783 | |
| 11,172,494 |
Deferred rent - non-current portion | |
| 60,540 | |
| 19,949 |
| |
| | |
| |
Total Liabilities | |
| 11,076,323 | |
| 11,192,443 |
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|
| |
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|
Commitments and contingencies (Note 7) | |
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Stockholders’ Equity: | |
|
| |
|
|
Preferred stock, $0.0001 par value, 6,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | |
| — | |
| — |
Common stock, $0.0001 par value, 90,000,000 shares authorized; 35,525,689 and 28,426,616 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | |
| 3,553 | |
| 2,844 |
Additional paid-in capital | |
| 132,432,682 | |
| 110,683,077 |
Accumulated deficit | |
| (112,107,067) | |
| (90,219,306) |
Total Stockholders’ Equity | | | 20,329,168 | | | 20,466,615 |
Total Liabilities and Stockholders’ Equity | | $ | 31,405,491 | | $ | 31,659,058 |
| | | | | | |
|
| June 30, |
| December 31, | ||
|
| 2023 |
| 2022 | ||
|
| (unaudited) | | | | |
Assets |
| |
|
| |
|
|
| |
|
| |
|
Current Assets |
| |
|
| |
|
Cash and cash equivalents | | $ | 17,468,088 | | $ | 22,863,520 |
Deferred clinical supply costs | | | 3,578,326 | | | 2,284,931 |
License fee and expense reimbursements receivable | | | 429,006 | | | 1,183,786 |
Security deposits, current | | | — | | | 119,550 |
Prepaid expenses and other current assets | |
| 1,801,373 | |
| 1,190,719 |
Total Current Assets | |
| 23,276,793 | |
| 27,642,506 |
| | | | | | |
Property and equipment, net | |
| 3,698,421 | |
| 1,295,115 |
Security deposits, non-current | |
| 198,674 | |
| 80,874 |
Operating lease right-of-use asset | | | 1,915,061 | | | 1,291,592 |
Equipment deposits | |
| 257,950 | |
| 726,326 |
Total Assets | | $ | 29,346,899 | | $ | 31,036,413 |
| |
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|
Liabilities and Stockholders’ Equity | |
| | |
|
|
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| | |
|
|
Current Liabilities: | |
| | |
|
|
Accounts payable | | $ | 1,312,749 | | $ | 1,428,283 |
Accrued compensation | |
| 1,013,118 | |
| 1,747,191 |
Accrued expenses and other current liabilities | |
| 363,431 | |
| 503,076 |
Operating lease liabilities - current portion | | | 427,749 | | | 484,882 |
Notes payable - current portion, net of debt discount of $91,621 and $33,885 as of June 30, 2023 and December 31, 2022, respectively | | | 947,163 | | | 174,448 |
Convertible notes payable - current portion, net of dedt discount of $0 and $33,885 as of June 30, 2023 and December 31, 2022, respectively | | | — | | | 174,448 |
Total Current Liabilities | | | 4,064,210 | | | 4,512,328 |
| | | | | | |
Operating lease liabilities - non-current portion | | | 1,584,218 | | | 907,644 |
Notes payable - non-current portion, net of debt discount of $1,120,372 and $813,229 as of June 30, 2023 and December 31, 2022, respectively | | | 8,683,794 | | | 4,190,938 |
Convertible notes payable - non-current portion, net of debt discount of $507,270 and $813,229 as of June 30, 2023 and December 31, 2022, respectively | |
| 4,492,730 | |
| 4,190,938 |
Total Liabilities | | | 18,824,952 | | | 13,801,848 |
| | | | | | |
Commitments and contingencies (Note 7) | |
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Stockholders’ Equity: | |
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| |
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Preferred stock, $0.0001 par value, 6,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022 | |
| — | |
| — |
Common stock, $0.0001 par value, 90,000,000 shares authorized; 38,169,398 and 36,668,980 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | |
| 3,817 | |
| 3,667 |
Additional paid-in capital | |
| 140,703,819 | |
| 135,461,361 |
Accumulated deficit | |
| (130,185,689) | |
| (118,230,463) |
Total Stockholders’ Equity | | | 10,521,947 | | | 17,234,565 |
Total Liabilities and Stockholders’ Equity | | $ | 29,346,899 | | $ | 31,036,413 |
The accompanying notes are an integral part of these condensed financial statements.
2
EYENOVIA, INC.
Condensed Statements of Operations
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | For the Nine Months Ended | | For the Three Months Ended | | For the Six Months Ended | ||||||||||||||||
| | September 30, | | September 30, | | June 30, | | June 30, | ||||||||||||||||
|
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||||||||||||||
Operating Income | | | | | | | | | | | | | ||||||||||||
Revenue | | $ | — | | $ | — | | $ | — | | $ | 4,000,000 | ||||||||||||
Cost of revenue | | | — | | | — | | | — | | | (1,600,000) | ||||||||||||
Gross Profit | | | — | | | — | | | — | | | 2,400,000 | ||||||||||||
| | | | | | | | | | | | |
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||
Operating Expenses: |
| | |
| | |
| | |
| | |
| | |
| | | | | | |
| |
Research and development | | | 3,876,876 | | | 3,552,068 | | | 11,176,326 | | | 11,559,364 | | $ | 2,811,061 | | $ | 3,586,866 | | $ | 5,333,011 | | $ | 7,299,450 |
General and administrative | |
| 3,353,352 | |
| 2,372,999 | |
| 10,362,907 | |
| 6,914,481 | |
| 3,149,809 | |
| 3,534,590 | | | 6,086,695 | | | 7,009,555 |
Total Operating Expenses | |
| 7,230,228 | |
| 5,925,067 | |
| 21,539,233 | |
| 18,473,845 | |
| 5,960,870 | |
| 7,121,456 | | | 11,419,706 | | | 14,309,005 |
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Loss From Operations | |
| (7,230,228) | |
| (5,925,067) | |
| (21,539,233) | |
| (16,073,845) | |
| (5,960,870) | |
| (7,121,456) | | | (11,419,706) | | | (14,309,005) |
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Other Income (Expense): | |
| | | | | |
| | |
| | |
| | | | | | | | | | |
Extinguishment of PPP 7(a) loan | | | — | | | 463,353 | | | — | | | 463,353 | ||||||||||||
Other income, net | | | 70,277 | | | 11,728 | | | 96,580 | | | 48,880 | | | 119,450 | | | 33,376 | | | 190,443 | | | 26,303 |
Interest expense | | | (177,138) | |
| (119,212) | | | (475,811) | | | (202,407) | | | (558,003) | |
| (153,436) | | | (1,012,006) | | | (298,673) |
Interest income | |
| 28,093 | |
| 600 | |
| 30,703 | |
| 2,354 | |
| 183,563 | |
| 2,416 | | | 286,043 | | | 2,610 |
| |
| | |
| | |
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| | ||||||||||||
Net Loss | | $ | (7,308,996) | | $ | (5,568,598) | | $ | (21,887,761) | | $ | (15,761,665) | | $ | (6,215,860) | | $ | (7,239,100) | | $ | (11,955,226) | | $ | (14,578,765) |
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Net Loss Per Share - Basic and Diluted | | $ | (0.21) | | $ | (0.21) | | $ | (0.67) | | $ | (0.61) | | $ | (0.16) | | $ | (0.22) | | $ | (0.32) | | $ | (0.46) |
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Weighted Average Number of Common Shares Outstanding - Basic and Diluted | |
| 34,631,774 | |
| 26,053,532 | |
| 32,778,551 | |
| 25,773,098 | |
| 38,093,826 | |
| 33,644,867 | | | 37,753,694 | | | 31,836,582 |
The accompanying notes are an integral part of these condensed financial statements.
3
EYENOVIA, INC.
Condensed Statements of Changes in Stockholders’ Equity
(unaudited)
| | | | | | | | | | | | | | |
| | For the Three and Nine Months Ended September 30, 2022 | ||||||||||||
| | | | | | | Additional | | | | | Total | ||
| | Common Stock | | Paid-In | | Accumulated | | Stockholders’ | ||||||
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | ||||
Balance - January 1, 2022 |
| 28,426,616 | | $ | 2,844 | | $ | 110,683,077 | | $ | (90,219,306) | | $ | 20,466,615 |
Issuance of common stock and warrants in registered direct offering [1] |
| 3,000,000 | |
| 300 | |
| 14,897,608 | |
| — | |
| 14,897,908 |
Issuance of common stock in At the Market offering [2] |
| 252,449 | |
| 25 | |
| 860,340 | |
| — | |
| 860,365 |
Stock-based compensation |
| — | |
| — | |
| 908,987 | |
| — | |
| 908,987 |
Issuance of common stock related to vested restricted stock units |
| 19,359 | |
| 2 | |
| (2) | |
| — | |
| — |
Net loss | | — | | | — | | | — | | | (7,339,665) | | | (7,339,665) |
Balance - March 31, 2022 | | 31,698,424 | | $ | 3,171 | | $ | 127,350,010 | | $ | (97,558,971) | | $ | 29,794,210 |
Exercise of stock warrants | | 1,870,130 | | | 187 | | | 18,514 | | | — | | | 18,701 |
Stock-based compensation | | — | | | — | | | 1,036,926 | | | — | | | 1,036,926 |
Issuance of common stock related to vested restricted stock units | | 54,499 | | | 5 | | | (5) | | | — | | | — |
Net loss | | — | | | — | | | — | | | (7,239,100) | | | (7,239,100) |
Balance - June 30, 2022 | | 33,623,053 | | $ | 3,363 | | $ | 128,405,445 | | $ | (104,798,071) | | $ | 23,610,737 |
Issuance of common stock in At the Market offering [3] | | 1,876,314 | | | 188 | | | 3,098,506 | | | — | | | 3,098,694 |
Stock-based compensation | | — | | | — | | | 928,733 | | | — | | | 928,733 |
Issuance of common stock related to vested restricted stock units | | 26,322 | | | 2 | | | (2) | | | — | | | — |
Net loss | | — | | | — | | | — | | | (7,308,996) | | | (7,308,996) |
Balance - September 30, 2022 |
| 35,525,689 | | $ | 3,553 | | $ | 132,432,682 | | $ | (112,107,067) | | $ | 20,329,168 |
| | | | | | | | | | | | | | |
| | For the Three and Six Months Ended June 30, 2023 | ||||||||||||
| | | | | | | Additional | | | | | Total | ||
| | Common Stock | | Paid-In | | Accumulated | | Stockholders’ | ||||||
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | ||||
Balance - January 1, 2023 |
| 36,668,980 | | $ | 3,667 | | $ | 135,461,361 | | $ | (118,230,463) | | $ | 17,234,565 |
Issuance of common stock in At the Market offering [1] |
| 1,299,947 | |
| 130 | |
| 3,499,462 | |
| — | |
| 3,499,592 |
Cashless exercise of stock options |
| 19,530 | |
| 2 | |
| (2) | |
| — | |
| — |
Stock-based compensation |
| — | |
| — | |
| 819,064 | |
| — | |
| 819,064 |
Issuance of common stock related to vested restricted stock units |
| 3,289 | |
| — | |
| — | |
| — | |
| — |
Net loss | | — | | | — | | | — | | | (5,739,366) | | | (5,739,366) |
Balance - March 31, 2023 | | 37,991,746 | | $ | 3,799 | | $ | 139,779,885 | | $ | (123,969,829) | | $ | 15,813,855 |
Issuance of common stock in At the Market offering [2] | | 121,989 | | | 13 | | | 403,107 | | | — | | | 403,120 |
Cashless exercise of stock options | | 1,219 | | | — | | | — | | | — | | | — |
Exercise of stock options | | 10,000 | | | 1 | | | 27,199 | | | — | | | 27,200 |
Stock-based compensation | | — | | | — | | | 493,632 | | | — | | | 493,632 |
Issuance of common stock related to vested restricted stock units | | 44,444 | | | 4 | | | (4) | | | — | | | — |
Net loss | | — | | | — | | | — | | | (6,215,860) | | | (6,215,860) |
Balance - June 30, 2023 | | 38,169,398 | | $ | 3,817 | | $ | 140,703,819 | | $ | (130,185,689) | | $ | 10,521,947 |
[1] | Includes gross proceeds of |
[2] | Includes gross proceeds of |
|
|
| | | | | | | | | | | | | | |
| | For the Three and Nine Months Ended September 30, 2021 | ||||||||||||
| | | | | | | Additional | | | | | Total | ||
| | Common Stock | | Paid-In | | Accumulated | | Stockholders’ | ||||||
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | ||||
Balance - January 1, 2021 | | 24,978,585 | | $ | 2,498 | | $ | 92,742,306 | | $ | (77,440,919) | | $ | 15,303,885 |
Exercise of stock warrants | | 644,992 | | | 65 | | | 1,530,925 | | | — | | | 1,530,990 |
Stock-based compensation | | — | | | — | | | 656,913 | | | — | | | 656,913 |
Net loss | | — | | | — | | | — | | | (5,351,667) | | | (5,351,667) |
Balance - March 31, 2021 | | 25,623,577 | | $ | 2,563 | | $ | 94,930,144 | | $ | (82,792,586) | | $ | 12,140,121 |
Exercise of stock warrants | | 232,022 | | | 23 | | | 572,978 | | | — | | | 573,001 |
Exercise of stock options | | 91,047 | | | 9 | | | 130,081 | | | — | | | 130,090 |
Issuance of SVB warrants [1] | | — | | | — | | | 351,390 | | | — | | | 351,390 |
Stock-based compensation | | — | | | — | | | 637,355 | | | — | | | 637,355 |
Net loss | | — | | | — | | | — | | | (4,841,400) | | | (4,841,400) |
Balance - June 30, 2021 | | 25,946,646 | | $ | 2,595 | | $ | 96,621,948 | | $ | (87,633,986) | | $ | 8,990,557 |
Exercise of stock options | | 16,539 | | | 2 | | | 46,710 | | | — | | | 46,712 |
Stock-based compensation | | — | | | — | | | 777,467 | | | — | | | 777,467 |
Net loss | | — | | | — | | | — | | | (5,568,598) | | | (5,568,598) |
Balance – September 30, 2021 | | 25,963,185 | | $ | 2,597 | | $ | 97,446,125 | | $ | (93,202,584) | | $ | 4,246,138 |
| | | | | | | | | | | | | | |
| | For the Three and Six Months Ended June 30, 2022 | ||||||||||||
| | | | | | | Additional | | | | | Total | ||
| | Common Stock | | Paid-In | | Accumulated | | Stockholders’ | ||||||
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | ||||
Balance - January 1, 2022 | | 28,426,616 | | $ | 2,844 | | $ | 110,683,077 | | $ | (90,219,306) | | $ | 20,466,615 |
Issuance of common stock and warrants in registered direct offering [1] | | 3,000,000 | | | 300 | | | 14,897,608 | | | — | | | 14,897,908 |
Issuance of common stock in At the Market offering [2] | | 252,449 | | | 25 | | | 860,340 | | | — | | | 860,365 |
Stock-based compensation | | — | | | — | | | 908,987 | | | — | | | 908,987 |
Issuance of common stock related to vested restricted stock units | | 19,359 | | | 2 | | | (2) | | | — | | | — |
Net loss | | — | | | — | | | — | | | (7,339,665) | | | (7,339,665) |
Balance -March 31, 2022 | | 31,698,424 | | $ | 3,171 | | $ | 127,350,010 | | $ | (97,558,971) | | $ | 29,794,210 |
Exercise of stock warrants | | 1,870,130 | | | 187 | | | 18,514 | | | — | | | 18,701 |
Stock-based compensation | | — | | | — | | | 1,036,926 | | | — | | | 1,036,926 |
Issuance of common stock related to vested restricted stock units | | 54,499 | | | 5 | | | (5) | | | — | | | — |
Net loss | | — | | | — | | | — | | | (7,239,100) | | | (7,239,100) |
Balance - June 30, 2022 | | 33,623,053 | | $ | 3,363 | | $ | 128,405,445 | | $ | (104,798,071) | | $ | 23,610,737 |
[1] |
|
[2] | Includes gross proceeds of $886,974, less total issuance costs of $26,609. |
The accompanying notes are an integral part of these condensed financial statements.
4
EYENOVIA, INC.
Condensed Statements of Cash Flows
(unaudited)
| | | | | | |
| | For the Nine Months Ended | ||||
| | September 30, | ||||
|
| 2022 |
| 2021 | ||
Cash Flows From Operating Activities |
| |
|
| |
|
Net loss | | $ | (21,887,761) | | $ | (15,761,665) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| |
Stock-based compensation | | | 2,874,646 | | | 2,071,735 |
Depreciation of property and equipment | |
| 228,898 | |
| 148,245 |
Amortization of debt discount | | | 78,645 | | | 41,944 |
Write-off of property and equipment | | | 209,040 | | | — |
Extinguishment of PPP 7(a) Loan | |
| — | |
| (463,353) |
Changes in operating assets and liabilities: | |
| | |
| |
Prepaid expenses and other current assets | |
| (66,250) | |
| 35,549 |
License fee and expense reimbursements receivables | | | 995,635 | | | 2,005,859 |
Deferred clinical supply costs | | | (1,871,096) | | | — |
Deferred license costs | | | — | | | 1,600,000 |
Security deposits | | | (67,614) | | | — |
Accounts payable | |
| (509,145) | |
| 223,068 |
Accrued compensation | |
| (275,609) | |
| 33,564 |
Accrued expenses and other current liabilities | |
| 539,084 | |
| (928,356) |
Deferred license fee | | | — | | | (4,000,000) |
Deferred rent | |
| 50,905 | |
| (4,397) |
Net Cash Used In Operating Activities | |
| (19,700,622) | |
| (14,997,807) |
| |
| | | |
|
Cash Flows From Investing Activities | | | | | | |
Purchases of property and equipment | | | (509,370) | | | (1,165,066) |
Vendor deposits for property and equipment | | | (53,589) | | | — |
Net Cash Used In Investing Activities | | | (562,959) | | | (1,165,066) |
| | | | | | |
Cash Flows From Financing Activities | |
| | |
| |
Proceeds from sale of common stock and warrants in registered direct offering [1] | |
| 14,981,299 | |
| — |
Net issuance of common stock in At the Market Offering [2] | | | 3,959,059 | | | — |
Proceeds from exercise of stock warrants | | | 18,701 | | | 2,103,991 |
Proceeds from SVB loan | | | — | | | 7,500,000 |
Repayments of notes payable | | | (675,332) | | | (547,259) |
Payment of offering issuance costs | | | (83,391) | | | — |
Payment of loan issuance costs | | | — | | | (66,618) |
Proceeds from exercise of stock options | | | — | | | 176,802 |
Net Cash Provided By Financing Activities | |
| 18,200,336 | |
| 9,166,916 |
Net Decrease in Cash and Cash Equivalents and Restricted Cash | |
| (2,063,245) | |
| (6,995,957) |
Cash, cash equivalents and restricted cash - Beginning of Period | |
| 27,336,850 | |
| 28,371,828 |
Cash, cash equivalents and restricted cash - End of Period | | $ | 25,273,605 | | $ | 21,375,871 |
|
|
|
|
| | | | | | |
| | For the Six Months Ended | ||||
| | June 30, | ||||
|
| 2023 |
| 2022 | ||
Cash Flows From Operating Activities |
| |
|
| |
|
Net loss | | $ | (11,955,226) | | $ | (14,578,765) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | |
| |
Stock-based compensation | | | 1,312,696 | | | 1,945,913 |
Depreciation of property and equipment | |
| 187,267 | |
| 145,901 |
Amortization of debt discount | | | 313,446 | | | 52,431 |
Non-cash rent expense | | | 280,968 | | | — |
Changes in operating assets and liabilities: | |
| | |
| |
Prepaid expenses and other current assets | |
| (1,514) | |
| (461,761) |
License fee and expense reimbursements receivables | |
| 754,780 | |
| 1,095,831 |
Deferred clinical supply costs | | | (1,293,395) | | | (1,538,380) |
Security and equipment deposits | | | 1,750 | | | (68,868) |
Accounts payable | | | (115,534) | | | 1,072,690 |
Accrued compensation | | | (734,073) | | | (529,534) |
Accrued expenses and other current liabilities | | | (139,645) | | | (21,417) |
Lease liabilities | |
| (284,996) | |
| 2,356 |
Net Cash Used In Operating Activities | |
| (11,673,476) | |
| (12,883,603) |
| |
| | | |
|
Cash Flows From Investing Activities | | | | | | |
Purchases of property and equipment | | | (2,122,197) | | | (281,342) |
Vendor deposits for property and equipment | | | — | | | (118,298) |
Net Cash Used In Investing Activities | | | (2,122,197) | | | (399,640) |
| | | | | | |
Cash Flows From Financing Activities | |
| | |
| |
Proceeds from sale of common stock and warrants in direct offering [1] | |
| — | |
| 14,981,299 |
Payment of offering issuance costs | | | — | | | (83,391) |
Proceeds from sale of common stock in At the Market offering | | | 4,023,414 | | | 886,974 |
Payment of issuance costs for At the Market offering | | | (120,702) | | | (26,609) |
Proceeds from exercise of stock options | | | 27,200 | | | 18,701 |
Proceeds from note payable to Avenue | | | 5,000,000 | | | — |
Payment of issuance costs for notes issued to Avenue | | | (125,982) | | | — |
Repayments of notes payable | | | (403,689) | | | (448,999) |
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 - Beginning of Period | |
| 22,863,520 | |
| 27,336,850 |
Cash, cash equivalents and restricted cash - End of Period | | $ | 17,468,088 | | $ | 29,381,582 |
5
| | | | | | |
Cash, cash equivalents and restricted cash consisted of the following: |
| | |
| | |
Cash and cash equivalents | | $ | 17,398,605 | | $ | 13,500,871 |
Restricted cash | | | 7,875,000 | | | 7,875,000 |
| | $ | 25,273,605 | | $ | 21,375,871 |
Supplemental Disclosure of Cash Flow Information: |
| |
|
| |
|
Cash paid during the periods for: | | | | | | |
Interest | | $ | 315,550 | | $ | 131,839 |
| | | | | | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | | | | | | |
Purchase of insurance premium financed by note payable | | $ | 675,332 | | $ | 705,360 |
Issuance of SVB stock warrants | | $ | — | | $ | 351,390 |
Issuance of common stock related to vested restricted stock units | | $ | 9 | | $ | — |
| | | | | | |
Cash, cash equivalents and restricted cash consisted of the following: |
| | |
| | |
Cash and cash equivalents | | $ | 17,468,088 | | $ | 21,506,582 |
Restricted cash | | | — | | | 7,875,000 |
| | $ | 17,468,088 | | $ | 29,381,582 |
Supplemental Disclosure of Cash Flow Information: |
| | |
| | |
Cash paid during the year for: | | | | | | |
Interest | | $ | 699,116 | | $ | 199,367 |
| | | | | | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | | | | | | |
Purchase of insurance policy financed by note payable | | $ | 609,140 | | $ | 675,331 |
Right-of-use assets and lease liabilities recognized upon lease renewal | | $ | 904,437 | | $ | — |
Vendor deposits applied to purchases of property and equipment | | $ | 468,376 | | $ | — |
Original issue discount on notes payable | | $ | 212,500 | | $ | — |
Cashless exercise of stock options | | $ | 2 | | $ | — |
Issuance of common stock related to vested restricted stock units | | $ | 4 | | $ | 7 |
[1] Includes gross proceeds of $14,981,299, of which $5,741,299 is pre-funded warrants.
The accompanying notes are an integral part of these condensed financial statements.
65
Note 1 – Business Organization, Nature of Operations and Basis of Presentation
Eyenovia, Inc. (“Eyenovia” or the “Company”) is a pre-commercialan ophthalmic technology company developing the Optejet® delivery system for use both in combination with its own drug-device therapeutic programs in mydriasis (pupil dilation), presbyopia and pediatric progressive myopia as well as out-licensing for additional indications. The Company aims to achieve precision in ophthalmic drug delivery of novel and existing ophthalmic pharmaceutical agents. The precise delivery of a low-volume columnar spray by the Optejet® device also minimizes contamination with a non-protruding nozzle and self-closing shutter. The Company believes that this technology could ultimately replace eye droppers by advancing drug delivery beyond the limitations of patient coordination, drug overexposure, gravity, contamination potential, and discomfort towards a more precise, comfortable, and successful drug administration for improved patient care. The ergonomic and functional design of the Optejet® delivers microdroplets horizontally faster than the blink reflex to minimize instillation discomfort and overflow spillage, providing a more comfortable experience. In the clinic, the Optejet® has demonstrated that its targeted delivery achieves a significantly high rate of successful administration of 98% upon first attempt compared to the established rate reported with traditional eye drops of ~ 50%. The diagnostics and therapeutics in the Company’s pipeline have been tested in randomized controlled trials and demonstrated significant results in improving the benefit to risk profile for drug delivery. For example, the Company’s deliberately designed technology provides a 75% reduction in ocular drug and preservative exposure to significantly improve the therapeutic index in drugs used for presbyopia, mydriasis and intraocular pressure (“IOP”) lowering through eight clinical trials. Eyedrops expose the ocular surface to approximately 300% more medication and preservatives that can lead to unintended effects and induce collateral tissue damage. Drug delivery via the Optejet device reduces ocular exposure to preservatives comparable to that of non-preserved formulations demonstrating potentially less surface damage from ocular stress. To address unmet medical needs, the Company is developing the next generation of smart ophthalmic therapeutics to target new indications or new combinations where there are currently no or few drug therapies approved by the U.S. Food and Drug Administration (“FDA”). The Company’s investigational products are classified by the FDAFood and Drug Administration (“FDA”) as drug-device combination products with drug primary mode of action, meaning that the Center for Drug Evaluation and Research, (“CDER”)or CDER, is designated as the lead center with primary jurisdictional oversight. Accordingly, the product candidates are submitted to the FDA and CDER for premarket review and approval under new drug applications, (“NDAs”).or NDAs.
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed financial statements of the Company as of SeptemberJune 30, 20222023 and for the three and ninesix months ended SeptemberJune 30, 20222023 and 2021.2022. The results of operations for the ninesix months ended SeptemberJune 30, 20222023 are not necessarily indicative of the operating results for the full year ending December 31, 20222023 or any other period. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and related disclosures of the Company as of December 31, 20212022 and for the year then ended, which were included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 30, 2022.31, 2023, as amended by Amendment No. 1, filed with the SEC on May 1, 2023.
Note 2 – Going Concern and Summary of Significant Accounting Policies
Since the date of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021,2022, there have been no material changes to the Company’s significant accounting policies.policies, except as disclosed below.
Liquidity and Going Concern
As of SeptemberJune 30, 2022,2023, the Company had unrestricted cash and cash equivalents in the aggregate amount of approximately $17.4 million and an accumulated deficit of approximately $112.1$17.5 million. For the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company incurred net losses of approximately $21.9$12.0 million and $15.8$14.6 million, respectively, and used cash in operations of approximately $19.7$11.7 million and $15.0$12.9 million, respectively. Subsequent to September 30, 2022, the Company received approximately $1.3 million in net proceeds from the sale of 587,298 shares of common stock pursuant to the Company’s At-the-Market Offering program with SVB Leerink. Also subsequent to September 30, 2022, the Company used its $7.9 million of restricted cash and $0.1 million of unrestricted cash in order to repay the Loan and Security Agreement, dated May 7, 2021 (the “SVB Loan”) with Silicon Valley Bank (“SVB”), including $7.5 million of principal, a final payment of $0.4 million and a prepayment fee of $0.1 million.
7
The Company does not have recurring revenue, and has not yet achieved profitability.profitability and may never become profitable. The Company expects to continue to incur cash outflows from operations. The Company expects that its researchResearch and development and general and administrative expenses will continue to increasebe incurred by the Company and, as a result, itthe Company will eventually need to generate significant product revenues to achieve profitability. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the date that these financial statements are issued. Implementation of the Company’s plans and its ability to continue as a going concern will depend upon the Company’s ability to commercialize its products and raise further capital through licensing transactions, the sale of additional equity or debt securities, or otherwise, to support its future operations.
The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its product and service offerings. If the Company is unable to secure additional capital, it may be required to curtail its research and development initiatives andand/or take additional measures to reduce general and administrative and sales and marketing costs in order to conserve its cash.
Reclassifications
Certain prior period amounts presented on the Company’s financial statements have been reclassified in order to conform to current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share.
6
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents in the financial statements.
Cash and cash equivalents that are restricted as to withdrawal or use under the termsstatements.As of certain executed agreements are recorded as Restricted Cash on the balance sheets, such as the collateralized money market account pursuant to the SVB Loan, as amended on September 29, 2021 by the First Amendment to the Loan and Security Agreement (the “First Amendment”). See Note 6 - Notes Payable. In connection with the First Amendment,June 30, 2023, the Company pledged to establish and maintain a collateralized money market accounthad Treasury bills with original maturity dates of three months or less in the amount of $7,875,000. Subsequent to September 30, 2022, the Company used this entire collateralized money market account plus $0.1 million of unrestricted cash in order to repay the SVB Loan, including $7.5 million of principal, a final payment of $0.4 million and a prepayment fee of $0.1 million.$4,493,766.
The Company has cash deposits in a financial institution which,that, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. As of SeptemberJune 30, 20222023 and December 31, 2021,2022, the Company had cash balances in excess of FDIC insurance limits of $24,773,605$12,474,323 and $26,836,850,$22,613,520, respectively.
Net Loss Per Common Share
Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period plus fully vested shares that are subject to issuance for little or no monetary consideration. Diluted earnings per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock.
The following table presents the computation of basic and diluted net loss per common share:
| | | | | | | | | | | | |
|
| For the Three Months Ended | | For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||||
Numerator: | | | | | | | | | | | | |
Net loss attributable to common stockholders | | $ | (6,215,860) | | $ | (7,239,100) | | $ | (11,955,226) | | $ | (14,578,765) |
| | | | | | | | | | | | |
Denominator (weighted average quantities): | |
| | |
| | | | | | | |
Common shares issued | |
| 38,064,215 | |
| 31,669,431 | | | 37,724,083 | | | 31,089,811 |
Add: Prefunded warrants | |
| — | |
| 1,870,130 | | | — | | | 671,594 |
Add: Undelivered vested restricted shares | |
| 29,611 | |
| 105,306 | | | 29,611 | | | 75,177 |
Denominator for basic and diluted net loss per share | |
| 38,093,826 | |
| 33,644,867 | | | 37,753,694 | | | 31,836,582 |
| | | | | | | | | | | | |
Basic and diluted net loss per common share | | $ | (0.16) | | $ | (0.22) | | $ | (0.32) | | $ | (0.46) |
The following securities are excluded from the calculation of weighted average diluted common shares because their inclusion would have been anti-dilutive:
| | | | | | | | |
| | September 30, | | June 30, | ||||
|
| 2022 |
| 2021 |
| 2023 |
| 2022 |
Options |
| 5,484,687 |
| 3,410,540 |
| 5,185,078 |
| 4,926,750 |
Warrants |
| 6,087,845 |
| 2,095,993 |
| 6,087,845 |
| 6,087,845 |
Convertible notes | | 2,327,747 | | — | ||||
Restricted stock units |
| 172,800 |
| 105,306 |
| 86,205 |
| 111,110 |
Total potentially dilutive shares |
| 11,745,332 |
| 5,611,839 |
| 13,686,875 |
| 11,125,705 |
8
Revenue Recognition
The Company’s revenues are generated primarily through research, development and commercialization agreements. The terms of such agreements may contain multiple promised goods and services, which may include (i) licenses to its intellectual property, and (ii) in certain cases, payment in connection with the manufacturing and delivery of clinical supply materials. Payments to us under these arrangements typically include one or more of the following: non-refundable, upfront license fees; milestone payments; payments for clinical product supply, and royalties on future product sales.
The Company analyzes its arrangements to assess whether such arrangements involve joint operating activities. For collaboration arrangements that are deemed to be within the scope of Accounting Standards Codification (“ASC”) Topic 808, “Collaborative Arrangements” (“ASC 808”), the Company allocates the contract consideration between such joint operating activities and elements that are reflective of a vendor-customer relationship and, therefore, within the scope of ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company’s policy is to recognize amounts allocated to joint operating activities as a reduction in research and development expense.
Under ASC 606, we recognize revenue when our customers obtain control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps:
The Company must make significant judgments in its revenue recognition process, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each performance obligation. In addition, arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered discretionary purchase options. The Company assesses whether these options provide a material right to the customer and if so, they are considered performance obligations.
For upfront license fees, the Company must consider how many performance obligations are in the contract and, if more than one, how to allocate the fee to those performance obligations upon satisfaction of the performance obligation(s). Milestone payments represent variable consideration that will be recognized when the performance obligation is achieved. Sales-based royalty payments derived from usage of intellectual property are recognized when those sales occur.
During 2020, the Company entered into a license agreement (the “Arctic Vision License Agreement”) with Arctic Vision (Hong Kong) Limited (“Arctic Vision”) and a license agreement (the “Bausch License Agreement”) with Bausch + Lomb, Inc. (“Bausch + Lomb”). Each license has three revenue components:
Deferred License Fee
The Company enters into license agreements which provide for the receipt of non-refundable, upfront licensing payments. These payments are recorded as deferred license fees and will be earned and recognized as revenue upon the satisfaction of performance obligations. See Note 7 – Commitments and Contingencies for additional details.
9
Clinical Supply Arrangements
Bausch + Lomb, Inc. (“B+L”) and Arctic Vision (Hong Kong) Limited (“Arctic Vision”) have contracted with the Company to manufacture and supply them with the appropriate drug-device combination products to conduct their clinical trials on a cost plus 10% mark-up basis. OurThe Company’s licensing agreements with Bausch + Lomb and Arctic Vision represent collaborative arrangements and they are not a customer with respect to the clinical supply arrangements. The Company’s policy is to (a) defer the materials and manufacturing costs in order to properly match them up against the income from the clinical supply arrangements; and (b) to report the net income from the clinical supply arrangements as other income.
Reclassifications
Certain prior period balances have been reclassified in order to conform to current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share.
Recently Adopted Accounting Standards
On May 3, 2021,In June 2016, the Financial Accounting Standards Board (the “FASB”)FASB issued Accounting Standards Update (“ASU”)ASU No. 2021-04, “Earnings Per Share2016-13, “Financial Instruments - Credit Losses (Topic 260), Debt—Modifications326)” and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718),also issued subsequent amendments to the initial guidance under ASU 2018-19, ASU 2019-04 and DerivativesASU 2019-05 (collectively, “Topic 326”). Topic 326 requires the measurement and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accountingrecognition of expected credit losses for Certain Modifications or Exchangesfinancial assets held at amortized cost. This replaces the existing incurred loss model with an expected loss model and requires the use of Freestanding Equity-Classified Written Call Options.” This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (such as warrants) that remain equity classified after modification or exchange. This standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Issuers should apply the new standard prospectivelyforward-looking information to modifications or exchanges occurring after the effective date of the new standard.calculate credit loss estimates. The Company adopted ASU 2021-04 effective2016-13 on January 1, 2022. This standard2023. The adoption of ASU 2016-13 did not have a material impact on the Company’s financial position, results of operations or cash flow.
Soon To Be Adopted Accounting Standardsflows.
In February 2016,August 2020, the FASB issued ASU 2016-02 “Leases (Topic 842)2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20)” (“and “Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, to clarify the accounting for certain financial instruments with characteristics of liabilities and equity. The amendments in this update reduce the number of accounting models for convertible debt instruments and convertible preferred stock by removing the cash conversion model and the beneficial conversion feature model. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in-capital. In addition, ASU 2016-02”).2020-06 improves disclosure requirements for convertible instruments and earnings-per-share guidance. ASU 2016-02 requires that a lessee recognize2020-06 also revises the assets and liabilities that arise from operating leases. A lessee should recognizederivative scope exception guidance to reduce form-over-substance-based accounting conclusions driven by remote contingent events. The amendments in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying assetthis update are effective for the lease term. ASU 2016-02, as amended, is now effective for emerging growth companies forCompany in fiscal years beginning after December 15, 2021,2023, and interim periods within those fiscal years beginning after December 15, 2022.years. Early adoption is permitted. The Company plansearly adopted ASU 2020-06 effective January 1, 2023 which eliminates the need to adopt ASU 2016-02 on December 31, 2022 and expects thatassess whether a beneficial conversion feature needs to be recognized upon the issuance of new convertible instruments. The adoption of this ASU will2020-06 did not have a material impact on the Company’s financial statements, primarily as a resultposition, results of recording right-of-use assets and lease liabilities for its operating leases in the approximate amounts of $1.3 million and $1.4 million, respectively.operations or cash flows.
Note 3 – Prepaid Expenses and Other Current Assets
As of SeptemberJune 30, 20222023 and December 31, 2021,2022, prepaid expenses and other current assets consisted of the following:
| | | | | | | | | | | | |
|
| September 30, |
| December 31, |
| June 30, |
| December 31, | ||||
|
| 2022 |
| 2021 |
| 2023 |
| 2022 | ||||
Payroll tax receivable | | | 621,063 | | | 343,785 | | $ | 645,566 | | $ | 660,891 |
Prepaid insurance expenses | | | 455,150 | | | 171,370 | | | 600,607 | | | 201,082 |
Prepaid general and administrative expenses | |
| 185,845 | |
| 71,375 | |
| 310,701 | | | 87,982 |
Prepaid research and development expenses | | | 83,192 | | | 2,521 | ||||||
Prepaid patent expenses | | | 73,157 | | | 38,796 | ||||||
Prepaid conference expenses | | | 100,803 | | | 12,586 | |
| 69,400 | | | 97,743 |
Prepaid patent expenses | | | 49,183 | | | 32,797 | ||||||
Prepaid rent and security deposit | | | 18,750 | | | 74,959 | ||||||
Other | |
| 32,226 | |
| 4,525 | | | — | | | 26,745 |
Prepaid security deposits | | | 18,750 | | | 18,750 | ||||||
Prepaid board of directors fees | | | — | | | 66,250 | ||||||
Total prepaid expenses and other current assets | | $ | 1,463,020 | | $ | 721,438 | | $ | 1,801,373 | | $ | 1,190,719 |
108
Note 4 – Accrued Compensation
As of SeptemberJune 30, 20222023 and December 31, 2021,2022, accrued compensation consisted of the following:
| | | | | | |
|
| September 30, |
| December 31, | ||
|
| 2022 |
| 2021 | ||
Accrued bonus expenses | | $ | 971,159 | | $ | 1,245,795 |
Accrued payroll expenses | |
| 296,850 | |
| 297,823 |
Total accrued compensation | | $ | 1,268,009 | | $ | 1,543,618 |
| | | | | | |
|
| June 30, |
| December 31, | ||
|
| 2023 |
| 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
As of SeptemberJune 30, 20222023 and December 31, 2021,2022, accrued expenses and other current liabilities consisted of the following:
| | | | | | | | | | | | |
|
| September 30, |
| December 31, |
| June 30, |
| December 31, | ||||
|
| 2022 |
| 2021 |
| 2023 |
| 2022 | ||||
Accrued consulting and professional services | | $ | 142,915 | | $ | 320,000 | ||||||
Accrued research and development expenses | | $ | 711,710 | | $ | 436,840 | | | 117,983 | | | 35,524 |
Accrued consulting and professional services | | | 386,712 | | | 250,000 | ||||||
Accrued interest | | | 152,969 | | | 94,792 | ||||||
Accrued leasehold improvements | | | — | | | 92,528 | ||||||
Credit card payable | |
| 58,799 | |
| 20,000 | |
| 58,549 | |
| 50,639 |
Accrued franchise tax | |
| 39,300 | |
| 1,680 | | | 26,201 | | | — |
Accrued travel and entertainment expenses | |
| 13,784 | |
| — | ||||||
Other | |
| 29,647 | |
| 42,407 | | | 3,999 | | | 4,385 |
Accrued travel and entertainment expenses | | | 5,666 | | | — | ||||||
Total accrued expenses and other current liabilities | | $ | 1,384,803 | | $ | 845,719 | | $ | 363,431 | | $ | 503,076 |
Note 6 – Notes Payable
As of SeptemberJune 30, 20222023 and December 31, 2021,2022, notes payable consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2022 |
| December 31, 2021 | | June 30, 2023 |
| December 31, 2022 | ||||||||||||||||||||||||||||
|
| Notes Payable |
| Debt Discount |
| Net |
| Notes Payable |
| Debt Discount |
| Net |
| Notes Payable |
| Debt Discount |
| Net |
| Notes Payable |
| Debt Discount |
| Net | ||||||||||||
Silicon Valley Bank loan | | $ | 7,500,000 | | $ | (270,987) | | $ | 7,229,013 | | $ | 7,500,000 | | $ | (349,632) | | $ | 7,150,368 | ||||||||||||||||||
Current portion: | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
D&O insurance policy loan | | $ | 205,451 | | $ | — | | $ | 205,451 | | $ | — | | $ | — | | $ | — | ||||||||||||||||||
Avenue - Note payable | | | 833,333 | | | (91,621) | | | 741,712 | | | 208,333 | | | (33,885) | | | 174,448 | ||||||||||||||||||
Avenue - Convertible note payable | | | — | | | — | | | — | | | 208,333 | | | (33,885) | | | 174,448 | ||||||||||||||||||
Total current portion | | $ | 1,038,784 | | $ | (91,621) | | $ | 947,163 | | $ | 416,666 | | $ | (67,770) | | $ | 348,896 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Non-Current portion: | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Avenue - Note payable | | | 9,804,166 | | | (1,120,372) | | | 8,683,794 | | | 5,004,167 | | | (813,229) | | | 4,190,938 | ||||||||||||||||||
Avenue - Convertible note payable | | | 5,000,000 | | | (507,270) | | | 4,492,730 | | | 5,004,167 | | | (813,229) | | | 4,190,938 | ||||||||||||||||||
Total non-current portion | | $ | 14,804,166 | | $ | (1,627,642) | | $ | 13,176,524 | | $ | 10,008,334 | | $ | (1,626,458) | | $ | 8,381,876 |
On February 24, 2022,2023, the Company issued a note payable in the amount of $609,140 for the purchase of a directors and officersofficers’ liability insurance policy (the “D&O Loan”). The note accrues interest at a rate of 7.11% per year and matures on August 24, 2023. The D&O Loan had an aggregate principal balance of $675,332 and wasis payable in six monthly payments of $103,639 consisting of principal and interest amounting to $113,628 per payment. The note accrued interest at a rate of 3.26% per year and matured on August 24, 2022.interest. During the ninesix months ended SeptemberJune 30, 2022,2023, the Company repaid the full$403,689 of principal balance of $675,332owed on the D&O Loan.
During the three months ended September 30, 2022, the Company recorded interest expense of $177,138, of which $176,215 is related to the SVB Loan (including amortization of debt discount of $26,214) and $923 is related to the D&O Loan. During the nine months ended September 30, 2022, the Company recorded interest expense of $475,811, of which $469,376 is related to the SVB Loan (including amortization of debt discount of $78,645) and $6,435 is related to the D&O Loan.
SVB Loan Amendment
On May 6, 2022, the Company and SVB agreed to amend the terms of the SVB Loan dated May 7, 2021. Pursuant to the amendment, the repayment term of the SVB Loan is reduced to 24 consecutive calendar months and the date that the first payment is due by the Company is extended to June 1, 2023. The amendment did not result in a 10% change in the net present value of the SVB Loan cash flows and, accordingly, the amendment was accounted for as a modification (a continuation of the original loan).
119
On May 22, 2023, pursuant to the Company’s Loan and Security Agreement (the “Loan and Security Agreement”) with Avenue Capital Management II, L.P., and related entities (“Avenue”), the Company received an additional tranche of non-convertible debt funding in the gross amount of $5,000,000. The SVBCompany paid approximately $126,000 of origination and legal fees connected to this debt funding. The additional funding was made under the provisions of the Loan and Security Agreement, bearing interest at an annual rate equal to the greater of (A) 7.0% and (B) the prime rate as reported in The Wall Street Journal plus 4.45%. The entire outstanding balance due under the Loan and Security Agreement has a maturity date of November 1, 2025. The additional funding triggered the extension of the interest-only period from the original 12 months to 18 months (through May 2024) for the entire outstanding balance due under the Loan and Security Agreement (initial and additional tranches). Following the interest-only period, the Company will make equal monthly payments of principal until the maturity date, plus interest.
During the three months ended June 30, 2023, the Company recorded interest expense of $558,003, of which $550,746 was repaid in full in November 2022. See Note 10 – Subsequent Events.related to the Loan and Security Agreement with Avenue Capital Management II, L.P. (“Avenue”) and related entities, (including amortization of debt discount of $163,956) and $7,257 was related to the D&O Loan. During the six months ended June 30, 2023, the Company recorded interest expense of $1,012,006, of which $1,001,140 was related to the Loan and Security Agreement (including amortization of debt discount of $313,446) and $10,866 was related to the D&O Loan.
Note 7 – Commitments and Contingencies
Employment AgreementsOperating Leases
On February 14, 2022, the Compensation Committee of the Board of Directors of the Company (the “Board”) approved amendments to the Employment Agreements with its executive officers (the “Employment Agreement Addendums”). Each of the Employment Agreement Addendums provides that if the executive’s employment is terminated by the Company without “Cause” or the executive suffers an “Involuntary Termination” (each as defined in the employment agreements), provided that the executive has signed a full release of all claims, the executive will be entitled to receive: (i) severance pay equal to twelve months of his or her then-current base salary (estimated at approximately $1,517,000 in the aggregate as of the date of the Employment Agreement Addendums), and (ii) a reimbursement for health insurance benefits under COBRA for the executive and his or her spouse and dependents for a period of twelve months or until the executive becomes eligible for comparable insurance benefits from another employer, whichever is earlier.
Transition of Chief Executive Officer
On July 27, 2022, the Company announced the appointment of Michael Rowe as its new Chief Executive Officer, effective August 1, 2022, with Dr. Tsontcho Ianchulev becoming Executive Chairman of the Board. Mr. Rowe is also serving as a member of the Board.
On July 26, 2022,In June 2023, the Company entered into an Employment Agreement (the “Employment Agreement”) with Mr. Rowe under which he will serve as Chief Executive Officer of the Company. Under the terms of the Employment Agreement, Mr. Rowe will receive an annual salary of $575,000. He is eligibleextension agreement to receive a cash bonus of up to 60% of his base salary. Additionally, Mr. Rowe received an option to purchase 440,000 shares of the Company’s common stock, pursuant to the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan, as amended. Mr. Rowe will also continue to participate in any and all benefit plans, from time to time, in effectrenew its lease for senior management, along with vacation, sick and holiday pay in accordance with the Company’s policies established and in effect from time to time. As a result of the change of salary, the aggregate potential severance pay for the executive officers of the Company is approximately $1,004,000.
The Company also entered into an agreement with Dr. Ianchulev (the “Executive Chairman Agreement”) pursuant to which Dr. Ianchulev will provide medical expertise and consultation related to the Company’s research and development programs, and such other matters as reasonably requested by the Company for an initial period of one year. In consideration for Dr. Ianchulev’s services, the Company has agreed to provide Dr. Ianchulev with a $5,000 monthly retainer throughout the term of the agreement, in addition to the compensation payable to all non-employee members of the Board.
Operating Leases
The Company leased 9533,800 square feet of office space in Reno, NevadaNew York, NY. The lease was due to expire on October 31, 2023. The lease was extended from November 1, 2023 to December 31, 2026.
In February 2023, the Company exercised its options to renew its three leases in Redwood City, California, for research and development activitiesa total of approximately 6,700 square feet. The leases were due to expire on August 31, 2023. The leases were extended from a company owned bySeptember 1, 2023 to August 31, 2025.
A summary of the Company’s former Vice President of Researchright-of-use assets and Development. The lease,liabilities as amended, expired on September 14, 2022 and provided for lease payments of $5,404 per month and a security deposit in the amount of $5,404. The Company has remained in the premises on a month-to-month basis at the same rental rate. Since the inception of the lease, the Company has made $112,600 of leasehold improvements related to this lease which have been fully amortized on the accompanying balance sheets. The Company’s rent expense for this space is recorded in Research and Development on the condensed statement of operations and amounted to $16,212 for the three months ended September 30, 2022 and 2021, and $48,636 for the nine months ended September 30, 2022 and 2021.follows:
On April 8, 2022, the Company agreed to enter into a lease agreement for a new office space of 3,916 square feet commencing on June 1, 2022 in Laguna Hills, CA. The lease expires on July 31, 2027 and provides for lease payments of $9,203 per month payable on the first day of each month commencing September 1, 2022, and a security deposit of $11,400. The Company’s rent expense for this space is recorded in General and Administrative on the condensed statement of operations and amounted to $28,371 during the three months ended September 30, 2022 and $37,828 during the nine months ended September 30, 2022.
| | | | |
|
| For the Six Months Ended |
| |
| | June 30, 2023 | | |
| | | |
|
Cash paid for amounts included in the measurement of lease liabilities: |
| |
| |
Operating cash flows used in operating activities | | $ | 284,996 | |
| | | | |
Right-of-use assets obtained in exchange for lease obligations | |
|
| |
Operating leases | | $ | 904,437 | |
| | | | |
| | | | |
Weighted Average Remaining Lease Term (Years) | |
|
| |
Operating leases | |
| 3.5 years | |
| | | | |
Weighted Average Discount Rate | |
|
| |
Operating leases | |
| 10.0 | % |
1210
On May 19, 2022,Future minimum payments under all of the Company agreed to enter into aCompany’s operating lease agreement with a non-related party for a new office space located in Reno, Nevada of 10,881 square feet commencing on May 23, 2022. The amended lease expires on September 23, 2027 with an option to extend the lease for an additional period of 60 months, and provides for lease payments ranging from $13,056 per month to $16,663 per month and a security deposit of $53,000. The Company’s rent expense for this space is recorded in Research and Development on the condensed statement of operations and amounted to $41,238 during the three months ended September 30, 2022 and $59,787 during the nine months ended September 30, 2022.agreements are as follows:
| | | |
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 |
Less: amount representing imputed interest | |
| (544,996) |
Present value of lease liabilities | |
| 2,011,967 |
Less: current portion | |
| (427,749) |
Lease liabilities, non current portion | | $ | 1,584,218 |
Litigations, Claims and Assessments
The Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. The Company records legal costs associated with loss contingencies as incurred and accrues for all probable and estimable settlements.
Note 8 – Stockholders’ Equity
At-The-Market Offerings
December 2021 Sales Agreement
On December 14, 2021, the Company entered into a Sales Agreement (the “December 2021 Sales Agreement”) with SVB Leerink under which the Company may offer and sell, from time to time at its sole discretion, shares of common stock for gross proceeds of up to $50.0 million through SVB Leerink as its sales agent (the “At-the-Market Offering”). The Company’s prior sales agreement, with SVB Leerink, entered into in May 2021, was terminated upon the effectiveness of the December 2021 Sales Agreement. The issuance and sale of shares, if any, of common stock by the Company under the December 2021 Sales Agreement will be pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-261638) filed with the SEC on December 14, 2021 (the “Registration Statement”), and the prospectus relating to the At-the-Market Offering filed therewith that forms a part of the Registration Statement.
Subject to the terms and conditions of the December 2021 Sales Agreement, SVB Leerink may sell the common stock by any method permitted by law deemed to be an “at –the- market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended. SVB Leerink will use commercially reasonable efforts to sell the common stock from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company will pay SVB Leerink a commission equal to three percent (3.0)% of the gross sales proceeds of any common stock sold through SVB Leerink under the December 2021 Sales Agreement, and also has provided SVB Leerink with certain indemnification rights. Through September 30, 2022, the Company received approximately $4.0 million in net proceeds from the sale of 2,128,763 shares of its common stock pursuant to the December 2021 Sales Agreement.
Securities Purchase Agreement
On March 3, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional and accredited investor (the “Purchaser”), relating to the issuance and sale of 3,000,000 shares (the “Shares”) of common stock, pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 1,870,130 shares of common stock and warrants to purchase an aggregate of 4,870,130 shares of common stock (the “Investor Warrants”) in a registered direct offering (the “March 2022 Offering”). The Company determined that the warrants qualified for equity classification.
The offering price for the Shares was $3.08 per Share and the offering price for the Pre-Funded Warrants was $3.07 per Pre-Funded Warrant, which represents the per Share public offering price less $0.01 per share exercise price for each Pre-Funded Warrant. The Investor Warrants have an exercise price of $3.54 per share and each Investor Warrant is exercisable for one share of common stock. The Investor Warrants will be exercisable beginning six months from the date of issuance and the Pre-Funded Warrants are exercisable immediately upon issuance. The Pre-Funded Warrants shall terminate when fully exercised and the Investor Warrants will terminate five years from the initial exercisability date. The aggregate gross proceeds to the Company from the March 2022 Offering were approximately $15 million with aggregate issuance costs of approximately $83,000, excluding the proceeds, if any, from the exercise of the Pre-Funded Warrants and the Investor Warrants. No underwriter or placement agent participated in the March 2022 Offering.
13
The March 2022 Offering was made pursuant to an effective registration statement on Form S-3 (Registration Statement No. 333-261638), as previously filed with and declared effective by the Securities and Exchange Commission and a related prospectus.
Equity Incentive Plan
On June 16, 2022,27, 2023, the Company’s stockholders approved an amendment to the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan, reserving an additional 1,500,0001,000,000 shares of common stock for further issuance under such plan.
At-The-Market Offering
During the six months ended June 30, 2023, the Company received approximately $3.9 million in net proceeds from the sale of 1,421,936 shares of its common stock pursuant to its Sales Agreement with SVB Securities LLC (“SVB Securities”) in an ”at-the-market” offering (the “At-the-Market Offering Program”).
Stock-Based Compensation Expense
The Company records stock-based compensation expense related to stock options and restricted stock units (“RSUs”). For the three months ended SeptemberJune 30, 20222023 and 2021,2022, the Company recorded expense of $928,733$493,632 ($420,61936,197 of which was included within research and development expenses and $508,114$457,435 was included within general and administrative expenses on the statements of operations) and $777,467$1,036,926 ($489,121516,669 of which was included within research and development expenses and $288,343$520,257 was included within general and administrative expenses on the statements of operations), respectively. For the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company recorded expense of $2,874,646$1,312,696 ($1,438,469411,327 of which was included within research and development expenses and $1,436,177$901,369 was included within general and administrative expenses on the statements of operations) and $2,071,735$1,945,913 ($1,138,3311,017,850 of which was included within research and development expenses and $933,401$928,063 was included within general and administrative expenses on the statements of operations), respectively.
Restricted Stock Units
A summary of the restricted stock units activity during the nine months ended September 30, 2022 is presented below:
| | | | | |
| | | | Weighted | |
| | | | Average | |
| | Number of | | Grant Date Value | |
|
| RSUs |
| Per Share | |
RSUs non-vested January 1, 2022 |
| 41,778 | | $ | 3.59 |
Granted |
| 193,304 | |
| 1.93 |
Vested |
| (55,319) | |
| 3.37 |
Forfeited |
| (6,963) | |
| 3.59 |
RSUs non-vested September 30, 2022 |
| 172,800 | | $ | 1.80 |
| | | | | |
Vested RSUs undelivered September 30, 2022 |
| 41,086 | | $ | 3.64 |
To date, the RSUs have only been granted to directors in accordance with the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan. The Company’s policy is not to deliver shares underlying the RSUs until the termination of service.
As of September 30, 2022, there was $254,152 of unrecognized stock-based compensation expense related to RSUs which will be recognized over a weighted average period of 0.8 years.
1411
Restricted Stock Units
A summary of RSU activity during the six months ended June 30, 2023 is presented below:
| | | | | |
| | | | Weighted | |
| | | | Average | |
| | Number of | | Grant Date Value | |
|
| RSUs |
| Per Share | |
RSUs non-vested January 1, 2023 |
| 172,800 | | $ | 1.80 |
Granted |
| 86,205 | |
| 2.32 |
Vested |
| (150,578) | |
| 1.80 |
Forfeited |
| (22,222) | |
| 1.80 |
RSUs non-vested June 30, 2023 |
| 86,205 | | $ | 2.32 |
| | | | | |
Vested RSUs undelivered June 30, 2023 |
| 29,611 | | $ | 3.68 |
To date, RSUs have only been granted to directors in accordance with the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan. The Company’s policy is to defer settlement of such RSUs until the termination of such director’s service on the Company’s board of directors. On February 28, 2023, the Company delivered 3,289 shares of common stock in respect of RSUs upon the resignation of a director. On June 16, 2023, the Company delivered 44,444 shares of common stock in respect of RSUs based on the prior resignation of two directors.
As of June 30, 2023, there was $200,000 of unrecognized stock-based compensation expense related to RSUs which will be recognized over a weighted average period of 1.0 years.
Stock Options
In applying the Black-Scholes option pricing model to stock options granted, the Company used the following approximate assumptions:
| | | | | | | | | | | | | | | | | | |
| | For the Three Months Ended | | For the Nine Months Ended | | For the Three Months Ended | | For the Six Months Ended | ||||||||||
| | September 30, | | September 30, | | June 30, | | June 30, | ||||||||||
|
| 2022 |
| 2021 |
| 2022 |
| 2021 |
| 2023 |
| 2022 |
| 2023 |
| 2022 | ||
Expected term (years) | | 5.41 - 5.85 |
| 5.85 |
| 0.58 - 10.00 |
| 5.85 - 10.00 | | 5.50 - 10.00 |
| 5.09 - 5.50 | | | 5.50 - 10.00 | | | 0.58 - 10.00 |
Risk free interest rate | | 2.66% - 3.02% | | 0.81% | | 0.76% - 3.35% | | 0.45% - 1.58% | | 3.44% - 4.02% | | 2.79% | | | 3.44% - 4.18% | | | 0.76% - 2.79% |
Expected volatility | | 85% - 87% | | 92% | | 82% - 90% | | 92% - 94% | | 82% - 94% | | 88% | | | 82% - 95% | | | 82% - 90% |
Expected dividends | | 0.00% | | 0.00% | | 0.00% | | 0.00% | | 0.00% | | 0.00% | | | 0.00% | | | 0.00% |
The Company has computed the fair value of stock options granted using the Black-Scholes option pricing model. Option forfeitures are accounted for at the time of occurrence. The expected term is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company uses a blended volatility calculation, the components of which are the Company’s historical volatility for the period from its initial public offering through the valuation date and the average peer-group data of six comparable entities to supplement the Company’s own historical data for the preceding years in computing the expected volatility. Accordingly, the Company is utilizing an expected volatility figure based on a review of the historical volatility of comparable entities over a period of time equivalent to the expected life of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued. The Company has not declared dividends, is currently in the development stage and has no plan to declare future dividends at this time.
The weighted average estimated grant date fair value of the stock options granted for the three months ended SeptemberJune 30, 20222023 and 20212022 was approximately $1.22$2.04 and $3.56$1.37 per share, respectively. The weighted average estimated grant date fair value of the stock options granted for the ninesix months ended SeptemberJune 30, 20222023 and 20212022 was approximately $1.61$1.78 and $4.16$2.02 per share, respectively.
A summary of the option activity during the nine months ended September 30, 2022 is presented below:
| | | | | | | | | | |
|
|
|
| |
|
| Weighted |
| |
|
| | |
| Weighted |
| Average | | | | |
| | |
| Average |
| Remaining |
| Aggregate | ||
|
| Number of |
| Exercise |
| Life |
| Intrinsic | ||
|
| Options |
| Price |
| In Years |
| Value | ||
Outstanding, January 1, 2022 |
| 4,377,398 | | | 3.89 |
|
|
| |
|
Granted |
| 1,167,310 | |
| 2.23 |
|
|
| |
|
Forfeited |
| (60,021) | |
| 4.21 |
|
|
| |
|
Outstanding, September 30, 2022 |
| 5,484,687 | | $ | 3.53 |
| 7.4 | | $ | 375,417 |
| | | | | | | | | | |
Exercisable, September 30, 2022 |
| 3,518,147 | | $ | 3.72 |
| 6.5 | | $ | 188,738 |
1512
A summary of the option activity during the six months ended June 30, 2023 is presented below:
| | | | | | | | | | |
|
|
|
| |
|
| |
| |
|
| | |
| |
| | | | | |
| | |
| Average |
| Remaining |
| Aggregate | ||
|
| Number of |
| Exercise |
| Life |
| Intrinsic | ||
|
| Options |
| Price |
| In Years |
| Value | ||
Outstanding, January 1, 2023 |
| 5,380,553 | | $ | 3.55 |
|
|
| |
|
Granted |
| 677,190 | |
| 2.39 |
|
|
| |
|
Exercised |
| (88,999) | |
| 1.83 |
|
|
| |
|
Forfeited/ Expired |
| (783,666) | | | 3.88 |
| | | | |
Outstanding June 30, 2023 | | 5,185,078 | | $ | 3.37 | | 7.1 | | $ | 962,979 |
| | | | | | | | | | |
Exercisable June 30, 2023 |
| 3,582,370 | | $ | 3.69 |
| 6.2 | | $ | 501,462 |
The following table presents information related to stock options as of SeptemberJune 30, 2022:2023:
| | | | | | | | | | | | | | |
Options Outstanding | Options Outstanding |
| Options Exercisable | Options Outstanding |
| Options Exercisable | ||||||||
| | | |
| Weighted | | | | | |
| Weighted | | |
| |
| Outstanding |
| Average |
| Exercisable | |
| Outstanding |
| Average |
| Exercisable |
Exercise | Exercise |
| Number of |
| Remaining Life |
| Number of | Exercise |
| Number of |
| Remaining Life |
| Number of |
Price | Price |
| Options |
| In Years |
| Options | Price |
| Options |
| In Years |
| Options |
| $1.00 - $1.99 |
| 1,577,286 | | 4.1 |
| 827,636 | $1.00 - $1.99 |
| 1,407,183 | | 4.7 |
| 884,183 |
| $2.00 - $2.99 |
| 1,010,018 | | 7.7 |
| 762,034 | $2.00 - $2.99 |
| 1,473,663 | | 6.9 |
| 844,473 |
| $3.00 - $3.99 |
| 1,241,069 | | 7.0 |
| 820,883 | $3.00 - $3.99 |
| 908,528 | | 6.8 |
| 694,510 |
| $4.00 - $4.99 |
| 385,305 | | 8.8 |
| 147,760 | $4.00 - $4.99 |
| 350,500 | | 8.1 |
| 216,178 |
| $5.00 - $5.99 |
| 100,805 | | 6.2 |
| 79,805 | $5.00 - $5.99 |
| 50,805 | | 4.3 |
| 50,638 |
| $6.00 - $6.99 |
| 1,005,286 | | 7.1 |
| 715,111 | $6.00 - $6.99 |
| 843,759 | | 6.5 |
| 741,748 |
| $7.00+ |
| 164,918 | | 5.5 |
| 164,918 | $7.00+ |
| 150,640 | | 4.8 |
| 150,640 |
| | | 5,484,687 | | 6.5 | | 3,518,147 | | | 5,185,078 | | 6.2 | | 3,582,370 |
As of SeptemberJune 30, 2022,2023, there was $4,058,569$2,868,023 of unrecognized stock-based compensation expense related to stock options, which will be recognized over a weighted average period of 1.61.7 years.
Warrants
A summary of the warrant activity for the nine months ended September 30, 2022 is presented below:
| | | | | | | | | | |
| | | | | | | Weighted | | | |
| | | | Weighted | | Average | | | | |
| | | | Average | | Remaining | | Aggregate | ||
| | Number of | | Exercise | | Life | | Intrinsic | ||
|
| Warrants |
| Price |
| In Years |
| Value | ||
Outstanding January 1, 2022 |
| 1,217,715 | | $ | 2.69 |
|
|
| |
|
Granted |
| 6,740,260 | |
| 2.56 |
|
|
| |
|
Exercised | | (1,870,130) | | | 0.01 | | | | | |
Outstanding September 30, 2022 |
| 6,087,845 | | $ | 3.37 |
| 4.5 | | $ | — |
| | | | | | | | | | |
Exercisable September 30, 2022 |
| 6,087,845 | | $ | 3.37 |
| 4.5 | | $ | — |
The following table presents information related to warrants as of September 30, 2022:
| | | | | | |
Warrants Outstanding | | Warants Exercisable | ||||
| | | | Weighted | | |
| | Outstanding | | Average | | Exercisable |
Exercise | | Number of | | Remaining Life | | Number of |
Price |
| Warrants |
| In Years |
| Warrants |
$2.4696 |
| 909,451 |
| 2.5 |
| 909,451 |
$2.7240 |
| 216,380 |
| 2.5 |
| 216,380 |
$4.7600 |
| 91,884 |
| 8.6 |
| 91,884 |
$3.5400 | | 4,870,130 | | 4.9 | | 4,870,130 |
|
| 6,087,845 |
| 4.5 |
| 6,087,845 |
Stock Warrant Exercises
During the nine months ended September 30, 2022, the Company issued an aggregate of 1,870,130 shares of common stock pursuant to the exercise of pre-funded warrants for aggregate proceeds of $18,701 at an exercise price of $0.01 per share.
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Note 9 – Employee Benefit Plans
401(k) Plan
In April 2019, the Company adopted the Eyenovia 401(k) Plan (the “Plan”), which went into effect in May 2019. All Company employees are able to participate in the Plan, subject to eligibility requirements as outlined in the Plan documents. Under the terms of the Plan, eligible employees are able to defer a percentage of their pay every pay period up to annual limitations set by Congress and the Internal Revenue Service under Section 401(k) of the Internal Revenue Code. For 2023 and 2022, and 2021, the Company’s Board hasof Directors approved a matching contribution equal to 100% of elective deferrals up to 4% of eligible earnings with the matching contribution subject to certain vesting requirements as outlined in the Plan documents. During the three months ended SeptemberJune 30, 20222023 and 2021,2022, the Company recorded expense of $39,914$46,196 and $34,076$47,883 associated with its matching contributions, respectively. During the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, the Company recorded expense of $173,896$125,164 and $144,917$133,982 associated with its matching contributions, respectively.
Note 10 – Subsequent Events
At-the-Market Offering Program
Subsequent to September 30, 2022, the Company received approximately $1.4 million in gross proceeds ($1.3 million in net proceeds) from the sale of 587,298 shares of our common stock pursuant to our At-the-Market Offering program with SVB Leerink.
SVB Loan Repayment
On November 4, 2022, the Company repaid the SVB Loan in full. The full amount of the payment was $8.0 million, and included the principal amount of the loan ($7,500,000), the final payment ($375,000) and a 2% prepayment fee ($150,000). The entire restricted cash account in the amount of $7,875,000 was used to make the substantial amount of the payment.
1713
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the results of operations and financial condition of Eyenovia, Inc. (“Eyenovia,” the “Company,” “we,” “us” and “our”) as of SeptemberJune 30, 20222023 and for the three and ninesix months ended SeptemberJune 30, 20222023 and 20212022 should be read in conjunction with our unaudited condensed financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 20212022 as filed with the Securities and Exchange Commission (“SEC”) on March 30, 2022.31, 2023, as amended by Amendment No. 1, as filed with the SEC on May 1, 2023.
Forward Looking Statements
This reportQuarterly Report on Form 10-Q contains “forward-looking statements” that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements.” Specifically, all The statements contained in this Quarterly Report on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements include our estimates regarding expenses, future revenue, capital requirements and our need for additional financing and other thanfinancial items; any statements of historical facts included in this report, including regarding our financial position, business strategy andthe plans, strategies and objectives of management for future operations, are forward-looking statements. These forward-lookingoperations; any statements about the advantages of our product candidates and platform technology; estimates regarding the potential market opportunity for our product candidates and platform technology; statements regarding our clinical trials; factors that may affect our operating results; statements about our ability to establish and maintain intellectual property rights; statements about our ability to retain key personnel and hire necessary employees and appropriately staff our operations; statements related to future capital expenditures; statements related to future economic conditions or performance; and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. Forward-looking statements are based onoften identified by the beliefsuse of management at the time these statements were made,words such as, well as assumptions made by and information currently availablebut not limited to, management. When used in this report, the words “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “will,” “continue” “intend,“plan,” “project,” “seek,” “should,” “target,” “would,” and “plan” and wordssimilar expressions or phrases of similar import arevariations intended to identify forward-looking statements. These statements reflectare based on the beliefs and assumptions of our current view with respectmanagement based on information currently available to future events andmanagement. Such forward-looking statements are subject to risks, uncertainties and assumptions related to variousother important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the sectionsections titled “Summary Risk Factors” and “Risk Factors” included in Item 1A of Part I of our most recent Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC.Securities and Exchange Commission (the “SEC”) on March 31, 2023, and as amended by Amendment No. 1, as filed with the SEC on May 1, 2023, and the risks discussed in our other SEC filings. Furthermore, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
FDA Approval of Mydcombi™
We received notification from the FDA on May 5, 2023 that our NDA for the Mydcombi™ product was approved. It is the only FDA-approved fixed combination of the two leading mydriatic agents in the United States. As an ophthalmic spray, Mydcombi may present a number of benefits for the optometric and ophthalmic offices as well as patients. Those benefits may include better tolerability, more efficient use of office time and resources, and an overall improved doctor-patient experience. We have begun the commercialization of Mydcombi, with the first commercial sale of the product on August 3, 2023 as part of a targeted launch, and are continuing to expand the manufacturing process in preparation for a broader launch in 2024, when internal manufacturing capabilities are expected to come on-line.
Overview
We are a pre-commercialan ophthalmic technology company developing the Optejet® delivery system for use both in combination with itsour own drug-device therapeutic programs as well as out-licensing for additional indications. WeOur aim is to achieve precision inimprove the delivery of topical ophthalmic medication through ergonomic design that facilitates ease-of-use, delivery of more physiologically appropriate medication volume, with the goal to reduce side effects and improve tolerability, and introduce digital health technology to improve therapy compliance and ultimately medical outcomes.
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The ergonomic and functional design of the Optejet® allows for horizontal drug delivery and eliminates the need to tilt the head back or the manual dexterity to squeeze a bottle, to administer medications. Drug is delivered in a microscopic array of novel and existing ophthalmic pharmaceutical agents.droplets faster than the blink reflex to help ensure instillation success. The precise delivery of a low-volume columnar spray by the Optejet® device also minimizes contamination with a non-protruding nozzle and self-closing shutter. The Company believes that this technology could ultimately replace eye droppers by advancing drug delivery beyond the limitations of patient coordination, drug overexposure, gravity, contamination potential, and discomfort towards a more precise, comfortable, and successful drug administration for improved patient care. The ergonomic and functional design of the Optejet® delivers microdroplets horizontally faster than the blink reflex to minimize instillation discomfort and overflow spillage, providing a more comfortable experience. In the clinic,clinical trials, the Optejet® has demonstrated that its targeted delivery achieves a significantly high rate of successful administration, with 98% of 98%sprays being accurately delivered upon first attempt compared to the established rate reported with traditional eye drops of ~ 50%. The diagnostics and therapeutics
A more physiologically appropriate volume of medication in the Company’s pipeline have been testedrange of seven to nine microliters is delivered by the Optejet, which is approximately one fifth of the 35 to 50 microliter dose typically delivered in randomized controlled trials and demonstrated significant results in improving the benefit to risk profile for drug delivery. For example, the Company’s deliberately designed technology provides a 75% reduction in ocular drug and preservative exposure to significantly improve the therapeutic index in drugs used for presbyopia, mydriasis and intraocular pressure (“IOP”) lowering through eight clinical trials. Eyedrops exposesingle eye drop. Lower volume of medication exposes the ocular surface to approximately 300% more medicationless active ingredient and preservatives, potentially reducing ocular stress and surface damage and improving tolerability. The lower volume also minimizes the potential for drug to enter systemic circulation, with the goal of avoiding some common side effects that can leadare related to unintended effects and induce collateral tissue damage. Drug delivery viaoverdosing of the eye.
We are developing versions of the Optejet with on-board digital technology to provide reminders via Bluetooth to smart devices and date and time stamp device reduces ocular exposureuse. This information can then be used by practitioners and health care systems to preservatives comparablemeasure treatment compliance and improve medical decision making. In this way, the Optejet could serve as an extension of the physician’s office by providing information that is not currently possible to thatcollect except through the use of non-preserved formulations demonstrating potentially less surface damage from ocular stress. To address unmet medical needs, the Company is developing the next generation of smart ophthalmic therapeutics to target new indications or new combinations where there are currently no or few drug therapies approved by the U.S. Food and Drug Administration (“FDA”). The Company’s investigational products are classified by the FDA as drug-device combination products with drug primary mode of action, meaning that the Center for Drug Evaluation and Research (“CDER”) is designated as the lead center with primary jurisdictional oversight. Accordingly, the product candidates are submitted to the FDA CDER for premarket review and approval under new drug applications (“NDAs”).diaries.
Our pipeline is currently focused on the late-stage development of novel, potential first-in-classdrug-device product line includes Mydcombi™ (tropicamide and phenylephrine HCL ophthalmic spray) and therapeutic indications for an estimated 25 million potential pediatric patients with progressive myopia in the United Statesprograms MicroPine (atropine ophthalmic spray) and an estimated over 100 million potential patients with age-related near vision impairment, or presbyopia—indications where there is tremendous unmet need and, to our knowledge, there exists only one known FDA-approved therapy, developed by Allergan. We are also developing the first microdose fixed combinationMicroLine (pilocarpine ophthalmic pharmaceutical for mydriasis to address the estimated over 100 million annual comprehensive eye exams involving pupil dilation.
18
spray). MicroPine is our first-in-class topical therapy for the treatment of progressive myopia, a back-of-the-eye ocular disease associated with pathologic axial elongation and sclero-retinal stretching. In the United States, myopia is estimated to affect approximately 25 million children, with up to five million considered to be at high risk for progressive myopia. In February 2019, the FDA accepted our investigational new drug application (“IND”)IND to initiate a Phase III registration trial of MicroPine (the “CHAPERONE study”)the CHAPERONE study to reduce the progression of myopia in children. We enrolled theThe first patient was enrolled in the CHAPERONE study in June 2019. Due to the COVID-19 pandemic, we experienced delays in trial enrollment as a result of supply chain issues with our third party suppliers, which in turn diminished our inventory supply. As of December 2021, per our license agreement described below, Bausch + Lomb, Inc. (“Bausch + Lomb”) manages enrollment of the CHAPERONE study. We have successfully expanded our manufacturing capabilities with our partnership with Coastline International, Inc. and the construction of our Redwood City, CA fill finish facility, and we have been able to reliably supply this study with clinical product as of the third quarter of 2022.
On October 9, 2020, we entered into a license agreement (the “Bauschthe Bausch License Agreement”)Agreement with Bausch + Lomb,B+L, pursuant to which Bausch + LombB+L may develop and commercialize MicroPine in the United States and Canada. Under the terms of the Bausch License Agreement, we received an upfront payment of $10.0 million and we may receive up to a total of $35.0 million in additional payments, based on the achievement of certain regulatory and launch-based milestones. Bausch + LombB+L also will pay us royalties to Eyenovia on a tiered basis (ranging from mid-single digit to mid-teen percentages) on gross profits from sales of MicroPine in the United States and Canada, subject to certain adjustments. Under the terms of the Bausch License Agreement, Bausch + LombB+L assumed sponsorship of the IND as well as oversightownership and the costs related to the ongoing CHAPERONE study.
We have also successfully expanded our manufacturing capabilities through a partnership with Coastline International, Inc. located in Tijuana, Mexico, and the construction of our own fill and finish facility in Redwood City, California. As of the date of filing, we are up-to-date supplying clinical product for the CHAPERONE and VISION Studies.
MicroLine is our investigational pharmacologic treatment for presbyopia. Presbyopia is a non-preventable, age-related hardening of the lens, which causes the gradual loss of the eye’s ability to focus on near objects and impairs near visual acuity. Allergan recently received FDA approval for and launched VuityTMVuity™, which is a pilocarpine solutiondrug product for the treatment of presbyopia. Our second Phase III study, VISION-2, used the same molecule, butdrug, delivered with the advantages of our Optejet delivery system.Optejet® device. We released positive top-line results from VISION-2 in the fourth quarter of 2022.
Mydcombi™ (or MicroStat) is our fixed combination formulation of tropicamide-phenylephrine for inducing mydriasis designed to befor diagnostic procedures and in conditions where short term pupil dilation is desired. Mydcombi is a novel approach for the estimated over 100106 million office-based comprehensive and diabetic eye exams performed every year in the United States. We have completedAs the only FDA-approved fixed combination of the two Phase III trialsleading mydriatic agents in the United States and as an ophthalmic spray, Mydcombi may present a number of benefits for Mydcombithe optometric and announced positive results from these studies, knownophthalmic offices as MIST-1well as patients. Those benefits may include better tolerability, more efficient use of office time and MIST-2,resources, and have submitted an NDAoverall improved doctor-patient experience. As noted above in “FDA Approval of Mydcombi”, we received FDA approval on May 5, 2023, and are preparing to the FDA seeking approval to marketcommercialize the product starting with a targeted launch and expanding in the U.S. In October 2021,2024 when we received a complete response letter (“CRL”) in responseexpect our internal manufacturing capabilities to our NDA, which in part informed us that pre-filled or co-packaged ophthalmic drug dispenser products like Mydcombi have been reclassified as drug-device combination products. This reclassification was based upon the U.S. Courtcome on-line.
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On August 10, 2020, we entered into a license agreement (the “Arcticthe Arctic Vision License Agreement”)Agreement with Arctic Vision, (Hong Kong) Limited (“Arctic Vision”), which was amended on September 14, 2021, pursuant to which Arctic Vision may develop and commercialize MicroPine, MicroLine and Mydcombi in Greater China (mainland China, Hong Kong, Macau and Taiwan) and South Korea. Under the terms of the Arctic Vision License Agreement, as amended, we received an upfront payment of $4.25 million before any payments to Senju Pharmaceutical Co., Ltd. (“Senju”). In addition, we may receive up to a total of $43.75$39.7 million in additional payments, based on various development and regulatory milestones, including the initiation of clinical research and approvals in Greater China and South Korea, and development costs. Arctic Vision also will purchase its supply of MicroPine, MicroLine and Mydcombi from usEyenovia or, for such products not supplied by us,Eyenovia, pay us a mid-single digit percentage royalty on net sales of such products, subject to certain adjustments. We will pay between 30 and 40 percent of such payments, royalties, or net proceeds of such supply to Senju pursuant to an exclusive license agreement with Senju dated March 8, 2015, as amended. For a descriptionamended (the “Senju License Agreement”).
We are in active discussions with manufacturers of the Senju license agreement, see Note 2 — Summary of Significant Accounting Policies — Arctic Vision License Agreementexisting and Note 10 — Related Party Transactions — Senju License Agreementlate-stage ophthalmic medications to our audited financial statements included in the Annual Report on Form 10-K filedexplore whether development with the SEC on March 30, 2022.Optejet technology can solve unmet medical and business needs. Some of those business needs could include extension of exclusivity under the Optejet patents, improvement in a drug’s tolerability profile, or potential improvement in treatment compliance.
Historically, we have financed our operations principally through equity offerings. We have also generated cash through licensing arrangements and our credit facilityfacilities with Silicon Valley Bank (“SVB”).SVB and Avenue. However, based upon our current operating plan, there is substantial doubt about our ability to continue as a going concern for at least one year from the date that theour financial statements
19
included elsewhere in this Quarterly Report on Form 10-Q are issued. Our ability to continue as a going concern depends on our ability to complete additional licensing or business development transactions or raise additional capital through licensing transactions, the sale of equity or debt securities to support our future operations. If we are unable to secure additional capital, we may be required to curtail our research and development initiatives andand/or take additional measures to reduce costs.
Our net losses were $7.3$6.2 million and $21.9$12.0 million for the three and ninesix months ended SeptemberJune 30, 2022.2023. As of SeptemberJune 30, 2022,2023, we had working capital and an accumulated deficit of $18.4$19.2 million and $112.1$130.2 million, respectively.
Financial Overview
Revenue and Cost of Revenue
In August and October 2020, we entered into the Arctic Vision License Agreement and Bausch License Agreement, respectively. Both of these agreements provide for the Company to earn revenue from an upfront licensing fee, the achievement of various development and regulatory milestones, and royalty income on sales of licensed products. Pursuant to the Senju license agreement, we will pay a percentage between 30 and 40 percent of such payments from the Arctic Vision License Agreement to Senju.
Research and Development Expenses
Research and development expenses are incurred in connection with the research and development of our microdose-therapeutics and consist primarily of contract servicepersonnel-related expenses. Given where we are in our life cycle, we do not separately track research and development expenses by project. Our research and development expenses consist of:
● | direct clinical and non-clinical expenses, which include expenses incurred under agreements with contract research organizations, contract manufacturing organizations, and costs associated with preclinical activities, development activities and regulatory activities; |
● | personnel-related expenses, which include expenses related to consulting agreements with individuals that have since entered into employment agreements with us as well as salaries and other compensation of employees that is attributable to research and development activities; and |
● | facilities and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, marketing, insurance and other supplies used in research and development activities. |
We expense research and development costs as incurred. We record costs for some development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as subject enrollment, clinical site activations or other information our vendors provide to us.
In addition, our license agreements with Arctic Vision and Bausch + Lomb require them to assume or reimburse us for specified research and development costs.
We expect that our research and development expenses will increase with the continuation of the aforementioned initiatives.
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General and Administrative Expenses
General and administrative expenses consist primarily of payroll and related expenses, legal and other professional services, as well as non-cash stock-based compensation expense. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research and development and the potential commercialization of our product candidates.
No payments related to the Arctic Vision License Agreement or Senju license agreement were earned or recognized during the three and nine months ended September 30, 2022.
20
Results of Operations
Three Months Ended SeptemberJune 30, 20222023 Compared with Three Months Ended SeptemberJune 30, 20212022
Research and Development Expenses
| | | | | | |
| | For the Three Months Ended June 30, | ||||
|
| 2023 |
| 2022 | ||
Personnel-related expenses | | $ | 1,747,020 | | $ | 1,524,119 |
Direct clinical and non-clinical expenses | | | 452,026 | | | 994,426 |
Non-cash stock-based compensation expenses | | | 36,197 | | | 516,669 |
Facilities expenses | |
| 267,952 | |
| 294,726 |
Supplies and materials | |
| 153,063 | |
| 115,380 |
Other expenses | |
| 154,802 | |
| 141,546 |
Total research and development expenses | | $ | 2,811,060 | | $ | 3,586,866 |
Research and development expenses for the three months ended SeptemberJune 30, 20222023 totaled $3.9$2.8 million, an increasea decrease of $0.3$0.8 million, or 8%22%, as compared to $3.6 million recorded for the three months ended SeptemberJune 30, 2021. Research2022. The increase in personnel-related expenses was primarily due to salary increases and development expenses consisted ofnew staff additions made throughout 2022, primarily related to the following:
| | | | | | |
| | For the Three Months Ended September 30, | ||||
|
| 2022 |
| 2021 | ||
Direct clinical and non-clinical expenses | | $ | 1,619,948 | | $ | 692,409 |
Personnel-related expenses | | | 1,187,195 | | | 1,415,615 |
Non-cash stock-based compensation expenses | | | 420,619 | | | 489,121 |
Other expenses | |
| 229,749 | |
| 103,512 |
Facilities expenses | |
| 212,584 | |
| 297,784 |
Supplies and materials | |
| 206,781 | |
| 553,627 |
Total research and development expenses | | $ | 3,876,876 | | $ | 3,552,068 |
anticipated Mydcombi launch. The increasedecrease in direct clinical and non-clinical expenses was primarily due to the VISION-2 Phase III MicroLine studyStudy being concluded in 2022. The decrease in personnel-related expenses and facilities expenses mainly resulted from an increase in such costs being allocated to clinical supplies. The decrease in non-cash stock-based compensation expenses resulted from stock grant forfeitures. The decrease in supplies and materials was mainlyprimarily due to the delaychange in the commercializationallocation percentages of Mydcombi.a grant from research and development expenses to general and administrative expenses and adjustments for forfeitures and expirations resulting from the review of outstanding options.
General and Administrative Expenses
| | | | | | |
| | For the Three Months Ended June 30, | ||||
|
| 2023 |
| 2022 | ||
Salaries and benefits | | $ | 975,393 | | $ | 905,017 |
Professional fees | | | 779,788 | | | 1,061,299 |
Stock-based compensation | |
| 457,435 | |
| 520,257 |
Insurance expense | | | 227,257 | | | 268,571 |
Sales and marketing | |
| 201,516 | |
| 318,198 |
Facilities expense | |
| 126,251 | |
| 115,923 |
Director fees and expense | |
| 106,250 | |
| 95,000 |
Other | | | 275,920 | | | 250,325 |
| | $ | 3,149,810 | | $ | 3,534,590 |
General and administrative expenses for the three months ended SeptemberJune 30, 20222023 totaled $3.4$3.1 million, an increasea decrease of $1.0$0.4 million, or 42%11%, as compared to $2.4$3.5 million recorded for the three months ended SeptemberJune 30, 2021. General and administrative expenses consisted of the following:
| | | | | | |
| | For the Three Months Ended September 30, | ||||
|
| 2022 |
| 2021 | ||
Professional fees | | $ | 793,842 | | $ | 377,977 |
Salaries and benefits | |
| 900,506 | |
| 744,683 |
Stock-based compensation | |
| 508,114 | |
| 288,343 |
Sales and marketing | |
| 407,737 | |
| 394,850 |
Insurance expense | |
| 269,840 | |
| 245,390 |
Other | | | 239,135 | | | 198,042 |
Facilities expense | |
| 120,636 | |
| 46,714 |
Director fees and expense | |
| 113,542 | |
| 77,000 |
Total general and administrative expenses | | $ | 3,353,352 | | $ | 2,372,999 |
2022. The increase in salaries and benefitsdecrease was mainlyprimarily attributable to staff additions made in late 2021 and early 2022 related to the ramp up for the anticipated Mydcombi launch. The increasea sharp decrease in professional services was primarily due to increasedfees which resulted from legal and professional recruiting expenses related toassociated with the addition of new directors in 2022.2022 that were not incurred in the first half of 2023. The increasedecrease in stock-based compensation expense was due to new grants awardedsales and marketing expenses primarily resulted from the decrease in late 2021 and early 2022. The increase in facilities expense was primarily due to the new lease entered into in 2022.
Nine Months Ended September 30, 2022 Compared with Nine Months Ended September 30, 2021
Revenue and Cost of Revenue
In August 2020, we received a $4.0 million upfront payment under the Arctic Vision License Agreement, and made a related payment of $1.6 million to Senju. This upfront payment was recorded as $4.0 million of deferred license fees and $1.6 million of deferred cost of revenue. Trial data for two of the product candidates that are subject to the Arctic Vision License Agreement (MicroPine andpromotional expenses.
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MicroLine) was fully submitted to Arctic Vision during the nine months ended SeptemberSix Months Ended June 30, 2021. As a result, we recognized the $4.0 million of revenue and recognized $1.6 million of cost of revenue related to the Senju payment during the nine months ended September2023 Compared with Six Months Ended June 30, 2021. We had no revenues during the nine months ended September 30, 2022.
2022
Research and Development Expenses
| | | | | | |
| | For the Six Months Ended June 30, | ||||
|
| 2023 |
| 2022 | ||
Personnel-related expenses | | $ | 3,361,872 | | $ | 2,972,710 |
Direct clinical and non-clinical expenses | |
| 278,225 | |
| 1,706,952 |
Non-cash stock-based compensation expenses | |
| 411,327 | |
| 1,017,850 |
Facilities expenses | |
| 494,999 | |
| 508,333 |
Supplies and materials | |
| 511,994 | |
| 859,635 |
Other expenses | |
| 274,594 | |
| 233,970 |
Total research and development expenses | | $ | 5,333,011 | | $ | 7,299,450 |
Research and development expenses for the ninesix months ended SeptemberJune 30, 20222023 totaled $11.2$5.3 million, a decrease of $0.4$2.0 million, or 3%27%, as compared to $11.6$7.3 million recorded for the ninesix months ended SeptemberJune 30, 2021. Research2022. The increase in personnel-related expenses was primarily due to salary increases and development expenses consisted ofcosts related to staff additions made throughout 2022 mainly related to the following:
| | | | | | |
| | For the Nine Months Ended September 30, | ||||
|
| 2022 |
| 2021 | ||
Personnel-related expenses | | $ | 4,159,905 | | $ | 4,003,192 |
Direct clinical and non-clinical expenses | |
| 3,494,633 | |
| 4,291,192 |
Non-cash stock-based compensation expenses | |
| 1,438,469 | |
| 1,138,331 |
Supplies and materials | |
| 898,683 | |
| 993,455 |
Facilities expenses | |
| 720,917 | |
| 871,938 |
Other expenses | | | 463,719 | | | 261,256 |
Total research and development expenses | | $ | 11,176,326 | | $ | 11,559,364 |
ramp up for the Mydcombi launch. The decrease in direct clinical and non-clinical expenses was mainlyprimarily due to Mydcombi product testing expense that was primarily donethe VISION-2 Study being concluded in early 2021. Stock option grants for new hires resulted in the increase2022. The decrease in non-cash stock-based compensation expenses.expenses was primarily due to the change in the allocation percentages of a grant from research and development expenses to general and administrative expenses and adjustments for forfeitures and expirations resulting from the review of outstanding options. The decrease in supplies and materials expenses resulted from the increase in other expenses was mainly duethe cost reimbursements for the clinical supplies that were supplied to various outsourcing costsour clinical partners (Arctic Vision and higher depreciation expense.B+L).
General and Administrative Expenses
| | | | | | |
| | For the Six Months Ended June 30, | ||||
|
| 2023 |
| 2022 | ||
Salaries and benefits | | $ | 1,997,344 | | $ | 1,933,800 |
Professional fees | |
| 1,392,823 | |
| 2,268,148 |
Stock-based compensation | |
| 901,369 | |
| 928,063 |
Insurance expense | |
| 483,993 | |
| 519,789 |
Sales and marketing | |
| 397,136 | |
| 497,506 |
Facilities expense | |
| 247,669 | |
| 221,954 |
Director fees and expense | |
| 203,750 | |
| 180,833 |
Other | |
| 462,611 | |
| 459,462 |
| | $ | 6,086,695 | | $ | 7,009,555 |
General and administrative expenses for the ninesix months ended SeptemberJune 30, 20222023 totaled $10.4$6.1 million, an increasea decrease of $3.5$0.9 million, or 51%13%, as compared to $6.9$7.0 million recorded for the ninesix months ended SeptemberJune 30, 2021. General and administrative expenses consisted of the following:
| | | | | | |
|
| For the Nine Months Ended September 30, | ||||
| | 2022 |
| 2021 | ||
Professional fees | | $ | 3,061,990 | | $ | 1,311,626 |
Salaries and benefits | |
| 2,834,306 | |
| 2,051,269 |
Stock-based compensation | |
| 1,436,177 | |
| 933,401 |
Sales and marketing | |
| 905,243 | |
| 1,002,201 |
Insurance expense | |
| 789,629 | |
| 674,726 |
Other | |
| 698,597 | |
| 560,582 |
Facilities expense | |
| 342,590 | |
| 158,426 |
Director fees and expense | |
| 294,375 | |
| 222,250 |
Total general and administrative expenses | | $ | 10,362,907 | | $ | 6,914,481 |
2022. The increasedecrease was primarily attributable to a sharp decrease in professional fees was primarily due to higherwhich resulted from legal and professional recruiting expenses related toassociated with the addition of new directors in 2022.2022 that were not incurred in the first half of 2023. The increasedecrease in salariessales and benefits was mainly due to new staff additions mademarketing expense primarily resulted from the decrease in late 2021 and early 2022 related to the ramp up for the anticipated Mydcombi launch. The increase in stock-based compensation was due to new grants awarded in late 2021 and early 2022. The increase in facilities expense was primarily due to the new lease entered into in 2022.promotional expenses.
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Liquidity and Capital Resources and Going Concern
We measure our liquidity in a number of ways, including the following:
| | | | | | | | | | | | |
| | September 30, | | December 31, | | June 30, | | December 31, | ||||
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| 2022 |
| 2021 |
| 2023 |
| 2022 | ||||
Cash and cash equivalents | | $ | 17,398,605 | | $ | 19,461,850 | | $ | 17,468,088 | | $ | 22,863,520 |
Restricted cash | |
| 7,875,000 | |
| 7,875,000 | ||||||
Total | | $ | 25,273,605 | | $ | 27,336,850 | ||||||
| | | | | | | | | | | | |
Working capital | | $ | 18,401,368 | | $ | 18,690,859 | | $ | 19,212,583 | | $ | 23,130,178 |
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Notes payable (gross) | | $ | 7,500,000 | | $ | 7,500,000 | | $ | 15,842,950 | | $ | 10,425,000 |
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Since inception, we have experienced negative cash flows from operations. As of SeptemberJune 30, 2022,2023, our accumulated deficit since inception was $112.1$130.2 million.
As of SeptemberJune 30, 2022,2023, we had an unrestricteda cash and cash equivalents balance of $17.4$17.5 million, working capital of $18.4$19.2 million and stockholders’ equity of $20.3$10.5 million. As of SeptemberJune 30, 20222023 and December 31, 2021,2022, we had $7.5 million of notes payable (gross) outstanding. Subsequent to September 30, 2022, we received approximately $1.3 million in net proceeds from the sale of 587,298 shares of our common stock pursuant to our At-the-Market Offering program with SVB Leerink. Subsequent to September 30, 2022, the Company used its $7.9 million of restricted cash and $0.1 million of unrestricted cash in order to repay the SVB Loan, including $7.5 million of principal, a final payment of $0.4$15.8 million and a prepayment fee$10.4 million, respectively, of $0.1 million.debt outstanding.
These conditions raise substantial doubt about our ability to continue as a going concern for at least one year from the date that the financial statements included elsewhere in this Quarterly Report on Form 10-Q are issued. Our financial statements do not include adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. Our ability to continue as a going concern depends on our ability to raise additional capital through the sale of equity or debt securities to support our future operations. Our operating needs include the planned costs to operate our business, including amounts required to fund research and development activities including clinical studies, working capital and capital expenditures. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product and service offerings. If we are unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce general and administrative and sales and marketing costs in order to conserve our cash.
During the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, our sources and uses of cash were as follows:
Net cash used in operating activities for the ninesix months ended SeptemberJune 30, 20222023 was $19.7$11.7 million, which includes cash used to fund a net loss of $21.9$12.0 million, reduced by $3.4$2.1 million of non-cash expenses, plus $1.2$1.8 million of cash used to fund changes in operating assets and liabilities. Net cash used in operating activities for the ninesix months ended SeptemberJune 30, 20212022 was $15.0$12.9 million, which includes cash used to fund a net loss of $15.8$14.6 million, reduced by $1.8$2.1 million of non-cash expenses, plus $1.0$0.4 million of cash used to fund changes in operating assets and liabilities.
Cash used in investing activities for the ninesix months ended SeptemberJune 30, 2023 was $2.1 million, which was related to purchases of property and equipment. Cash used in investing activities for the six months ended June 30, 2022 was $0.6$0.4 million, which was related to purchases of and vendor deposits for property and equipment. Cash used in investing activities for the nine months ended September 30, 2021 was $1.2 million, which was related to purchases of property and equipment.
Net cash provided by financing activities for the ninesix months ended SeptemberJune 30, 20222023 totaled $18.2$8.4 million, which was attributable to $19.1$4.0 million of gross proceeds received from sales under our At-the-Market Offering Program and $5.0 million of gross proceeds from the additional tranche under the Loan and Security Agreement. This was slightly offset by the repayment of $0.4 million of notes payable in connection with the D&O Loan, $0.1 million of the At-the-Market offering issuance costs relating to our At-the-Market Offering Program and $0.1 million of issuance costs related to the additional tranche under the Loan and Security Agreement. Net cash provided by financing activities for the six months ended June 30, 2022 totaled $15.3 million, which was attributable to $15.9 million of gross proceeds received from the March 2022 Offering (as defined in our Annual Report on Form 10-K, as filed with the SEC on March 31, 2023, as amended by Amendment No. 1, as filed with the SEC on May 1, 2023) and the At-the-Market Offering.Offering Program. This was slightly offset by the repayment of $0.7$0.4 million of notes payable in connection with the D&O Loan and the $0.1 million payment of issuance costs related to the March 2022 Offering issuance costs. Net cash provided by financing activities for the nine months ended September 30, 2021 totaled $9.2 million, which was primarily attributable to $7.5 million of proceeds from the SVB Loan and $2.3 million from the exercise of warrants and stock options. This was slightly offset by the repayment of notes payable and loan issuance costs of $0.6 million.Offering.
23
Contractual Obligations and Commitments
During the next twelve months we have commitments to pay: (a) $3.8$2.7 million to settle our SeptemberJune 30, 20222023 accounts payable, accrued compensation, and accrued expenses and other current liabilities; (b) $0.7$0.4 million relating to our non-cancelable operating lease commitments; and (c) $1.5 million of potential executive severance pay; and (d) $7.5$1.0 million of potential payments due under our notes payable. In addition, we would be required to pay an aggregate of $1.5 million of executive severance pay under the provisions of the Executive Employment Agreements with three executive officers, in the event that their respective employment with us were to be terminated without cause or if there is an involuntary termination (as defined in the agreement).
After twelve months we have commitments to pay an additional $1.2$1.6 million relating to our non-cancelable operating lease commitments.commitments and notes payable in the amount of $14.8 million.
19
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on financial conditions, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies and Estimates
For a description of our critical accounting policies, including critical accounting estimates, see Item 7 – Critical Accounting Policies in our Annual Report on Form 10-K, as filed with the SEC on March 31, 2023, as amended by Amendment No. 1, as filed with the SEC on May 1, 2023.
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires us to make estimates and judgmentsjudgements that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Changes in estimates are reflected in reported results for the period in which they become known. Actual results could differ significantly from the estimates made by our management.
There have been no material changes to our critical accounting policies and estimates from those disclosed in our financial statements and the related notes and other financial information included in our Annual Report on Form 10-K for the year ended December 31, 2021.2022, as filed with the SEC on March 31, 2023, as amended by Amendment No. 1, as filed with the SEC on May 1, 2023.
Recently Adopted Accounting Standards
For a description of recently adopted accounting standards, including adoption dates and estimated effects, if any, on our condensed financial statements, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Smaller reporting companies such as Eyenovia are not required to provide the information required by this item.Item.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
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In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on their evaluation, our principal executive officer and principal financial officer concluded that, as of SeptemberJune 30, 2022,2023, our disclosure controls and procedures were designed to, and were effective to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures as of SeptemberJune 30, 2022.2023.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the quarter ended SeptemberJune 30, 2022,2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
2521
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently a party to any material legal proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors.
Item 1A. Risk Factors.
There have been no material changes to the risk factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021,2022, as filed with the SEC on March 30, 2022.
31, 2023, as amended by Amendment No. 1, as filed with the SEC on May 1, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.Securities Trading Plans of Directors and Executive Officers
During the three months ended June 30, 2023, none of our directors or officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
2622
Item 6. Exhibits. (TO BE UPDATED – WILL CHECK WITH COVINGTON)
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Exhibit | | Incorporated by Reference from Filings as Noted Below (Unless | ||||||||
Number |
| Exhibit Description |
| Form |
| File No. |
| Exhibit |
| Filing Date |
3.1 | | | 8-K | | 001-38365 | | 3.1 | | January 29, 2018 | |
3.1.1 | | Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation | | 8-K | | 001-38365 | | 3.1.1 | | June 14, 2018 |
3.2 | | ��� | 8-K | | 001-38365 | | 3.1 | | February 7, 2022 | |
10.1 | | Eyenovia Inc. Amended and Restated 2018 Omnibus Stock Incentive Plan, as Amended | | 8-K | | 001-38365 | | 10.1 | | June 27, 2023 |
| | | | | | | | | | |
31.1 | | | — | | — | | — | | Filed herewith | |
31.2 | | | — | | — | | — | | Filed herewith | |
32.1* | | | — | | — | | — | | Filed herewith | |
32.2* | | | — | | — | | — | | Filed herewith | |
101.INS | | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document | | — | | — | | — | | Filed herewith |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document | | — | | — | | — | | Filed herewith |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | — | | — | | — | | Filed herewith |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | — | | — | | — | | Filed herewith |
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document | | — | | — | | — | | Filed herewith |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | — | | — | | — | | Filed herewith |
104 | | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document contained in Exhibit 101 | | — | | — | | — | | Filed herewith |
+ Management contract or other compensatory plan.
2723
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| EYENOVIA, INC. | |
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| |
Date: | By: | /s/ John Gandolfo |
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| John Gandolfo |
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| Chief Financial Officer |
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