Ladies and gentlemen, greetings and welcome to the Eyenovia Second Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I will now turn the conference over to Eric Ribner of LifeSci Advisors. Please go ahead, sir..

Thanks very much and good afternoon and welcome to Eyenovia’s second quarter 2022 earnings conference call and audio webcast. With me today are Eyenovia’s Chairman, Dr. Sean Ianchulev; Chief Executive Officer, Michael Rowe; and Chief Financial Officer, John Gandolfo.

This afternoon, Eyenovia issued a press release announcing financial results for the 3 months ended June 30, 2022. We encourage everyone to read today’s press release as well as Eyenovia’s report on Form 10-K for the year ended December 31, 2021 which was filed with the SEC March 30, 2022 and our most recently filed 10-Q.

The company’s press release and annual report are also available on Eyenovia’s website at www.eyenovia.com. In addition, this conference call is being webcast through the company’s website and will be archived there for future reference.

Please note, on today’s call, we will be discussing investigational products candidates which have yet to receive FDA approval. Please also note that certain information discussed on the call today is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act.

We caution listeners that during this call, Eyenovia’s management will be making forward-looking statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company’s business.

These forward-looking statements are subject to a number of risks which are described in more detail in our annual report on Form 10-K and most recently filed 10-Q. This conference call contains time-sensitive information accurate only as of the date of this live broadcast, August 10, 2022.

Eyenovia undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as may be required by applicable securities law. With that said, I’d like to turn the call over to Dr. Sean Ianchulev, Chairman of Eyenovia’s Board of Directors.

Sean?.

Thank you, Eric and welcome, everyone, to our Second Quarter 2022 Financial Results Conference Call. I'll keep my comments very brief this morning before handing the call over to Eyenovia's new CEO, Michael Rowe, for a comprehensive update.

In June, I announced that I would be stepping down from both the CEO and Chief Medical Officer roles and transitioning to Chairman of the Board, while also serving as a medical consultant to the company. At that time, the Board retained an executive search firm and conducted a broad search for the most qualified candidate.

We identified several potential candidates and conducted interviews. At the end of the day, however, the Board agreed that none were better match for the skill set we require right now than Michael Rowe.

The appointment of Michael, who previously served as our Chief Operating Officer, ensures continuity, while at the same time bringing significant diverse ophthalmic industry operations and commercialization expertise to the CEO role. This is a critical moment given where we as a company stand today.

We will be resubmitting our MydCombi new drug application in the fourth quarter, giving us line of sight to transitioning into a commercial stage company.

At the same time, we're about to wrap up our second Phase III presbyopia study, VISION-2 which will be one input of MicroLine NDA for what we estimate to be a multibillion dollar presbyopia market in the U.S. alone.

Michael was also instrumental in brokering our collaborations with Bausch & Lomb, the eye care business that was spun out of Bausch Health in 2021 and Arctic Vision.

Together, these agreements provide us with potential sources of non-dilutive funding in the form of development and regulatory milestones and if the respective products are approved, sales royalties. This could be significant over time and we see opportunities for additional agreements in other territories.

Given Michael's track record here, the Board of Directors has also voted to add Michael as a board member, where we will be well served by his experience.

With my transition to Chairman, I will be able to continue to work with the Board and leadership team to help guide Eyenovia towards its long-term goals while also remaining involved in future innovation as we work to expand our technology across additional therapeutic areas and cement our place as the new standard of care in topical ophthalmic therapies with the Optejet device.

This is a very exciting time for Eyenovia. And with Michael assuming the CEO role, I believe we have a world-class team in place to best position us for long-term success. This will benefit not only patients and physicians but our shareholders as well. Remaining on the topic of leadership, last month we announced that we added Dr.

Ellen Strahlman and Ram Palanki as new directors to our Board of Directors. Each brings decades of medical technology, clinical development, launch and commercialization experience, much of it specific to ophthalmology.

This cross-functional expertise rounds out what I believe to be a top quality board, especially at a time when we have these significant clinical and regulatory milestones rapidly approaching.

That Ellen and Ram have agreed to join our Board provides strong validation of our technology and I look forward to working with them and the entire Board as we shepherd the company through this new and exciting phase of growth. At this point, I'd like to pass the baton over to Michael..

a microbial challenge study that demonstrated the ability of the Optejet to keep microbes from entering the device; a human factor study, assessing the ability of users to follow cleaning instructions; and the electronic safety study. The fourth test which is real-time drug stability, is ongoing and nearly complete.

We expect results later this quarter. We did experience modest supply chain delays that have impacted most high-technology manufacturers and those have now been resolved. As a result, we now anticipate resubmitting our MydCombi NDA in the fourth quarter of this year.

Reiterating the anticipated regulatory time line, we are assuming a 6-month review period and are making plans for a precision launch if approved during the first half of next year. And this launch time line is unchanged from our prior guidance.

As we have said before, we believe the time and effort invested in this Optejet device validation work today may benefit and potentially streamline the review process for our other programs in the future, both MicroLine and MicroPine.

To ensure that we are fully capable of meeting the ongoing and new clinical product supply requirements of our partners, we recently announced that our new manufacturing facility in Redwood City, California, is now operational.

The capacity and capabilities that we gained from this new state-of-the-art facility complements our existing contract manufacturing relationships.

Facility is strategically located near several of our Silicon Valley-based suppliers and will be used primarily for Optejet manufacturing finishing operations, including drug loading, enrolment and packaging prior to distribution.

We also announced the hiring of medical technology industry veteran, Bren Kern, as Senior Vice President of Manufacturing Operations. Bren has spent his career helping companies transition from research and development entities into scaled commercial manufacturing organizations.

Over the past 20 years, he has led product and manufacturing optimization, supported regulatory approvals and established GMP-compliant manufacturing solutions worldwide. We believe Bren brings to Eyenovia the ideal skill set and get-it-done attitude that we need as we prepare to make the important transition to a commercial stage company.

Now let’s move to MicroLine, our proprietary Microdose Array Print pilocarpine therapy for the temporary improvement in near vision associated with presbyopia.

This is an addressable market representing over 18 million people in the United States alone between the ages of 40 and 55 who otherwise never wore glasses and have the resources for a cash pay product. Our second Phase III study, VISION-2, is progressing nicely.

As a reminder, VISION-2 is a double-masked superiority trial evaluating 2% multi-array print pilocarpine versus placebo. We are close to achieving full enrolment of subjects into the study and anticipate top line data this quarter.

This is slightly later than our original guidance as we, as well as many other companies, found it challenging to get people out of their workspace for the required office visits. This is a consequence of the high employment rates that we currently enjoy.

But we are approaching our target enrolment of 139 and this gives us confidence in the current time line. Today, there is currently 1 pharmacological treatment available on the market, Allergan’s VUITY.

And while this is helping to create the market, we believe we can capture a significant share of this market by leveraging the potential benefits of our Optejet technology. Among these is a low rate of headache. In VISION-1, we saw a very low rate of headache and brow ache, a common side effect of pilocarpine.

Conventional pilocarpine drops can cause headache in about 15% of patients. With the Optejet, we saw this rate reduced to less than 3% in our VISION-1 trial. And so far, we are seeing the same profile coming out of VISION-2.

In addition, MicroLine delivery through the Optejet dispenser is easier and neater to administer and is designed to be used on demand with far less ocular stresses caused by preservatives than traditional eye drops.

Topical ophthalmic medications typically contain preservatives to help ensure the sterility of the product and to increase its shelf life. Over time, this can lead to adverse events due to the toxicity from overexposure to these preservatives.

We have conducted studies, such as the one conducted in collaboration with Tufts University that we discussed last quarter which have demonstrated that preserved drugs delivered with the Optejet act more like unpreserved drugs, reduce the ocular stress and potentially avoiding these long-term adverse events.

We have compiled a significant body of market research among consumers, patients and prescribers, indicating strong interest in the Optejet over traditional eye droppers.

In our most recent research conducted in the last 4 weeks, 94% of prescribers agreed with the statement that the Optejet will improve the drug delivery process for patients taking ophthalmic medications.

This was based on the doctor’s belief that the Optejet would improve the ability of patients to get the medication onto the eye and address issues that patients have with handling eye drop bottles or vials, tilting their head and dispensing too much medication.

Similarly, 93% of consumers who regularly use eye drops also felt that the Optejet would give them more control or independence over eye medication use. The reasons behind this strong result were very much like those stated by the doctors.

The totality of research that we have conducted give us a great deal of conviction that the Optejet can be a significant differentiator for us, potentially leading to strong consumer demand for our solutions relative to others on the market.

I would now like to turn the call over to our Chief Financial Officer, John Gandolfo, to provide a financial update.

John?.

Thank you, Michael. For the second quarter of 2022, we reported net loss of approximately $7.2 million,, or $0.22 per share, on approximately 33.6 million weighted average shares outstanding.

And this compares to a net loss of approximately $4.8 million, or $0.19 per share, for the second quarter of 2021 on approximately 25.9 million weighted average shares outstanding. Research and development expenses totalled approximately $3.6 million for the second quarter of 2022.

This compares to approximately $3.7 million for the same period in 2021, a decrease of approximately 2.7%. For the second quarter of 2022, general and administrative expenses were approximately $3.5 million compared with approximately $2.3 million for the second quarter of 2021, an increase of approximately 53.8%.

Total operating expenses for the second quarter of 2022 were approximately $7.1 million compared to total operating expenses of $6 million for the same period in 2021. This represents an increase of approximately 19%.

As of June 30, 2022, the company's unrestricted and restricted cash balance was approximately $29.4 million which includes $7.9 million of restricted cash. Before we open the call to questions, I will conclude with a brief update on our licensing program for Bausch & Lomb for MicroPine in the U.S.

and Canada and Arctic Vision for all 3 of our drugs in China and South Korea. It is worth noting that while our original license agreement in October 2020 was with Bausch Health, our U.S. licensee became Bausch & Lomb, the eyecare business that was formerly part of Bausch Health that was spun out as a separate company in early 2021.

So for the sake of clarity, our U.S. licensee is Bausch & Lomb and not Bausch Health. MicroPine, as you may recall, is a proprietary atropine formulation for the reduction of pediatric myopia progression that has been shown in clinical studies to slow myopia progression by 60% or more.

There are currently no FDA approved drug therapies for this indication and if left untreated, this can result in retinal detachment, myopic retinopathy and vision loss. Bifocal, multifocal glasses or contact lenses are typically prescribed to myopic children.

Recall that as part of the agreement with Bausch & Lomb, oversight and costs related to the ongoing Phase III CHAPERONE MicroPine clinical trial were transferred to our partner. CHAPERONE is a 48-month U.S.-based multi-center, randomized, double-masked trial that is enrolling more than 400 children between 3 and 12 years of age.

The trial is comparing micro-dosed atropine 0.01% versus placebo ophthalmic solution and enrollment is progressing as planned. Our agreement with Arctic Vision covers Greater China and South Korea. And while the original agreement that we announced in August 2020 was for MicroPine and MicroLine, they also subsequently added MydCombi as well.

So Arctic Vision now licenses all 3 of our current programs. MicroPine for pediatric myopia in particular represents a significant opportunity in China. The Ministry of Education estimates that nearly 53% of all Chinese children suffered from myopia in 2020 and 13 million children are estimated to be at the highest risk.

Our agreement with Arctic Vision provides for sales royalties in addition to development milestones. So if and when approved, MicroPine could be a significant source of non-dilutive funds to our company. Finally, we've recently announced that Arctic Vision has now enrolled the first patient in its presbyopia study.

So that program is progressing nicely. Data license agreements have generated approximately $16 million in license fees and we have the potential to earn an additional $60 million in net license and development milestones and reimbursable expenses over the next 4 years.

As noted, upon commercialization, if approved, Eyenovia can also earn significant sales royalties as well. We are also continuing to assess potential pipeline expansion opportunities as we believe we can leverage the Optejet technology to address unmet needs in additional large ophthalmic indications.

Some examples include anti-infectives, anti-inflammatories, dry eye and glaucoma, each with significant market opportunities. Pipeline expansion was a significant consideration as we were building out our new Redwood City, California facility. So in conclusion, we continue to be pleased with our performance to date.

To summarize our key highlights today, one, we are continuing to rapidly advance our 3 Phase III MicroLine presbyopia program. And we are enrolling patients in our Phase III trial, VISION-2 and expect top line data in the third quarter.

We are also actively preparing for the resubmission of our MydCombi NDA in the fourth quarter of this year which if approved, would give us our first commercial product and validate our Optejet dispensing technology.

We executed on a planned CEO transition and added significant expertise to our Board of Directors ahead of these meaningful clinical and regulatory milestones.

Our new state-of-the-art manufacturing facility in Redwood City, California is now operational and this provides additional capacity to complement our existing contract manufacturing relationships.

And our license agreements with Arctic Vision and Bausch & Lomb were progressing well and continue to offer the opportunity for meaningful development and regulatory milestones as well as line of sight to potential sales royalties possibly within the next 2 years. So that concludes our prepared remarks.

We would now like to open up the call to questions.

Operator?.

[Operator Instructions] Our first question comes from the line of Matt Kaplan from Ladenburg Thalmann..

Michael, congratulations on your new title..

Thank you, Matt..

Just in terms of, you mentioned a stage launch that was planned for MydCombi.

Can you give us a sense of how that -- what that means and how that would roll out and why a stage launch?.

Yes. So our plan is approval the first half of next year. We'll be prepared within weeks after that approval to do the launch. But because it's a new technology and we want to make sure that people have -- and the doctors, remember, this is geared for doctors, MydCombi -- have an optimal experience with the product.

We're going to roll it out with large group practices that we can go and train them and learn everything we can. It's almost like a beta launch or a beta test and get all the bugs out of that may be in the system because it is a new technology, a new way of doing things before going national.

So I think what you'll see is that we are geared up to address about 10% of those offices with the current staffing and resources we have now. So we're not going to expend any additional money to do that. And once we have a bit of experience and have that under our belt, we'll expand after that..

Okay. That's helpful.

And then with respect to MicroLine and the VISION-2 study, as you're getting close to top line data there, what should we be looking for in the data as it comes out in the near term?.

Well, the primary endpoint of course everybody will be looking at is the percentage of patients who have a 3-line gain in the active group versus the control group. So you'll be looking for a statistically significant result there. And then we want to see the adverse event profile.

We've looked at the masked data in the trial so far overall where I said that the headache/brow ache was less than 3%. That's for everybody that's in there. So we're looking at the right profile.

Assuming we have the efficacy which would be part of the that top line, our plan then is to set up an end of Phase III meeting with the FDA which takes about 60 days after that. go meet with the FDA. And coming out of that meeting, preparing to put together our NDA.

And simultaneous with that, we'll start doing our registration batches for the NDA to save a little time..

And how long does it take to complete the registration batches?.

Well, the registration batches take a full year. So the sooner we can start that, the better. The trigger for that is the successful VISION-2. We'll go right into making those registration batches because they're not inexpensive and we just want to be as efficient as possible..

[Operator Instructions] Our next question comes from the line of Alex Matthews [ph], an investor..

I want to find out if Optejet, when it's approved, it would be available for over-the-counter purchase, for regular use for dispensing drugs -- eye drops? And also, do you expect approval within 6 months, or it's going to take 6 months for approval?.

Yes. Alex, first of all, thank you for being an investor. We appreciate that. The Optejet is not something that you can fill with other products. It's not like you can take an eye dropper and squeeze it into the Optejet and use it.

It actually is a primary container which means it has to be developed with the drug that it's intended to use from the beginning. And that's why we have to do these registration studies. But with that, we are talking actively with other companies to see if they would like to put their products in our technology and there is substantial interest.

And one of our strategies is to partner or license the technology to these other companies so that we can see things in areas like dry eye or glaucoma, where other people might have very good drugs but they don't have very good ways of having it dispensed. And if they marry with us, they could have the best of both worlds.

For your second question, once we file -- refile the NDA for MydCombi, the clock for approval is 6 months at that point.

Did I answer your question?.

Yes..

Thank you very much..

Our next question comes from the line of Len Yaffe from Stoc Doc Partners..

Sean, congratulations on having obsolesced yourself with an incredible successor. So you succeeded all around. My question for Michael is pretty simply. On the VUITY launch from Allergan, they started with a lot of commercials and then the commercials, I think, stopped.

But what have you learned from seeing the launch and from talking to optometrists or ophthalmologists in terms of the pluses and minuses of the product, what you might have learned that you could do better when you launch the product in the next year?.

Well, thank you, Len. And I'm going to correct your last name, Yaffe. Thank you for calling and for your support. The first thing we learned is that there's a tremendous interest in a pharmacological option for presbyopia. I think when Allergan went out the gate with the direct-to-consumer campaign, everybody was talking about it.

Everybody was asking their doctors about it. So we've learned that the concept of having a pharmaceutical option for treating presbyopia is very, very high. So that's absolutely a positive.

What we've also learned is that what we bring to the table in terms of having a better delivery system for people and one that addresses the side effect of brow ache and headache is also a very big positive, because that's the thing that people probably like the least about their products. So those were the two positives.

The third thing that I think we've learned is how important it is to give doctors a heads up of what's coming out and who the right patients are for this product. For example, I have heard things like from other doctors who say they have 70-year-old patients who are coming into the office asking for it.

And these products are really not designed for people like that. We've been very careful with what we've said which has always been this is a product designed for people between 40 and 55, more or less freshly presbyopic and that's really where they work best.

So I think what we've learned is really to set the right expectation, who the right patient is and what they can get out of this which is good, functional vision. What most people between 40 and 55 are looking for is they'd like to be able to look at their cell phone without having to grab their glasses. It's that kind of function.

They're not looking -- if they're teachers, they're not trying to grade term papers without their glasses on. So it’s really setting the expectation of what you’re going to get. And I think our product, frankly, offers the best answer for all of those 3 things..

And you mentioned that there were 18 million presbyops in the age range who….

Who have money..

Yes, who have money and are naïve to glass wearing..

Yes..

I was wondering what your expectations are for the revenue per patient per year so we could kind of arrive at a potential market size in the U.S..

Well, our market research has said that people -- with the Optejet specifically on average, a patient would probably fill that 3 times a year. And we had previously discussed that our price would be somewhere around $100 a cartridge. So that would give you an estimate of the revenue per patient..

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. And now I would like to turn the conference over to Mr. Michael Rowe, the Chief Executive Officer, for closing comments..

Thank you. And thank you, everybody. That concludes today’s call. We hope we were successful in conveying the significant progress that we continue to make with the Optejet technology and across our key clinical programs.

We remain on track to resubmit the MydCombi NDA in the fourth quarter of this year and MicroLine presbyopia program is progressing with many clear and distinct advantages over therapies currently available or in development. Put simply, we believe we have potential line of sight to 2 commercial products in the near future.

Thank you again for joining us..

Thank you. The conference of Eyenovia has now concluded. Thank you for your participation. You may now disconnect your lines..