Eyenovia: It Is Now Time To See Positive Results In Their Marketing Efforts

I introduced Eyenovia (NASDAQ:EYEN) to my SA readers in 2021 – Can You See Me Now? At the time, they had a pending PDUFA date with the FDA, where they were scheduled to receive approval for their first drug candidate. However, the approval was not issued by the FDA. This event happened due to an extenuating matter unrelated to their drug candidate. It is a long story, but the FDA approved their drug earlier this year. Eyenovia is doing a small, well-defined rollout with select doctors nationwide. The formal launch will occur in the 4th-Q, with their sales force making sales calls on doctors involved in treating the human eye. Eyenovia has done an excellent job prelaunch, where they have attended key medical conferences and issued peer-reviewed articles showing relevant data and merit for the innovative Optejet system. The data obtained by their prelaunch efforts should provide a trove of names for doctors who have expressed interest in using MydCombi in their practice. Having these leads for a small sales force will eliminate the need for making cold calls to doctors' offices—they can make appointments directly with the doctors who have shown an interest in the product. Eyenovia has clearly stated that meaningful revenues will only start in the 1st-Q of 2024. However, we should begin seeing trends in adoptions by medical doctors when we get the 3rd-Q report in early November.

With this article, I wish to share the critical and essential events announced in the 2nd-Q results on August 10, 2023, and subsequent events from this date. It has been a long and challenging journey for those on board Eyenovia’s stock since 2021. The foundation has been laid –now it is time for Eyenovia’s marketing efforts to bring in sustaining revenues to grow the company with more products using the Optejet system.

Key Topics and Achievements Shared in Second Quarter Results for 2023

Eyenovia obtained the first required state pharmacy license from New York. This created the opportunity to obtain the first commercial sale of MydCombi. Dr. Nathan Radcliffe is associated with the New York Eye Surgery Center. Each year, their doctors have, on average, 30,000 patient visits where they are seeking their expertise for their eye care.

As mentioned in a previous article, a drug company must seek state licenses for its product. Eyenovia has no history with such state agencies, so it takes longer to establish its credentials with the 50 states. But the process gets easier once a drug company gets its first approval. Therefore, this New York approval should speed up the process for the remaining states.

In anticipation of this licensing requirement being obtained in California, Eyenovia has conducted training sessions in Orange County, California, early in August. The practice is OC Retina, where they have locations in the following cities—Laguna Hills, Fullerton, Santa Ana, San Juan Capistrano, and Newport Beach.

With the California state agency approval, the doctors associated with OC Retina will create coast-to-coast exposure to MydCombi. With the final build-out of the internal manufacturing facilities, Eyenovia will be ready for the full rollout of their newly approved unique eye product based on the Optejet platform. Now, Eyenovia's marketing efforts must obtain orders in all fifty states.

Manufacturing Efforts

Several topics about their manufacturing efforts were shared during the 2nd-Q report and company comments. It was well known that Eyenovia has extensive plans to create its own manufacturing facilities, with such locations being in Redwood City, California, and Reno, Nevada. However, during this quarterly update, it was revealed that Eyenovia filed with the FDA a request for a new site to be added to their manufacturing efforts.

San Diego, CA-based Coastline International will provide this manufacturing capacity. The FDA has given Eyenovia a mid-November PDUFA date for them to issue their review and inspection results for the manufacturing facility. Coastline International has been working with Eyenovia during the pre-approval period and throughout the clinical testing, where they were manufacturing the clinical supply of components used by the trial patients. Having this prior experience with Coastline operations should expedite the FDA review process.

It should be noted that Coastline International has its headquarters in San Diego, CA, and the manufacturing operations are across the border in Tijuana, Mexico. However, the company has forty years of experience in manufacturing. The manufacturing of medical equipment is a significant part of their operation. Coastline currently operates three facilities, which total over 50,000 sq. ft. of manufacturing space, including four separate ISO Class 8 / Class 100,000 cleanrooms. This strategic location is only 15 minutes (less than 10 miles) from the San Diego border.

I’m hopeful these increased manufacturing capabilities are tied to the need for more products to fill projected customer orders for MydCombi, APP13007, and future new products in clinical trials.

GEN 2 Optejet

The other news shared and related to manufacturing is that the Redwood City facility has moved forward with qualifying the Gen 2 fill-and-finish line. This is critical for Eyenovia’s coming efforts in 40-55-year-old patients suffering from presbyopia and hopefully soon having a drug candidate for the glaucoma market. MydCombi is dosed in the doctor’s office, and there is no need to track the patient's compliance. In the future, having Bluetooth features as part of the Optejet system is critical for internally created products and partnership deals from other drug companies seeking a new delivery method for their product line of optical drugs. As soon as the Gen 2 Optejet product and fill-and-finish lines are operational, the original Optejet device will be dropped from production. Eyenovia has stated that the Gen 2 product and smaller size will be cheaper to produce due to fewer parts needed.

August 15, 2023-Announcement for License Agreement with Formosa Pharmaceuticals

In the 1st-Q,2023 financial filings and subsequent Q&A session, the CEO made the following statement in response to a question from one of the stock analysts on the call:

Our strategy, among other things, is to develop partnerships, as John had mentioned. And those partnerships, obviously, would bring in some money associated with them. So things like that, that are nondilutive are absolutely our preference. So if you're looking, Robert, for what our preference is, it would be to close a partnership or 2, and we're working very hard on those. And then do these nondilutive and save the dilutive for the last option. John, would that be correct?

On this 1st-Q conference call, the stock analysts pressed Eyenovia executives about how they would obtain operating funds in the future and if such funding would be dilutive or nondilutive for the company. Eyenovia’s response left me thinking they planned to close partnership deals to generate immediate revenue for the company.

I applaud Eyenovia’s executives for how they have been able to accomplish so many objectives where the cash burn rate has been so judiciously managed. I’m realistic in the fact that Eyenovia will need a cash infusion sometime soon. But during the 2nd-Q financial results and conference call, investors were told:

Now I’d like to talk a bit more about our efforts to leverage and monetize the Optejet technology through partnerships with other companies. We have engaged in active discussions in this area with no fewer than four companies across a variety of topical ophthalmic markets. Some of these discussions take longer than would be assumed because we need to first determine if the products under discussion are compatible with the Optejet. This is something that is true for any container closure system. And usually, those test include spray performance as well as material compatibility. We anticipate being able to announce the first of these arrangements very shortly. Our goal with all discussions is to marry our leading delivery technology with a new or unique drug asset to bring the best of both worlds to patients and prescribers while providing near-term revenue and/or capital opportunities for the company.

Based on this previous declaration, where there were four ongoing negotiation efforts taking place to leverage and monetize the Optejet technology, six days later, we got a press release stating that Eyenovia had acquired the exclusive U.S. rights to distribute and sell APP13007(clobetasol propionate ophthalmic nanosuspension, 0.05%) from Taiwan-based Formosa Pharmaceuticals.

What a Difference Can Occur in Six Days

In total candor on my part, I was taken aback by finding out that in six days, the leveraging and monetizing of the Optejet technology had changed to a deal where Eyenovia was spending money to purchase the rights to an ophthalmic nanosuspension drug that would be dosed with an eyedropper –not the Optejet device. Upon reading the press release, I immediately went to the required SEC Form-8 outlining the significant details of the transaction between Eyenovia and Formosa Pharmaceuticals.

Formosa will initially be the sole supplier of the Licensed Product to the Company and its affiliates and sublicensees in the Territory. Pursuant to the License Agreement, the Company and Formosa expect to enter into separate supply, pharmacovigilance and quality agreements related to the Licensed Product.

In connection with the Company’s entry into the License Agreement, the Company is required to pay Formosa $2 million within 45 days of the effective date of the agreement, with half to be paid in cash, and the other half to be in the form of 487,805 shares of the Company’s common stock. Under the License Agreement, the Company has also agreed to pay Formosa up to $4 million upon the achievement of certain development milestones and up to $80 million upon the achievement of certain sales milestones.

Instead of leveraging and monetizing the Optejet technology, we find Eyenovia spending $1 million in cash and offering 487,805 shares of company stock to a Taiwan-based company—Formosa Pharmaceuticals.

After My Initial Review of This Deal, What My Thoughts Are Now

I was not impressed with the deal after reading the August 16th press release. However, after reading the SEC Form-8, going to the Formosa website, reading details of their drug candidate, and finding that they had a PUDFA very soon, my negativity began to wane. Looking at the deal and considering what Eyenovia needs for a stream of revenue and to create meaningful new products, these are the things I found that changed my opinion of the partnership:

• Formosa’s drug (APP130007) involved in this deal has an NDA before the FDA, where a PDUFA date is scheduled for March 4, 2024—about seven months from now.
• This ophthalmic drug is designed to treat pain and inflammation after eye surgery, with cataract surgery being a significant example. The US market reflects more than seven million ocular surgeries where topical ocular steroids and steroid combinations currently generate about $1.3 billion in sales. With the aging population, cataract surgeries alone will increase the need for pain and inflammation products post-surgery.
• APP13007 is based on clobetasol propionate ophthalmic nanosuspension, 0.05%, delivered with an eyedropper. Clobetasol has a long history as one of the most effective steroid medications.
• In their Phase III clinical study, nearly 400 patients undergoing cataract surgery were randomized (1:1 ratio) to the APP13007 or placebo arm. The APP13007 arm showed the desired superiority results. For the FDA to approve a new drug, at minimal consideration, the drug must show efficacy rates that are better than a placebo comparator.
• What is essential about APP13007 compared to most of the competitor drugs for this indication is that APP13007 requires only two drops daily for two weeks to resolve any pain or inflammation experienced by a patient. Many competitor drugs typically require more drops over a longer period of dosing their drug. I will use my wife’s experience with cataract surgery, where she is still dosing after her surgeries. In her case, she had surgery for both eyes, with the first surgery taking place on July 20, 2023. She dosed four times daily for the first week based on 4-hour intervals. In the second week, she dosed thrice daily at 4-hour intervals. In week three, she dosed two times with an AM and a PM dosing. In week four, she dosed daily one time. Her tapered dosing went from July 20th to August 16th. The surgery took place for her second eye on August 8th, and she will finish the post-surgery dosing regimen on September 4th, 2023. Remember that the standard protocol is that a medical doctor must see you every two weeks to check on the status of your inflammation being resolved. As I was typing this article, my wife called me to report on her check-up (8/25/2023), where, in the third week of dosing, she still has inflammation from the second eye surgery. The point is that for a patient obtaining cataract surgery for both eyes if my wife’s case is typical, this would mean that if they had used APP13007, they could have the surgeries and pain/inflammation issues resolved in four weeks versus using a competitor’s regimen of eight weeks. The eight-week number is based on no overlapping days when a patient treats both eyes. As for the attending doctor, with APP13007 being used, they would have needed to see the patient twice for follow-up visits for the usual inflammation issues. For the doctors not using APP13007, a doctor would need to see the patient four times to check for inflammation issues. Logic would indicate that having four intercessions with a patient’s flow through a doctor's office versus having eight intercessions, the four-week regimen would be the preferred outcome for the doctors and their patients.
• So that readers might better appreciate the many potential merits of APP13007, merely follow this link to Formosa’s corporate website, which is devoted to sharing the attributes of the ophthalmic drug that the FDA should approve in March 2024. Make sure that near the end of this in-depth presentation of data for APP13007, watch the video presentation, which gives visual explanations of various aspects of important issues.

But of all the above-listed attributes of APP13007, based on Phase III clinical data showing the drug offers rapid efficacy and resolution of pain and inflammation issues for the patient and no significant adverse events associated with the drug, I believe the FDA should approve the drug in March 2024. Upon approval, what makes this drug so unique for Eyenovia, is the fact that they will have two FDA-approved ophthalmic drugs on the market where they might be the only drug company that has a competitive drug (MydCombi) used in every eye examination for dilations. With APP13007 being approved, Eyenovia would have an FDA-approved drug that could be used in every surgical procedure where it is typical; doctors will prescribe a drug for treating pain and inflammation.

Having personally spent decades in marketing leadership roles for a Fortune 500 corporation, it's always advantageous when you have more than one product for your sales representatives calling on critical customers. Having products with inherent synergies that enhance and meet their customers’ needs for achieving their goals and you can offer competitive pricing will significantly impact your sales team’s success in capturing new customers.

The above citations are why I think Eyenovia made a critical decision that should enhance their opportunities for creating sustainable revenue streams and allow them to expand their product line in the ophthalmic market.

Financial Status

As of June 30, 2023, Eyenovia had on-hand cash and cash equivalents of approximately $17.5 million compared to $22.9 million as of December 31, 2022. This reflects that for the first six months of 2023, they had a cash burn rate of $5.4 million. In my previous article about the company, I indicated their need for additional cash to adequately fund the marketing efforts and launch of MydCombi, plus new clinical trials for their internal pipeline products.

We got the answer on August 24, 2023, when Eyenovia offered this press release:

NEW YORK, Aug. 24, 2023 (GLOBE NEWSWIRE) -- Eyenovia, Inc. (EYEN), a commercial-stage ophthalmic technology company commercializing Mydcombi™ (tropicamide+phenylephrine ophthalmic spray for mydriasis) and developing the Optejet® device for use both in connection with its own drug-device therapeutic product candidates for presbyopia and pediatric progressive myopia as well as out-licensing for additional indications, today announced that it has entered into a Securities Purchase Agreement with a leading health care investor in an offering of 4,198,633 shares of its common stock, pre-funded warrants to purchase up to 2,252,979 shares of common stock and warrants to purchase up to 4,838,709 shares of common stock (the "Offering"). The combined offering price for each share of common stock and accompanying warrant is $1.86, and the offering price for each pre-funded warrant and accompanying warrant is $1.85.

The gross amount of this secondary offering is projected to be about $12.0 million. In addition to this new cash amount, the company has reported in their recent 2nd-Q report the following information about additional cash they will be receiving in 2023:

For a brief update on our licensing revenues, in addition to the cash balance noted above, we have receivables from our license partners of approximately $430,000 as of June 30, 2023, and expect a reimbursement payment of approximately $2 million from Arctic Vision for product development expenses in the second half of 2023.

By making some assumptions, this infusion of cash could look like this:

* $17.500 million as of June 30th.

* $11.500 million net of August 24th Secondary Stock Issuance

* $.430 thousand receivable from license partner

* $2.0 million from Arctic Vision for product development

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$31.430 Million Cash Based on Above Assumptions

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Assuming the cash burn rate increases by 50% from the previous burn rate of $5.4 million, this would reflect a burn rate of $8.1 million for the current 3rd quarter. This scenario would create a cash position of $23.33 million to start the 4th quarter of the year when the full launch of MydCombi will start generating revenue.

Secondary stock offerings are always dilutive for current shareholders, but the simple fact is Eyenovia needed cash to fund a detailed and productive rollout of their first product. Plus, they now have the expense of creating a market plan for a second product obtained from Formosa. The good news is that when the secondary offering was announced, the price of the offering was at the current trading price, and then the stock increased in value that day. This indicates that the completion of this ability to raise cash meets investors' approval.

Additional Near-Term Events

• All manufacturing facilities will be FDA-approved and fully operational for producing products for marketing and clinical trials for developing new products.
• As for developing new products, Eyenovia has stated they will undertake the production of registration batches for the Apersure presbyopia program in the fourth quarter of 2023.
• Having complete control of the Formosa clobetasol formulation will allow Eyenovia to discuss with the FDA about starting a late-stage clinical trial using the Optejet delivery device for treating patients suffering from dry eye conditions. The market for such a product is estimated to be over $3.6 billion.

Risks

A market capitalization of only $80.92 million places it in the microcap classification. Potential investors should be very cautious and fully undertake due diligence to determine if their investor criteria are met based on their personal situation. A good rule to apply is only to invest an amount one can afford to lose. For example, I have only 2.51% and 3.6% of my portfolio allocated to Eyenovia in my two brokerage accounts. In the short history of Eyenovia the volatility in their share valuations has been pronounced. In their short history of being a listed trading stock, the price has been near $10.00 to being traded sub-$1.00 a share. Year-to-date 2023, the stock started the year at $1.63 a share and hit a year high of $5.75 on May 5th—a tidy 3.5 times the initial price for the year. Just be cautious!

With this article, I’ve tried to objectively introduce current information that should be a positive for Eyenovia. They should now be able to create a revenue stream that will ultimately make it a successful and profitable company. One must remember that Eyenovia is entering a marketplace with larger and smaller ophthalmic-focused companies with viable products and thus having an established market share. Eyenovia, with its Optejet product, is attempting to introduce a radically different way for drugs to be delivered to a patient's eye socket. With their marketing efforts, Eyenovia must be able to prove to decision-makers that they can provide a delivery device and drugs that can improve the flow of patients through their office and do this with better efficacy from their drug and with a competitive price when being compared to the current supplier's product. The efficacy data looks very positive based on the data for MydCombi and the future APP13007 when approved by the FDA. Eyenovia must find a pricing level for their offering that allows them to meet both of these marketing needs.

Follow the Big Money

There is one final item related to the future potential for Eyenovia to be successful with its business model. This item is part of my decision to continue to believe in their potential.

In my March 4, 2022, article about Eyenovia I mentioned Stuart Grant and his involvement with Eyenovia where I shared these comments:

Stuart M. Grant is a private investor with a 10%+ stake in the company - 4,827,124 shares. As part of this total share count, 437,236 shares have been added since last October’s CRL notification. Mr. Grant has an impressive resume and an outstanding historical record in investing and philanthropy. There is no assurance that insider buying always works out for those adding more shares after an adverse event has negatively impacted the price of the shares. If my interpretation of the most unusual catalyst for this drop in share price proves accurate, this astute investor has chosen to use his money to buy more shares. And I’m encouraged by his option to buy these additional shares. I certainly have taken advantage of it by adding more shares since my initial purchase.

On August 17, 2023, Mr. Grant filed an SEC Form-4, revealing that on August 16, 2023, he had purchased 45,000 shares of Eyenovia’s stock at $1.90. The next day, August 17, 2023, he purchased 30,000 shares at $1.87. With these purchases, Mr. Grant now holds 5,269,998 shares, over 10% of the outstanding shares of Eyenovia.

Grant has been proven to be a very successful investor, and he apparently sees the potential for Eyenovia as another successful investment opportunity. We can hope his willingness to continue buying Eyenovia’s stock will reward such investors.

Conclusion

• Eyenovia is currently rolling out its market plans for its first FDA-approved product with a small, targeted group of doctors. With a full launch starting in the year's fourth quarter, we will should see a revenue stream in the 1st Q of 2024.
• Upon FDA approval in March 2024, Eyenovia would have its second approved drug that offers synergies that complement its first drug.
• Eyenovia has a partnership deal with Bausch+Lomb for the US and Canada markets and Arctic Vision for the Asian markets, where they have Optejet products in advanced clinical trials, where data should be revealed soon.
• With the recently acquired rights to Formosa’s clobetasol formulation, Eyenovia plans to evaluate this formulation using the Optejet device for the dry eye market, estimated to be a $3.6 billion market in the US.
• With the secondary stock offering announced on August 24th, Eyenovia now has the cash to fund their first two drug launches and other clinical plans that they see as viable opportunities.

Good luck with your future and current investment decisions. Only use my article as a starting point for your personal due diligence.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.