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Eyenovia(EYEN) - 2022 Q4 - Annual Report
EYENEyenovia(EYEN)2023-03-30 16:00
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Financial Performance and Funding - The company has incurred net losses of approximately 118.2millionsinceinception,withnetlossesof118.2 million since inception, with net losses of 28.0 million and 12.8millionfortheyearsendedDecember31,2022and2021,respectively[271].−Thecompanyrequiressubstantialadditionalfundingtocontinueresearchanddevelopmentactivities,manufacturing,andcommercializationeffortsintonextyear[263].−Thecompanyhasnotgeneratedanyproductsalesrevenueandhasnotachievedprofitableoperations[271].−Thecompanyexpectstocontinueincurringsubstantiallosseswhilepreparingproductcandidatesforthemarket,whichmaytakeayearormore[271].−Thecompany’scashatDecember31,2022isnotsufficienttooperateasagoingconcernforatleastoneyearwithoutadditionalfunding[256].−Thecompanymayneedtoraiseadditionalcapitalthroughequityofferingsordebtfinancings,whichcoulddiluteexistingstockholders′ownership[268].−Thecompanyhasfacedadversedevelopmentsinthefinancialservicesindustrythatcouldimpactitsbusinessoperationsandfinancialcondition[257].−Thecompany’sabilitytoaccessfundingsourcesmaybesignificantlyimpairedbyfactorsaffectingthefinancialservicesindustryortheeconomyingeneral[259].−Thecompanyhasa"goingconcern"explanatoryparagraphincludedinitsindependentauditor′sreport,indicatingsubstantialdoubtaboutitsabilitytocontinueasaviableentity[255].−AsofDecember31,2022,thecompanyhadfederalnetoperatinglosscarry−forwardsofapproximately12.8 million for the years ended December 31, 2022 and 2021, respectively [271]. - The company requires substantial additional funding to continue research and development activities, manufacturing, and commercialization efforts into next year [263]. - The company has not generated any product sales revenue and has not achieved profitable operations [271]. - The company expects to continue incurring substantial losses while preparing product candidates for the market, which may take a year or more [271]. - The company’s cash at December 31, 2022 is not sufficient to operate as a going concern for at least one year without additional funding [256]. - The company may need to raise additional capital through equity offerings or debt financings, which could dilute existing stockholders' ownership [268]. - The company has faced adverse developments in the financial services industry that could impact its business operations and financial condition [257]. - The company’s ability to access funding sources may be significantly impaired by factors affecting the financial services industry or the economy in general [259]. - The company has a "going concern" explanatory paragraph included in its independent auditor's report, indicating substantial doubt about its ability to continue as a viable entity [255]. - As of December 31, 2022, the company had federal net operating loss carry-forwards of approximately 85.9 million, with about 10.8millionsettoexpirebetween2034and2037[275].−ThecompanyhasincurredsignificantnetoperatinglossessinceitsinceptioninJuly2014,whichmayadverselyaffectitsfinancialconditioniftaxbenefitscannotbeutilized[275].ProductDevelopmentandRegulatoryApproval−Thesuccessofthecompany′sproductcandidates,includingMydcombi,MicroPine,andMicroLine,isdependentonobtainingmarketingapprovalsandsuccessfullycommercializingtheseproducts[279].−ThecompanyhascompletedmultiplePhaseIIandIIIstudiesforitsproductcandidates,buttheclinicaltrialprocessremainsuncertain,withpotentialforsignificantdelays[280].−Delaysinclinicaltrialscouldresultinincreaseddevelopmentcostsandimpactthecompany′sabilitytobecomeprofitable[283].−Thecompanyreliesoncontractresearchorganizations(CROs)andclinicaltrialsitesfortimelyconductofclinicaltrials,whichmaybesubjecttodelaysbeyonditscontrol[293].−Thecompanymayfacechallengesinenrollingasufficientnumberofsubjectsforclinicaltrials,whichcoulddelayorpreventnecessaryregulatoryapprovals[288].−Undesirablesideeffectsfromproductcandidatescouldleadtointerruptionsinclinicaltrialsandaffectregulatoryapprovalprocesses[301].−Thecompanyhasnoproductscurrentlyapprovedforsale,anditsfutureprospectsareheavilyreliantonthesuccessofitsproductcandidates[279].−ThecompanysubmittedanNDAtotheFDAforMydcombi,targetingover100millioneyeexamsand4millionophthalmicsurgicaldilationsannuallyintheU.S.[337].−InOctober2021,thecompanyreceivedaCompleteResponseLetter(CRL)fromtheFDA,indicatingthatMydcombiwasreclassifiedasadrug−devicecombinationproduct,necessitatingadditionalnon−clinicaldeviceinformationforresubmission[337].−TheFDAacceptedtheresubmittedNDAforMydcombiinDecember2022,withaPDUFAdatesetforMay8,2023[337].−TheapprovalprocessforMydcombirequirescompliancewithcomplexproceduresinvolvingboththeCDRHandCDERcentersoftheFDA,whichcouldsignificantlyincreasecostsanddevelopmenttimelines[338].−Thecompanyanticipatesthatitsotherproductcandidates,MicroPineandMicroLine,willalsobeclassifiedasdrug/devicecombinationproducts,similartoMydcombi[339].−Regulatoryapprovalsmaybesubjecttoongoingobligationsandcouldincursignificantadditionalexpenses,includingpost−marketstudyrequirementsandcompliancewithcGMPsandGCPrequirements[341].−TheFDAmayrequireRiskEvaluationandMitigationStrategies(REMS)forproductcandidates,whichcouldincludeadditionalsafetymeasuresandrestricteddistributionmethods[342].−Thecompanydoesnothaveanyproductcandidatesapprovedforsaleinanyjurisdiction,limitingitsmarketpotential[349].−Regulatoryrequirementsvarywidelyacrossjurisdictions,whichcoulddelayorpreventproductintroductionininternationalmarkets[349].MarketandCompetitiveLandscape−Thecommercialsuccessoftheproductcandidateswilllargelydependonmarketacceptanceamongophthalmologists,optometrists,andpatients,whichisuncertainevenwithregulatoryapproval[310].−Thecompanyfacessignificantcompetitioninthespecialtypharmamarket,whichischaracterizedbyrapidtechnologicalchangeandthepotentialforcompetitorstoachieveregulatoryapprovalbeforethecompany[313].−Thecompanyhaslimitedresourcesformanufacturing,sales,anddistribution,whichcouldadverselyaffectthecommerciallaunchandsalesofitsproductcandidates[316].−Pricingpressuresareexpectedduetotrendsinmanagedhealthcareandlegislativechanges,whichmayhinderthesuccessfulcommercializationofnewproducts[326].−Coverageandreimbursementfromthird−partypayorsarecriticalforproductacceptance,andthecompanymayfacedifficultiesinobtainingtheseapprovals[321].LegalandComplianceRisks−Thecompanyissubjecttoextensivehealthcarelaws,includingthefederalAnti−KickbackStatuteandtheFalseClaimsAct,whichmayimpactbusinessoperationsandfinancialarrangements[358].−Legislativereforms,suchastheAffordableCareActandtheInflationReductionAct,couldmateriallyaffectthecompany′sfinancialconditionandoperationalresults[361][364].−Startingin2023,thecompanymustpayrebatestothefederalgovernmentifdrugpricesincreasefasterthaninflation,impactingrevenuefromMedicare[364].−Thecompanyfacesincreasedscrutinyoverdrugpricing,withpotentiallegislativechangesaimedatenhancingtransparencyandcontrollingcosts[363].−State−levelregulationsrequirepharmaceuticalmanufacturerstonotifypurchasersofpriceincreasesexceeding1610.8 million set to expire between 2034 and 2037 [275]. - The company has incurred significant net operating losses since its inception in July 2014, which may adversely affect its financial condition if tax benefits cannot be utilized [275]. Product Development and Regulatory Approval - The success of the company's product candidates, including Mydcombi, MicroPine, and MicroLine, is dependent on obtaining marketing approvals and successfully commercializing these products [279]. - The company has completed multiple Phase II and III studies for its product candidates, but the clinical trial process remains uncertain, with potential for significant delays [280]. - Delays in clinical trials could result in increased development costs and impact the company's ability to become profitable [283]. - The company relies on contract research organizations (CROs) and clinical trial sites for timely conduct of clinical trials, which may be subject to delays beyond its control [293]. - The company may face challenges in enrolling a sufficient number of subjects for clinical trials, which could delay or prevent necessary regulatory approvals [288]. - Undesirable side effects from product candidates could lead to interruptions in clinical trials and affect regulatory approval processes [301]. - The company has no products currently approved for sale, and its future prospects are heavily reliant on the success of its product candidates [279]. - The company submitted an NDA to the FDA for Mydcombi, targeting over 100 million eye exams and 4 million ophthalmic surgical dilations annually in the U.S. [337]. - In October 2021, the company received a Complete Response Letter (CRL) from the FDA, indicating that Mydcombi was reclassified as a drug-device combination product, necessitating additional non-clinical device information for resubmission [337]. - The FDA accepted the resubmitted NDA for Mydcombi in December 2022, with a PDUFA date set for May 8, 2023 [337]. - The approval process for Mydcombi requires compliance with complex procedures involving both the CDRH and CDER centers of the FDA, which could significantly increase costs and development timelines [338]. - The company anticipates that its other product candidates, MicroPine and MicroLine, will also be classified as drug/device combination products, similar to Mydcombi [339]. - Regulatory approvals may be subject to ongoing obligations and could incur significant additional expenses, including post-market study requirements and compliance with cGMPs and GCP requirements [341]. - The FDA may require Risk Evaluation and Mitigation Strategies (REMS) for product candidates, which could include additional safety measures and restricted distribution methods [342]. - The company does not have any product candidates approved for sale in any jurisdiction, limiting its market potential [349]. - Regulatory requirements vary widely across jurisdictions, which could delay or prevent product introduction in international markets [349]. Market and Competitive Landscape - The commercial success of the product candidates will largely depend on market acceptance among ophthalmologists, optometrists, and patients, which is uncertain even with regulatory approval [310]. - The company faces significant competition in the specialty pharma market, which is characterized by rapid technological change and the potential for competitors to achieve regulatory approval before the company [313]. - The company has limited resources for manufacturing, sales, and distribution, which could adversely affect the commercial launch and sales of its product candidates [316]. - Pricing pressures are expected due to trends in managed healthcare and legislative changes, which may hinder the successful commercialization of new products [326]. - Coverage and reimbursement from third-party payors are critical for product acceptance, and the company may face difficulties in obtaining these approvals [321]. Legal and Compliance Risks - The company is subject to extensive healthcare laws, including the federal Anti-Kickback Statute and the False Claims Act, which may impact business operations and financial arrangements [358]. - Legislative reforms, such as the Affordable Care Act and the Inflation Reduction Act, could materially affect the company's financial condition and operational results [361][364]. - Starting in 2023, the company must pay rebates to the federal government if drug prices increase faster than inflation, impacting revenue from Medicare [364]. - The company faces increased scrutiny over drug pricing, with potential legislative changes aimed at enhancing transparency and controlling costs [363]. - State-level regulations require pharmaceutical manufacturers to notify purchasers of price increases exceeding 16% and disclose pricing information [365]. - The company is subject to anti-corruption laws, including the FCPA and the UK Bribery Act, which could lead to significant compliance costs and legal risks [368][371]. - Future international operations will require compliance with various laws and regulations, potentially limiting growth and increasing development costs [370]. - The company may incur significant legal expenses and reputational harm if found non-compliant with healthcare laws and regulations [360]. - The uncertainty surrounding future healthcare reforms could limit coverage and reimbursement for the company's products, affecting demand [366]. Human Resources and Management - The company had only 41 full-time employees as of March 30, 2023, relying on third-party contractors for professional services [379]. - The company is highly dependent on its senior management team, including the CEO, and may face challenges in retaining or attracting qualified personnel [375]. - Future performance will depend on the successful integration of newly hired executive officers and effective collaboration among senior management [378]. - The company faces intense competition for qualified personnel among biotechnology and pharmaceutical companies, which may hinder its ability to attract and retain talent [377]. Supply Chain and Manufacturing Risks - The company relies on third parties for clinical trials and research, which may lead to delays or increased costs if these parties do not meet their contractual obligations [384]. - The company does not currently have long-term agreements with third-party suppliers for the commercial supply of components, which may delay research and development activities [392]. - Reliance on third-party manufacturers increases the risk of supply shortages for raw materials or active pharmaceutical ingredients necessary for clinical trials [394]. - Disruptions at third-party suppliers, such as natural disasters or vandalism, could result in substantial capital requirements and months of manufacturing delays [396]. - The company currently lacks alternative production plans or disaster-recovery facilities, which could jeopardize manufacturing capabilities in case of supplier disruptions [396]. - The COVID-19 pandemic has impacted the ability to procure sufficient supplies, with potential delays in clinical studies and commercialization of product candidates [399]. Intellectual Property Risks - The company faces risks related to intellectual property, including challenges in obtaining and maintaining patent protection, which could affect competitive advantage [403]. - Patent applications may not result in enforceable patents, and the scope of protection could be limited, impacting the ability to compete effectively [404]. - The company may face challenges from third parties that could invalidate or circumvent its patents, leading to increased competition [407]. - The patent application process is complex and uncertain, with no assurance of success in obtaining patents for product candidates [411]. - The company’s ability to protect its proprietary technologies is critical for commercial success, and failure to do so could materially harm its business [415]. - The company faces uncertainty regarding the future protection of its proprietary rights, as legal means provide limited protection and may not ensure competitive advantage [418]. - There is a risk that pending patent applications may not result in issued patents or may be insufficient to protect the company's technology [419]. - Patent terms are limited, generally expiring 20 years after filing, which may not provide adequate protection for products developed over long timelines [423]. - The company may not receive patent term extensions under the Hatch-Waxman Amendments, potentially shortening the period to enforce patent rights and allowing competitors to market similar products sooner [424]. - Changes in patent law could diminish the value of patents, impacting the company's ability to protect its products [426]. - The company may face significant costs and resource diversion from enforcing patent rights in foreign jurisdictions, which could lead to invalidation or narrow interpretation of patents [432]. - The biotechnology and pharmaceutical industries are prone to intellectual property litigation, which could result in costly and time-consuming legal challenges for the company [434]. - If found to infringe on third-party intellectual property rights, the company may be forced to cease development or obtain licenses that may not be available on commercially reasonable terms [435]. - The company’s ability to protect intellectual property rights may be adversely affected by changes in foreign intellectual property laws, particularly in developing countries [430]. - The company may not be able to enforce its intellectual property rights globally due to varying patentability requirements and enforcement challenges in different jurisdictions [429]. Stock and Financial Management - As of March 28, 2023, the company had 37,991,746 shares of common stock outstanding, with an additional 1,125,831 shares issuable upon exercise of warrants from a private placement completed in March 2020 [451]. - The trading price of the company's common stock has fluctuated between 1.50 and $10.74 from its IPO in January 2018 to March 30, 2023 [453]. - The company may face significant volatility in its stock price due to various factors, including clinical trial results and regulatory developments [453]. - The company has broad discretion in the use of its cash, which could lead to ineffective spending and financial losses if not managed properly [453]. - The company may be unable to obtain additional licenses at reasonable costs, potentially hindering its ability to develop or commercialize product candidates [447].