Business context and reporting period
The supplied filing is Eyenovia, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2018, not a filing under the “HYPERION DEFI, INC.” name in the request metadata. Eyenovia is a clinical-stage ophthalmology company developing micro-dose drug-delivery products using patented piezo-print technology. It had no product revenue and had not completed development of a product candidate.
Financial results and liquidity
| Metric | Three months ended June 30, 2018 | Six months ended June 30, 2018 | Comparable 2017 period |
|---|---|---|---|
| Revenue | None | None | None |
| Research and development expense | $2.41 million | $4.51 million | $0.75 million and $1.66 million, respectively |
| General and administrative expense | $0.91 million | $2.25 million | $0.22 million and $0.42 million, respectively |
| Net loss | $3.32 million | $6.75 million | $0.98 million and $2.08 million, respectively |
| Basic and diluted loss per share | $0.33 | $0.77 | $0.43 and $0.92, respectively |
Margins are not meaningful because the company had no revenue. For the first six months, operating cash use was $5.43 million, compared with $1.91 million in 2017; investing cash flow was zero. Financing provided $24.74 million, primarily from the January IPO. Cash rose to $24.56 million from $5.25 million at December 31, 2017. At June 30, current assets were $24.81 million, current liabilities $1.28 million, and working capital $23.53 million. The company reported no debt and stockholders’ equity of $23.54 million.
Material changes versus prior periods
- Second-quarter R&D expense increased 221% year over year; first-half R&D expense increased 171%. Management attributed the increases to expanded development activity, contracted services and supplies, and hiring.
- Second-quarter G&A expense increased 304%; first-half expense increased 434%, reflecting higher payroll and contracted services, professional fees, insurance, stock compensation, and public-company costs.
- The January IPO sold 2.73 million shares at $10 per share, generating $27.3 million gross proceeds and approximately $24.5 million net proceeds. Preferred stock also converted into common stock.
- Common shares outstanding were 9,998,646 at June 30, versus 2,566,530 at December 31, 2017. A 1-for-3.75 reverse split was implemented in January; share and per-share data were retrospectively adjusted.
Outlook, risks, contingencies, and unusual items
- Management expected June 30 cash to fund operations and capital needs for at least 12 months from issuance of the financial statements. Additional capital may be needed thereafter; inability to raise it could force R&D cuts and other cost reductions. The company expects R&D and G&A spending to increase.
- Management planned to begin Phase III trials for MicroStat in the second half of 2018 and MicroProst in the first half of 2019, subject to IND submissions and FDA feedback. MicroTears, an OTC dry-eye candidate, was expected to proceed to registration activities without Phase III trials.
- A lawsuit related to the Corinthian asset purchase sought approximately $1.1 million in damages; trial was scheduled for September 20, 2018. The company cited indemnification and a related $10 million insurance policy and recorded no loss contingency, stating it did not expect a material loss.
- Disclosure controls were deemed ineffective at June 30 because of material weaknesses involving segregation of finance duties, identification of related parties, communication of agreement terms to the board, and R&D expense recording. Management described remediation steps and expected to remediate the weaknesses before year-end, but noted effectiveness was not yet assured.
- Related-party arrangements included consulting, lease, and engineering services. Subsequent to quarter-end, the company entered an approximately $1.29 million office lease commitment, with an approximately $118,000 security deposit. It also granted options and restricted stock units after quarter-end.
- Cash deposits exceeded FDIC insurance limits by $24.31 million at June 30. No off-balance-sheet arrangements were reported.
Most important facts to verify
- Confirm issuer identity: the filing is for Eyenovia, Inc., despite the different company name in the request metadata.
- Check progress and timing of the planned MicroStat and MicroProst trials, including regulatory feedback and funding needs.
- Monitor operating cash use against management’s stated 12-month liquidity expectation and any subsequent financing.
- Review remediation of the four disclosed internal-control material weaknesses and whether controls become effective.
- Track the Corinthian litigation outcome and the obligations under the new office lease and related-party arrangements.