Filing summary
Filing identity: The request identifies HYPERION DEFI, INC., but the supplied Form 10-Q is for Eyenovia, Inc. It covers the quarter ended March 31, 2018 and was signed May 9, 2018. The filing describes Eyenovia as a clinical-stage ophthalmology biopharmaceutical company developing micro-dose drug-delivery products. It reports no product revenue.
Financial results and position
| Metric | Q1 2018 | Q1 2017 or prior date |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $2.09 million | $0.91 million |
| General and administrative expense | $1.34 million | $0.20 million |
| Net loss | $3.43 million | $1.11 million |
| Basic and diluted loss per share | $0.45 | $0.49 |
| Cash used in operating activities | $2.39 million | $0.87 million |
| Cash at period end | $27.60 million | $2.51 million at March 31, 2017 |
At March 31, 2018, total assets were $27.98 million, current liabilities $1.12 million, total liabilities $1.12 million, and stockholders’ equity $26.86 million. The balance sheet implies working capital of $26.84 million; MD&A rounds this to $27.0 million and gives current liabilities as $1.0 million. The company reported no debt. Operating margins are not meaningful because there was no revenue.
Changes and notable items
- Operating expenses rose substantially year over year: R&D increased 130% and G&A increased 575%. The company attributed the increases to expanded development activity, personnel and supplies, stock-based compensation, professional fees, and public-company costs.
- On January 29, 2018, the IPO issued 2.73 million shares at $10 per share, generating approximately $24.5 million in net proceeds. Outstanding preferred stock converted into common stock. Cash increased from $5.25 million at year-end 2017 to $27.60 million at quarter-end.
- Stock-based compensation expense was $650,576, compared with $3,337 in Q1 2017. A 1-for-3.75 reverse stock split took effect January 8, 2018; share and per-share data were retrospectively adjusted.
Outlook, risks, and contingencies
- Management said cash on hand was expected to fund operating and capital requirements for at least 12 months from issuance of the financial statements. The company expects to need additional capital thereafter; failure to obtain it could require reduced spending or curtailed R&D.
- Management expected R&D and G&A expenses to increase. It planned to begin MicroProst and MicroStat clinical trials in the second half of 2018, subject to IND submissions and FDA feedback, and to proceed with registration activities for MicroTears. The company had not completed development of a product candidate.
- A lawsuit relating to the acquisition of Corinthian seeks approximately $1.1 million plus other damages; trial was scheduled for September 10, 2018. The company cited indemnification and $10 million of applicable insurance coverage and recorded no loss contingency, stating it did not expect a material loss.
- Disclosure controls and procedures were deemed ineffective. Four continuing material weaknesses were identified, involving segregation of duties, identification of related parties, communication of agreement terms to the board, and recording of R&D expenses. Management described plans to strengthen oversight and add finance personnel; controls had not changed during the quarter.
- Related-party arrangements included consulting, office and laboratory leases, and engineering services. R&D expense for a company owned by the VP of R&D was $232,012 in the quarter.
Important facts to verify
- Confirm the intended issuer: the supplied filing is Eyenovia, Inc., not HYPERION DEFI, INC.
- Verify the company’s clinical and regulatory progress against the stated trial plans and required FDA actions.
- Monitor cash burn, the 12-month liquidity estimate, and any subsequent financing needs.
- Track remediation of the disclosed material weaknesses and the effectiveness of financial reporting controls.
- Review developments in the Corinthian litigation and the scope and applicability of the stated indemnity and insurance coverage.