EyeGate Pharmaceuticals, Inc. — Form 10-Q Summary
Reporting period: Three and six months ended June 30, 2021; filed August 12, 2021. The provided filing identifies the registrant as EyeGate Pharmaceuticals, Inc. (NASDAQ: EYEG), not Kiora Pharmaceuticals, Inc.
Business Context
EyeGate is a clinical-stage pharmaceutical company developing treatments for inflammatory and immune diseases, primarily involving the eye. Its principal programs are PP-001, a DHODH inhibitor acquired through the December 2020 Panoptes acquisition, and Ocular Bandage Gel (OBG), a modified hyaluronic-acid product under clinical evaluation for corneal wound repair and ocular-surface conditions.
- PP-001 is being developed as an intravitreal injection and an eye-drop formulation for ocular and potentially systemic indications.
- Following an FDA Type B meeting, OBG development shifted from a medical device to a drug, potentially allowing Medicare Part D reimbursement.
- The company has not generated significant revenue and has incurred losses since inception.
Financial Performance and Position
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | $0 in 2021 and 2020 | $0 in 2021 and 2020 |
| Research and development expense | $1.440 million vs. $0.631 million | $2.720 million vs. $1.569 million |
| General and administrative expense | $1.306 million vs. $1.090 million | $2.606 million vs. $2.123 million |
| Total operating expenses | $2.746 million vs. $1.721 million | $5.326 million vs. $3.692 million |
| Net loss | $2.469 million vs. $1.717 million | $5.050 million vs. $3.669 million |
| Net loss per common share | $0.35 vs. $0.38 loss | $0.72 vs. $0.81 loss |
| Net cash used in operating activities | Not provided for the quarter | $5.207 million vs. $3.867 million |
- Operating expenses increased primarily because of personnel and development costs associated with Panoptes and PP-001; the increase was partly offset by lower OBG costs.
- Other income included a $278,190 gain from forgiveness of the Paycheck Protection Program loan. Interest expense was $2,719 for the six-month period.
- At June 30, 2021, cash and cash equivalents were $3.663 million, restricted cash was $45,000, and total assets were $18.100 million.
- Total liabilities were $7.646 million, including $5.343 million of contingent consideration. The PPP loan had been fully forgiven, and the company reported no additional indebtedness at June 30, 2021.
- Stockholders’ equity was $10.454 million, compared with $6.999 million at December 31, 2020. Common shares outstanding increased to 7,097,912 from 5,556,394.
- The company had an accumulated deficit of $113.389 million at June 30, 2021.
Cash Flow, Financing, and Liquidity
- Six-month operating cash use was $5.207 million, investing cash use was $63,865, and financing cash provided was $7.761 million.
- January 2021 private-placement proceeds were approximately $8.0 million net; the transaction included 1,531,101 common shares and warrants for up to 1,531,101 shares.
- On August 11, 2021, after quarter-end, the company raised approximately $9.7 million net through a registered direct offering and concurrent warrant placement.
- Management stated that cash on hand at June 30, 2021, together with the August financing, was expected to fund planned operations into the second half of 2022. This estimate is sensitive to the pace of cash expenditures.
- Management also stated that additional capital will be required to continue development and that no committed external funding source exists.
Material Changes Versus the Prior Comparable Period
- Six-month R&D expense increased 73% to $2.720 million, principally due to Panoptes-related personnel costs and PP-001 development.
- Six-month G&A expense increased 23% to $2.606 million, primarily due to higher professional fees and personnel costs.
- Six-month net loss increased 38% to $5.050 million despite the $278,190 PPP forgiveness gain.
- Six-month operating cash burn increased 35% to $5.207 million.
- The company’s share count increased substantially following the January private placement and warrant exercise activity, creating potential dilution.
- Warrants outstanding increased to 4,247,384 at June 30, 2021, and potentially issuable shares from warrants, options, and preferred stock totaled 5,490,245.
Outlook, Risks, and Unusual Items
- The company expects significant expenses and increasing operating losses while advancing PP-001, OBG, and any other candidates through clinical development and regulatory review.
- Management concluded that recurring losses and negative cash flows create substantial doubt about the company’s ability to continue as a going concern. The financial statements contain no adjustments that might be required if the company cannot continue as a going concern.
- Additional financing may be pursued through equity or debt offerings, licensing, collaborations, strategic alliances, or grants. Financing may be unavailable or unfavorable and could dilute existing holders or require surrendering valuable rights.
- Clinical development depends on patient enrollment, trial execution, safety and efficacy, regulatory decisions, manufacturing, and the company’s ability to secure funding. The company does not expect products to be commercially available for several years, if at all.
- COVID-19 could disrupt clinical studies, operations, financial markets, and access to capital. No material adverse operational effect had been reported as of the filing date.
- Contingent consideration was $5.343 million at June 30, 2021, with no valuation change recorded during the quarter. Additional obligations may arise under license and acquisition agreements based on development and commercial milestones.
- After quarter-end, the company appointed Brian M. Strem as President and Chief Executive Officer and entered into a non-binding term sheet regarding a potential Bayon acquisition. The proposed transaction could involve 50,000 shares at closing and earnout consideration of up to approximately $7.1 million or approximately 2.2 million shares or equivalents; consummation was uncertain.
- The company reported no material legal proceedings, no material off-balance-sheet arrangements, and no material changes to previously disclosed risk factors.
Most Important Facts to Verify
- Confirm that this filing belongs to EyeGate Pharmaceuticals, Inc. rather than Kiora Pharmaceuticals, Inc.
- Verify the timing, net proceeds, share issuance, and warrant terms of the August 11, 2021 financing.
- Assess whether the expected funding runway into the second half of 2022 remains adequate relative to projected clinical and operating cash needs.
- Review the terms and valuation of the $5.343 million contingent consideration and other milestone-based obligations.
- Evaluate dilution from outstanding warrants, options, preferred stock conversion rights, and the proposed Bayon transaction.
- Monitor clinical, regulatory, and reimbursement progress for PP-001 and OBG, including the effect of OBG’s reclassification as a drug.
- Reconcile the disclosed going-concern uncertainty with subsequent financing and the company’s ability to raise additional capital.