Filing Overview
Filing identity: The supplied filing is EyeGate Pharmaceuticals, Inc.’s Form 10-K for the fiscal year ended December 31, 2020, not Kiora Pharmaceuticals, Inc. The company was a clinical-stage pharmaceutical developer focused on inflammatory and immune diseases of the eye and nervous system. It operated in one business segment and reported as a smaller reporting company and non-accelerated filer.
In the fourth quarter of 2020, EyeGate acquired Panoptes Pharma Ges.m.b.H., adding PP-001, a clinical-stage DHODH inhibitor, through the PaniJect and PaniDrop ophthalmic programs. The company also continued developing Ocular Bandage Gel (OBG), a modified hyaluronic-acid product for corneal wound repair and dry-eye-related punctate epitheliopathies.
Financial and Operating Metrics
| Metric | 2020 | 2019 | Change |
|---|---|---|---|
| Collaboration revenue | $12,059 | $2.686 million | Down $2.674 million |
| Research and development expense | $3.566 million | $5.389 million | Down $1.823 million |
| General and administrative expense | $4.659 million | $4.406 million | Up $0.253 million |
| Total operating expenses | $8.225 million | $9.795 million | Down $1.570 million |
| Net loss | $8.092 million | $7.097 million | Loss increased $0.995 million |
| Net loss per share | $1.77 | $2.23 | Improved on higher share count |
| Net cash used in operations | $7.317 million | $8.154 million | Improved $0.837 million |
Revenue was minimal because 2019 included recognition of deferred revenue following the termination of the Bausch Health licensing agreements. The 2020 loss included $0.724 million of stock-based compensation, $0.114 million of gain on dissolution of a foreign entity, and $0.414 million of Panoptes acquisition-related costs.
At December 31, 2020, unrestricted cash and cash equivalents were $1.186 million, compared with $3.777 million at December 31, 2019. Including restricted cash, year-end cash was $1.231 million. Total assets were $15.158 million and total liabilities were $8.158 million. Stockholders’ equity was $7.000 million.
The company had $0.278 million of Paycheck Protection Program debt, its only reported debt at year-end. If not forgiven, the loan matures in May 2022 and bears 1.0% annual interest. Non-current contingent consideration increased to $5.343 million from $1.710 million, primarily reflecting the Panoptes acquisition.
Material Changes Versus 2019
- Collaboration revenue declined sharply after the 2019 recognition of $2.686 million related to terminated Bausch Health agreements; no further revenue from those agreements is expected.
- R&D expense declined primarily because the OBG PRK pivotal study was completed in 2019, partly offset by manufacturing and other development costs.
- G&A expense increased because of professional fees and Panoptes acquisition costs.
- Panoptes added approximately $5.624 million of in-process R&D and $1.959 million of goodwill at acquisition-date fair values. The company issued 884,222 common shares and Series D preferred stock in the transaction and assumed contingent obligations.
- Common shares outstanding increased to 5.556 million at year-end from 4.078 million, primarily due to the 2020 offering, warrant exercises, and Panoptes acquisition consideration.
- Net cash used in operating activities improved, but financing proceeds of approximately $4.998 million were insufficient to prevent a $2.591 million decrease in cash during the year.
Pipeline, Outlook, and Risks
PP-001 had completed early safety studies in Europe. The PaniJect study in 12 uveitis patients showed a reported safety profile and efficacy signals, while PaniDrop was tolerated in healthy volunteers at the tested concentrations. OBG reported positive results in a 234-patient PRK pivotal study and a 20-patient dry-eye pilot study, but neither product had received marketing approval.
The company was evaluating the development strategy and routes of administration for PP-001 and could discontinue one of the ophthalmic routes. OBG was being developed as a device while the company evaluated reclassification as a drug. A Type B FDA meeting regarding OBG occurred in the first quarter of 2021; the filing does not provide a final FDA determination.
Management expected continuing and increasing operating losses and stated that products were not expected to be commercially available for several years, if at all. Based on year-end cash and approximately $8.0 million of net proceeds from a January 6, 2021 private placement, management expected funding through August 31, 2021. Additional equity, debt, grants, licensing, or collaboration financing was required, and the filing states that there was substantial doubt about the company’s ability to continue as a going concern.
- Clinical, regulatory, manufacturing, reimbursement, intellectual-property, and commercialization risks remain substantial.
- COVID-19 could delay clinical enrollment, trial operations, regulatory interactions, manufacturing, and financing, although no material adverse operational effect had been reported as of the filing date.
- The company relied on third-party contract research organizations and manufacturers and had no contractual commitments for commercial supply or redundant manufacturing sources.
- The company had no approved products, no significant recurring product revenue, and no internal sales or marketing infrastructure.
- Armistice Capital affiliates controlled approximately 47.2% of outstanding voting power, creating concentration-of-control and dilution considerations.
Facts Investors Should Verify
- Confirm that the intended issuer is EyeGate Pharmaceuticals rather than Kiora Pharmaceuticals; the supplied filing identifies the issuer as EyeGate and trades under ticker EYEG.
- Verify the going-concern disclosure, cash runway, and financing completed on January 6, 2021.
- Review the Panoptes acquisition accounting, including the $5.624 million in-process R&D, $1.959 million goodwill, and $5.343 million contingent consideration liability.
- Assess the probability, timing, and cost of additional PP-001 and OBG clinical studies and FDA approvals.
- Review potential dilution from outstanding warrants, options, Series C and Series D preferred stock, and future financing needs.
- Evaluate the status of OBG’s potential reclassification as a drug and the company’s reliance on third-party manufacturers and clinical vendors.