Business Context and Reporting Period
This unaudited Form 10-Q was filed by EyeGate Pharmaceuticals, Inc. for the quarter and six months ended June 30, 2020. The request metadata identifies Kiora Pharmaceuticals, Inc., but the filing text identifies the registrant as EyeGate Pharmaceuticals, Inc. The company is a clinical-stage ophthalmic pharmaceutical company developing EyeGate Ocular Bandage Gel (OBG), a modified hyaluronic-acid eye drop intended for corneal wounds, defects and epitheliopathies.
EyeGate reported positive topline data for its pivotal photorefractive keratectomy study and planned to submit a de novo application to the FDA during 2020. Following positive data in its punctate epitheliopathy study, management stated that the FDA meeting in July 2020 supported advancing to a pivotal study planned for the first half of 2021. The company does not plan to continue developing its legacy EGP-437 platform.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2020 | Comparable Period |
|---|---|---|---|
| Collaboration revenue | $0 | $0 | $0 and $2.686 million, respectively, in 2019 |
| Research and development expense | $631,114 | $1.569 million | $763,896 and $1.485 million, respectively |
| General and administrative expense | $1.090 million | $2.123 million | $1.106 million and $2.242 million, respectively |
| Total operating expense | $1.721 million | $3.692 million | $1.870 million and $3.727 million, respectively |
| Net loss | $1.717 million | $3.669 million | $1.837 million and $966,463, respectively |
| Net loss per share | $0.38 | $0.81 | $0.63 and $0.33, respectively |
| Net cash used in operating activities | Not separately provided | $3.867 million | $3.569 million |
Because the company reported no revenue during either 2020 period, revenue-based margins are not meaningful. The six-month operating loss was $3.692 million and the net loss was $3.669 million. Interest income was $22,784 for the six months, compared with $74,697 in 2019.
At June 30, 2020, cash and cash equivalents were $4.689 million, restricted cash was $45,000, total assets were $10.967 million, total liabilities were $3.169 million, and stockholders’ equity was $7.798 million. The accumulated deficit was $103.916 million.
The company had a $278,190 Paycheck Protection Program loan and no other debt at June 30, 2020. If not forgiven, the loan bears interest at 1.0%, matures in May 2022, and requires monthly payments beginning in December 2020. Management believed the entire loan balance would be forgiven, subject to official approval.
Material Changes Versus the Prior Comparable Period
- Six-month collaboration revenue declined to zero from $2.686 million. The 2019 revenue resulted from recognizing deferred revenue after Bausch Health Companies terminated its license agreements; no further revenue is expected from those agreements.
- Six-month net loss increased to $3.669 million from $966,463, primarily because of the absence of the 2019 collaboration revenue.
- Six-month research and development expense increased $83,782 to $1.569 million, primarily due to expiration of a prepaid research-vendor agreement, partially offset by lower personnel costs and OBG clinical activity.
- Six-month general and administrative expense decreased $118,857 to $2.123 million, primarily due to lower personnel costs and travel, partially offset by higher corporate costs and professional fees.
- Second-quarter research and development expense decreased $132,782 to $631,114, primarily due to lower OBG clinical activity. Second-quarter general and administrative expense decreased $15,577.
- Operating cash use increased to $3.867 million from $3.569 million. Financing cash inflows increased to $4.780 million from $28,857, including $4.501 million of net proceeds from a January 2020 registered direct stock offering and the $278,190 PPP loan.
- Common shares outstanding increased to 4,626,755 at June 30, 2020 from 4,077,755 at December 31, 2019, primarily reflecting the issuance of 500,000 shares in the January offering.
Guidance, Outlook, Risks and Unusual Items
Management expected continued significant expenses and operating losses as it advances OBG through clinical development and seeks regulatory approval. The company stated that its cash on hand at June 30, 2020 was expected to fund planned operations through January 31, 2021, although changes in spending could alter that timing.
Management stated that additional capital would be required through equity or debt financings, licensing arrangements, collaborations, or government grants. No committed external funding source was available, and the company warned that financing may not be available on acceptable terms or at all. These conditions created substantial doubt about the company’s ability to continue as a going concern.
- OBG development, FDA review, clinical-trial timing, costs, enrollment, safety and efficacy remain subject to substantial uncertainty.
- The company was evaluating potential effects of the COVID-19 pandemic on study timelines and costs.
- Future equity financing could dilute existing stockholders; strategic transactions could require relinquishing rights to technologies or product candidates.
- The company had approximately 2.862 million outstanding warrants and 246,893 outstanding stock options at June 30, 2020, creating potential future dilution.
- Contingent consideration was recorded at $1.710 million, and SentrX could receive up to $4.75 million in milestone payments related to OBG manufacturing rights.
- The company extended its Waltham lease through March 2021 and its Salt Lake City lease through October 2020. Lease liabilities totaled $102,579.
- The filing reported no material off-balance-sheet arrangements and no current legal proceedings.
Important Facts for Investors to Verify
- Confirm the registrant identity: the supplied filing text is for EyeGate Pharmaceuticals, Inc., not Kiora Pharmaceuticals, Inc.
- Verify the company’s cash runway beyond January 31, 2021 and the timing and terms of any required capital raise.
- Track FDA submission and review progress for the OBG de novo application and the planned punctate-epitheliopathy pivotal study.
- Determine whether the $278,190 PPP loan is ultimately forgiven and assess any resulting repayment obligation.
- Reconcile the absence of recurring revenue with projected development and commercialization funding needs.
- Assess dilution from outstanding warrants, options, preferred stock convertible into common stock, and potential future equity offerings.