EyeGate Pharmaceuticals, Inc. — Form 10-Q Summary
Filing identity: The supplied filing is for EyeGate Pharmaceuticals, Inc. (Nasdaq: EYEG), not Kiora Pharmaceuticals, Inc. The report covers the quarter and nine months ended September 30, 2019, and was filed November 7, 2019. EyeGate is a clinical-stage specialty pharmaceutical company developing ocular products based on CMHA-S and iontophoresis technologies.
Financial Results and Position
| Metric | Three Months Ended September 30 | Nine Months Ended September 30 |
|---|---|---|
| Collaboration revenue | $0.0 million in 2019; $0.315 million in 2018 | $2.686 million in 2019; $1.653 million in 2018 |
| Research and development expense | $2.406 million; prior year $2.260 million | $3.892 million; prior year $6.619 million |
| General and administrative expense | $1.045 million; prior year $1.233 million | $3.287 million; prior year $3.389 million |
| Total operating expenses | $3.451 million; prior year $3.492 million | $7.178 million; prior year $10.008 million |
| Net loss | $3.428 million, or $1.15 per share | $4.395 million, or $1.47 per share |
| Net cash used in operating activities | Not separately reported | $5.567 million; prior year $8.841 million |
- Cash and cash equivalents were $2.455 million at September 30, 2019, compared with $8.004 million at December 31, 2018. Including restricted cash, ending cash was $2.500 million.
- Total assets were $8.868 million and stockholders’ equity was $5.212 million at September 30, 2019.
- Total liabilities were $3.656 million, including $1.068 million of accounts payable, $0.983 million of accrued expenses, $1.210 million of contingent consideration and $0.270 million of deferred tax liability.
- The Company reported no indebtedness other than ordinary-course trade payables and capital financing obligations. Lease liabilities were $0.126 million.
- Net cash used in investing activities was zero for the first nine months of 2019. Financing activities provided $0.013 million, primarily from warrant exercises.
Material Changes Versus the Prior Comparable Period
- Nine-month revenue increased $1.033 million to $2.686 million, entirely because the March 2019 termination of two Bausch Health Companies license agreements caused $2.686 million of previously deferred revenue to be recognized. No further revenue is expected from those agreements.
- Nine-month R&D expense declined $2.727 million, principally because of lower EGP-437 activity, completion of 2018 OBG pilot work and lower personnel costs, partially offset by increased spending on the OBG pivotal study.
- Nine-month net loss improved by $3.889 million from the prior year, but the Company remained loss-making and dependent on external financing.
- Quarterly net loss increased by $0.305 million despite slightly lower total operating expenses, primarily because the prior-year quarter included $0.315 million of collaboration revenue.
- The Company adopted the lease accounting standard effective January 1, 2019, recording approximately $0.137 million of right-of-use assets and corresponding liabilities.
- A 1-for-15 reverse stock split became effective August 30, 2019. It was intended to restore Nasdaq minimum bid-price compliance, and management stated that the Company achieved full compliance with applicable Nasdaq listing rules.
Business, Outlook, Risks and Unusual Items
- EyeGate’s lead CMHA-S product, EyeGate Ocular Bandage Gel, entered a pivotal corneal-wound-healing study in the second quarter of 2019, with topline data expected by year-end 2019. A follow-on punctate-epitheliopathy trial was approved by the FDA in the third quarter, also with topline data expected by year-end 2019.
- Prior EGP-437 trials produced clinically relevant findings but failed key statistical or non-inferiority objectives. Management stated that it would assess strategic options for the program after Bausch Health terminated the related license agreements.
- Management expects significant continuing expenses and operating losses and does not expect product candidates to be commercially available for several years, if at all.
- The Company disclosed substantial doubt about its ability to continue as a going concern. Based on cash at September 30 and the October financing, management expected funding to support planned operations through February 29, 2020.
- On October 2, 2019, after quarter-end, the Company completed a private placement of 600,000 common shares and warrants for approximately $1.9 million of gross proceeds. The warrants cover up to 600,000 shares and become exercisable six months after issuance.
- Additional capital will be required through equity or debt financing, licensing transactions, collaborations or grants. The Company had an effective $50 million S-3 shelf registration, but stated that future financing may not be available on favorable terms or at all.
- Contractual obligations totaled approximately $472,085, including $129,585 of lease obligations and $342,500 under licensing agreements. The Company also disclosed potential milestone payments under certain licenses that are not included in this table.
- No material legal proceedings or material changes to previously disclosed risk factors were reported. Management concluded that disclosure controls were effective and that there were no material changes in internal control over financial reporting.
Investor Verification Checklist
- Confirm the filing-company mismatch: the source document is EyeGate Pharmaceuticals, Inc., while the request identifies Kiora Pharmaceuticals, Inc.
- Verify the effect of the Bausch Health license terminations on revenue recognition and the absence of recurring collaboration revenue.
- Assess liquidity after the October 2, 2019 financing, the February 29, 2020 projected cash runway and the Company’s going-concern disclosure.
- Review OBG pivotal-study progress, year-end 2019 clinical readouts and the regulatory pathway toward a de novo 510(k) submission.
- Evaluate dilution from the reverse split, outstanding warrants, stock options, Series C preferred stock convertible into 852,500 common shares and the October financing warrants.
- Review the failure of prior EGP-437 clinical endpoints and management’s strategic plans for the program.