# EyePoint, Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [EyePoint, Inc.](/companies/eypt.md) (CIK 1314102)
- Form: 10-Q
- Filed: 2024-11-07
- Accepted by EDGAR: Nov 7, 2024, 16:05 ET
- Period: 2024-09-30
- Accession: 0000950170-24-123267
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1314102/000095017024123267/eypt-20240930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1314102/000095017024123267/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $10.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $31.7m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $736.0k | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $2.9m | us-gaap:CostOfGoodsAndServicesSold |
| Research and development | 3 months, 2024-07-01 to 2024-09-30 | $29.5m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-01-01 to 2024-09-30 | $89.6m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$32.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$100.6m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$29.4m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | −$89.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.54 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | −$1.67 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.54 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | −$1.67 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 54,449,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 53,526,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$90.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2024-01-01 to 2024-09-30 | $3.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $79.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $268.5m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $300.9m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $48.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $82.2m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-09-30 | $218.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 31,798 characters.

### Note Regarding Forward-Looking Statements

Various statements made in this Quarterly Report on Form 10-Q are forward-looking and involve risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements give our current expectations or forecasts of future events and are not statements of historical or current facts. These statements include, among others, statements about:

- the potential for DURAVYU™, as an investigational sustained delivery intravitreal treatment deploying a bioerodible Durasert E™ insert of vorolanib, a selective and patented tyrosine kinase inhibitor (TKI) targeting wet age-related macular degeneration (wet AMD) and diabetic macular edema (DME);
- our expectations regarding the timing and outcome of our ongoing and planned clinical trials for DURAVYU™ for the treatment of wet AMD and DME;
- our expectations regarding the timing and clinical development of our other product candidates, including EYP-2301, a TIE-2 agonist, razuprotafib, formulated in Durasert E™ to potentially improve outcomes in serious retinal diseases;
- our strategic alliances with other companies;
- our belief that our cash, cash equivalents, and investments in marketable securities of $253.8 million at September 30, 2024, along with the net proceeds from the October $161.0 million equity financing will enable us to fund operations into 2027;
- our ability to obtain additional capital in sufficient amounts and on terms acceptable to us, and the consequences of failing to do so;
- our future expenses and capital expenditures;
- our expectations regarding the timing and results of the August 2022 subpoena from the U.S. Attorney’s Office for the District of Massachusetts (DOJ) seeking production of documents related to sales, marketing and promotional practices (DOJ Subpoena), including as pertain to DEXYCU®;
- our ability to manufacture DURAVYU™ or any other products or product candidates, in sufficient quantities and quality;
- our expectations regarding our ability to obtain and adequately maintain sufficient intellectual property protection for DURAVYU™ and any other products or product candidates, and to avoid claims of infringement of third-party intellectual property rights;
- our expectations regarding the warning letter the Company received from the FDA in July 2024, or the Warning Letter, pertaining to YUTIQ® manufacturing, citing alleged violations of cGMP requirements in connection with an FDA inspection at the Company’s Watertown facility in February 2024 and our plans to implement corrective and preventive actions required by the Warning Letter;
- the effect of legal and regulatory developments; and
- our expectation that we will continue to incur significant expenses and that our operating losses and our net cash outflows to fund operations will continue for the foreseeable future.

Forward-looking statements also include statements other than statements of current or historical fact, including, without limitation, all statements related to any expectations of revenues, expenses, cash flows, earnings or losses from operations, cash required to maintain current and planned operations, capital or other financial items; any statements of the plans, strategies, and objectives of management for future operations; any plans or expectations with respect to product research, development, and commercialization, including regulatory approvals; any other statements of expectations, plans, intentions or beliefs; and any statements of assumptions underlying any of the foregoing. We often, although not always, identify forward-looking statements by using words or phrases such as “likely”, “expect”, “intend”, “anticipate”, “believe”, “estimate”, “plan”, “project”, “forecast”, and “outlook”.

The following are some of the factors that could cause actual results to differ materially from the anticipated results or other expectations expressed, anticipated or implied in our forward-looking statements:

- the effectiveness and timeliness of our clinical trials, and the usefulness of the data;
- the sufficiency of our existing cash resources;
- our access to needed capital;
- fluctuations in our operating results;
- the duration, scope, and outcome of any governmental inquiries or investigations;
- the success of current and future license and collaboration agreements, including our agreements with ANI Pharmaceuticals, Inc. (ANI), Betta Pharmaceuticals Co., Ltd. (Betta), Equinox Science, LLC (Equinox), and Ocumension Therapeutics (Ocumension);
- our dependence on contract research organizations, vendors, and investigators;
- our ability to manufacture clinical and commercial supply of our products and product candidates;
- the extent to which the global economic conditions, uncertainty caused by geopolitical violence and unrest and public health crises impact our business, the medical community, and the global economy;
- market acceptance of our product candidates, if approved;
- protection of intellectual property and avoiding intellectual property infringement;
- our ability to implement corrective and preventive actions required by the Warning Letter to the satisfaction of the FDA;
- product liability; and
- other factors described in our filings with the SEC.

We cannot guarantee that the results and other expectations expressed, anticipated or implied in any forward-looking statement will be realized. The risks set forth under Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as supplemented by the risks set forth under Item 1A of this Quarterly Report on Form 10-Q, describe major risks to our business, and you should read and interpret any forward-looking statements together with these risks. A variety of factors, including these risks, could cause our actual results and other expectations to differ materially from the anticipated results or other expectations expressed, anticipated or implied in our forward-looking statements. Should known or unknown risks materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated, or projected in the forward-looking statements. You should bear this in mind as you consider any forward-looking statements.

Our forward-looking statements speak only as of the dates on which they are made. We do not undertake any obligation to publicly update or revise our forward-looking statements even if experience or future changes makes it clear that any projected results expressed or implied in such statements will not be realized.

EYEPOINT®, DEXYCU®, YUTIQ®, DURASERT®, DURAVYU®, DELIVERING INNOVATION TO THE EYE®, and WITH AN EYE ON PATIENTS® are our trademarks. Retisert® and Vitrasert® are Bausch & Lomb’s trademarks. YUTIQ® is licensed to ANI Pharmaceuticals, Inc. and Ocumension Therapeutics in their respective territories. ILUVIEN® is ANI Pharmaceuticals, Inc.’s trademark. The reports we file or furnish with the SEC, including this Quarterly Report on Form 10-Q, also contain trademarks, trade names, and service marks of other companies, which are the property of their respective owners.

### Our Business

### Overview

We are a company committed to developing and commercializing innovative therapeutics to help improve the lives of patients with serious retinal diseases. Our pipeline leverages our proprietary bioerodible Durasert E™ technology for sustained intraocular drug delivery. The Company’s lead product candidate, DURAVYU™, is an investigational sustained delivery treatment for anti-vascular endothelial growth factor (anti-VEGF) -mediated retinal diseases combining vorolanib, a selective and patent-protected tyrosine kinase inhibitor with bioerodible Durasert E™. DURAVYU™ is presently in Phase 3 clinical trials as a sustained delivery treatment for wet age-related macular degeneration (wet AMD), the leading cause of vision loss among people 50 years of age and older in the United States, and in Phase 2 clinical trial for diabetic macular edema (DME).

### Recent Developments

- Completed an underwritten public offering with gross proceeds of $161.0 million in October. The Company sold 14,636,363 shares of its common stock, which included the exercise in full by the underwriters of their option to purchase an additional 1,909,090 shares of common stock. The shares of common stock were sold at a public offering price of $11.00 per share.
- Announced the grand opening of EyePoint’s Northbridge, MA manufacturing facility in October. The 40,000 square foot Good Manufacturing Process (cGMP) compliant commercial manufacturing facility was built to meet U.S. FDA and European Medicines Agency (EMA) and will support global manufacturing across the Company’s portfolio, including lead pipeline asset, DURAVYU™ upon potential regulatory approval.
- Announced the appointment of esteemed industry leader Fred Hassan to the Company’s Board of Directors in September.

### R&D Highlights

- Announced positive interim 16-week data for the ongoing open label Phase 2 VERONA clinical trial of DURAVYU™ for diabetic macular edema (DME) in October. DURAVYU™ 2.7mg demonstrated an early, sustained, and clinically meaningful improvement in best-corrected visual acuity (BCVA) with a gain of +8.9 letters compared to baseline versus +3.2 letters for aflibercept control. DURAVYU 2.7mg also demonstrated concomitant structural improvement with CST (central subfield thickness) improvement of 68.1 microns versus 30.5 microns for aflibercept control. Notably, both DURAVYU™ doses

showed an immediate benefit over aflibercept control in both BCVA and CST demonstrating the differentiated drug release profile of DURAVYU™ with immediate bioavailability. Additionally, a favorable safety and tolerability profile continued for both DURAVYU™ arms. The Company expects to report the full topline results in the first quarter of 2025, once all patients complete the trial.

- Announced first patient dosed in the Phase 3 LUGANO clinical trial of DURAVYU™ in wet age-related macular degeneration (wet AMD). The second Phase 3 LUCIA pivotal trial initiation is expected to have first patient dosing by end of 2024. The LUGANO and LUCIA clinical trials are designed for potential global regulatory and commercial success with every six-month re-dosing in both trials. With over 160 trial sites committed and robust DAVIO 2 data the company anticipates rapid enrollment of both trials with topline data anticipated in 2026.
- Presented DAVIO 2 twelve-month data at the American Academy of Ophthalmology (AAO) 2024 Subspecialty Day in October, at the 24th EURetina Congress in September and the Retina Society 57th Annual Meeting in September.
- Presented a comparison of tyrosine kinase inhibitors being developed for intravitreal delivery at the Retina Society 57th Annual Meeting in September, demonstrating the differentiation of DURAVYU™ with immediate bioavailability and controlled release via zero-order kinetics for at least six months.
- Presented on sustained-release vorolanib highlighting selective pan-VEGF receptor inhibition and anti-angiogenic effects in VEGF-mediated ocular diseases at the American Retina Forum (ARF) 2024 National Meeting in August demonstrating the durable efficacy, reliable safety and reduced injection burden of treatment with DURAVYU™.

### Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with GAAP requires that we make certain estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. We base our estimates, judgments, and assumptions on historical experience, anticipated results, and trends, and on various other factors that we believe are reasonable under the circumstances at the time. By their nature, these estimates, judgments, and assumptions are subject to an inherent degree of uncertainty. Actual results may differ from our estimates under different assumptions or conditions. In our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, we set forth our critical accounting policies and estimates, which included revenue recognition, reserves for variable consideration associated with our commercial revenue and recognition of expense in outsourced clinical trial agreements. See Note 2 of the notes to our unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q for a description of our accounting policies and estimates.

### Results of Operations

### Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023:

| Revenues: | Three Months Ended September 30, 2024 | 2023 | Change Amounts% |  |
| --- | ---: | ---: | ---: | ---: |
| Product sales, net | $664 | $816 | $(152) | -19% |
| License and collaboration agreements | 9,561 | 14,137 | (4,576) | -32% |
| Royalty income | 299 | 249 | 50 | 20% |
| Total revenues | 10,524 | 15,202 | (4,678) | -31% |
| Operating expenses: |  |  |  |  |
| Cost of sales | 736 | 1,202 | (466) | -39% |
| Research and development | 29,542 | 17,363 | 12,179 | 70% |
| Sales and marketing | 24 | 479 | (455) | -95% |
| General and administrative | 12,970 | 10,556 | 2,414 | 23% |
| Total operating expenses | 43,272 | 29,600 | 13,672 | 46% |
| Loss from operations | (32,748) | (14,398) | (18,350) | 127% |
| Other income (expense): |  |  |  |  |
| Interest and other income, net | 3,387 | 1,786 | 1,601 | 90% |
| Interest expense | — | — | — | - |
| Loss on extinguishment of debt | — | — | — | - |
| Total other income, net | 3,387 | 1,786 | 1,601 | 90% |
| Net loss | $(29,361) | $(12,612) | $(16,749) | 133% |
| Net loss per share - basic and diluted | $(0.54) | $(0.33) | $(0.21) | 64% |
| Weighted average shares outstanding - basic and diluted | 54,449 | 38,341 | 16,108 | 42% |

### Product Sales, Net

Product sales, net represents the gross sales of YUTIQ® and DEXYCU® less provisions for product sales allowances. Product sales, net decreased by $0.2 million, or 19%, to $0.7 million for the three months ended September 30, 2024 compared to the same period the prior year. This decrease was driven by lower sales of YUTIQ® product supply to ANI. For the three months ended September 30, 2024, product sales, net included $0.7 million of product supply under the existing commercial supply agreement (CSA) with ANI.

### License and Collaboration Agreement

License and collaboration agreement revenue decreased by $4.6 million, or 32%, to $9.6 million for the three months ended September 30, 2024 compared to the same period the prior year. This decrease was due to lower recognition of deferred revenue related to the agreement to license YUTIQ® product rights to ANI due to lower product sales to ANI.

### Royalty Income

Royalty income increased by less than $0.1 million, or 20%, to $0.3 million for the three months ended September 30, 2024 compared to the same period the prior year. The increase was attributable to higher non-cash Alimera royalties payable to SWK Funding LLC.

### Cost of Sales, Excluding Amortization of Acquired Intangible Assets

Cost of sales decreased by $0.5 million, or 39%, to $0.7 million for the three months ended September 30, 2024 compared to the same period the prior year. This decrease was primarily due to lower commercial product sales year over year.

### Research and Development

Research and development expenses increased by $12.2 million, or 70%, to $29.5 million for the three months ended September 30, 2024 compared to the same period the prior year. This increase was attributable primarily to (i) $4.0 million in increased clinical trial costs related to the initiation of DURAVYU™ in Phase 3 clinical trials (LUGANO and LUCIA) for wet AMD, (ii) $3.8 million higher personnel expense to support clinical trial activity and product development, including $2.1 million of non-cash stock compensation, (iii) $1.4 million higher clinical trial material expense to be used in phase 3 clinical trials for wet AMD, (iv) $1.3 million in higher professional services, (v) $1.0 million higher facility and IT expenses, and (vi) $0.7 million in other R&D expenses. We anticipate an increase in future periods of clinical trials expenses due to our continuing Phase 3 clinical trials.

### Sales and Marketing

Sales and marketing expenses decreased by $0.5 million, or 95%, for the three months ended September 30, 2024 compared to the same period the prior year. This decrease was driven by discontinued YUTIQ® promotion due to the agreement that granted YUTIQ® license and rights to ANI in the second quarter of 2023 and the Company's exit from the commercial business.

### General and Administrative

General and administrative expenses increased by $2.4 million, or 23%, to $13.0 million for the three months ended September 30, 2024 compared to the same period the prior year. This increase was primarily attributable to $1.8 million in stock-based compensation and $0.8 million in personnel costs, partially offset by lower legal and other administrative expenses.

### Interest (Expense) Income

Interest income from investments in marketable securities and institutional money market funds increased by $1.6 million, or 90%, to $3.4 million for the three months ended September 30, 2024 compared to the same period the prior year. This increase was due primarily to an increase in cash and marketable securities on hand.

### Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023:

| Revenues: | Nine months ended September 30, 2024 | 2023 | Change Amounts% |  |
| --- | ---: | ---: | ---: | ---: |
| Product sales, net | $2,390 | $13,483 | $(11,093) | -82% |
| License and collaboration agreements | 27,906 | 17,768 | 10,138 | 57% |
| Royalty income | 1,389 | 739 | 650 | 88% |
| Total revenues | 31,685 | 31,990 | (305) | -1% |
| Operating expenses: |  |  |  |  |
| Cost of sales, excluding amortization of acquired intangible assets | 2,896 | 3,634 | (738) | -20% |
| Research and development | 89,554 | 46,711 | 42,843 | 92% |
| Sales and marketing | 80 | 11,504 | (11,424) | -99% |
| General and administrative | 39,770 | 28,854 | 10,916 | 38% |
| Total operating expenses | 132,300 | 90,703 | 41,597 | 46% |
| Loss from operations | (100,615) | (58,713) | (41,902) | 71% |
| Other income (expense): |  |  |  |  |
| Interest and other income, net | 11,144 | 4,611 | 6,533 | 142% |
| Interest expense | — | (1,247) | 1,247 | -100% |
| Gain (loss) on extinguishment of debt | — | (1,347) | 1,347 | -100% |
| Total other income, net | 11,144 | 2,017 | 9,127 | 453% |
| Net loss before income taxes | $(89,471) | $(56,696) | $(32,775) | 58% |
| Net loss per share - basic and diluted | $(1.67) | $(1.50) | $(0.17) | 11% |
| Weighted average shares outstanding - basic and diluted | 53,526 | 37,804 | 15,722 | 42% |

### Product Sales, Net

Product sales, net represents the gross sales of YUTIQ® and DEXYCU® less provisions for product sales allowances. Product sales, net decreased by $11.1 million, or 82%, to $2.4 million for the nine months ended September 30, 2024 compared to the same period the prior year. This decrease was driven by the agreement that granted license and rights to YUTIQ® to ANI in May 2023 as the Company exited its commercial business. For the nine months ended September 30, 2024, product sales, net were primarily from the sales of product supply under the existing commercial supply agreement (CSA) with ANI of $1.9 million, as well as $0.5 million of product supply to Ocumension.

### License and Collaboration Agreement

License and collaboration agreement revenue increased by $10.1 million, or 57%, to $27.9 million for the nine months ended September 30, 2024 compared to the same period the prior year. This increase was due to higher recognition of deferred revenue related to the agreement to license YUTIQ® product rights to ANI from 9 months of revenue in 2024 compared to a partial year in 2023.

### Royalty Income

Royalty income increased by $0.7 million, or 88%, to $1.4 million for the nine months ended September 30, 2024 compared to the same period the prior year. The increase was primarily attributable to increased Ocumension Therapeutics royalties from YUTIQ® product sales in China.

### Cost of Sales, Excluding Amortization of Acquired Intangible Assets

Cost of sales decreased by $0.7 million, or 20%, to $2.9 million for the nine months ended September 30, 2024 compared to the same period the prior year. This decrease was primarily due to lower commercial product sales year over year.

### Research and Development

Research and development expenses increased by $42.8 million, or 92%, to $89.6 million for the nine months ended September 30, 2024 compared to the same period the prior year. This increase was attributable primarily to (i) $10.0 million higher personnel expense to support clinical trial activity and product development, including $5.7 million of non-cash stock compensation, (ii) $8.8 million in increased clinical trial costs related to DURAVYU™ in Phase 2 (DAVIO2) and Phase 3 (LUGANO and LUCIA) clinical trials for wet AMD, NPDR (PAVIA), and DME (VERONA), (iii) $5.7 million associated with non-cash equity award modifications expense, (iv) $5.0 million for a milestone payment due for completion of our Phase 2 wet AMD (DAVIO2) clinical trial, (v) $4.4 million in higher clinical trial material expense, (vi) $3.2 million higher DURAVYU™ non-clinical expenses, (vii) $1.5 million in higher facility costs, (viii) $1.6 million in severance related expense, and (ix) $2.5 million of other R&D expenses. We anticipate an increase in future periods of clinical trials expenses due to our continuing Phase 3 clinical trials.

### Sales and Marketing

Sales and marketing expenses decreased by $11.4 million, or 99%, to $0.1 million for the nine months ended September 30, 2024 compared to the same period the prior year. This decrease was driven by discontinued YUTIQ® promotion due to the agreement that granted YUTIQ® license and rights to ANI in the second quarter of 2023 and the Company's exit from the commercial business. Expenses for the nine months ended September 30, 2024 included support for ongoing government reporting requirements.

### General and Administrative

General and administrative expenses increased by $10.9 million, or 38%, to $39.8 million for the nine months ended September 30, 2024 compared to the same period the prior year. This increase was driven by (i) $9.2 million in stock-based compensation, (ii) $3.0 million in higher personnel costs, partially offset by $1.4 million in lower legal and other administrative expenses.

### Interest (Expense) Income

Interest income from investments in marketable securities and institutional money market funds increased by $6.5 million, or 142%, to $11.1 million for the nine months ended September 30, 2024 compared to the same period the prior year. This increase was due primarily to an increase in cash and marketable securities and higher interest rates in the current year to date period.

There was no interest expense in the nine months ended September 30, 2024 due to the repayment of the loan under the loan and security agreement with Silicon Valley Bank (SVB Loan Agreement) on May 17, 2023. Interest expense for the nine months ended September 30, 2023 was $1.2 million.

### Liquidity and Capital Resources

We have had a history of operating losses and an absence of significant recurring cash inflows from revenue, and at September 30, 2024 we had a total accumulated deficit of $831.6 million. Our operations have been financed primarily from sales of our equity securities, issuance of debt and a combination of license fees, milestone payments, royalty income and other fees received from collaboration partners.

### Financing Activities

During the nine months ended September 30, 2024, we sold 1,299,506 shares of our common stock under the ATM facility at a weighted average price of $9.36 per share for gross proceeds of approximately $12.2 million. Share issue costs, including sales agent commissions, totaled approximately $0.4 million.

### Future Funding Requirements

At September 30, 2024, we had cash, cash equivalents, and investments in marketable securities of $253.8 million. We expect the cash, cash equivalents and investments on September 30, 2024, along with the net proceeds from the October $161.0 million equity financing will enable us to fund operations into 2027. Due to the difficulty and uncertainty associated with the design and implementation of preclinical studies and clinical trials, we will continue to assess our cash and cash equivalents and future funding requirements. However, there is no assurance that additional funding will be achieved and that we will succeed in our future operations. We expect to continue to incur substantial additional operating losses for at least the next several years as we continue to develop our product candidates and seek marketing approval and, subject to obtaining such approval, the eventual commercialization of our product candidates. If we obtain marketing approval for any of our product candidates, we will incur significant sales, marketing, and manufacturing expenses. We also expect to continue to incur significant costs to comply with corporate governance, internal controls, and similar requirements associated with operating as a public reporting company.

Actual cash requirements could differ from management’s projections due to many factors including additional investments in research and development programs, clinical trial expenses for DURAVYU™ and EYP-2301, competing technological and market developments and the costs of any strategic acquisitions and/or development of complementary business opportunities.

The amount of additional capital we will require will be influenced by many factors, including, but not limited to:

1\. the scope, progress, results, and costs of clinical trials of DURAVYU™, as a sustained delivery intravitreal treatment for wet AMD and DME;

2\. our expectations regarding the timing and clinical development of our product candidates, including DURAVYU™ and EYP-2301;

3\. the duration, scope, and outcome of the DOJ Subpoena and its impact on our financial condition, results of operations, or cash flows;

4\. whether and to what extent we internally fund, whether and when we initiate, and how we conduct additional pipeline product development programs;

5\. payments we receive under any new collaboration agreements or payments expected from existing agreements;

6\. whether and when we are able to enter into strategic arrangements for our products or product candidates and the nature of those arrangements;

7\. the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing any patent claims;

8\. the costs and timing to implement corrective and preventive actions required by the Warning Letter to the satisfaction of the FDA;

9\. changes in our operating plan, resulting in increases or decreases in our need for capital; and

10\. our views on the availability, timing, and desirability of raising capital.

We expect to seek additional funding to sustain our future operations and while we have successfully raised capital in the past, the ability to raise capital in future periods is not assured. We do not know if additional capital will be available when needed or on terms favorable to us or our stockholders. Collaboration, licensing or other agreements may not be available on favorable terms, or at all. If we seek to sell our equity securities, we do not know whether and to what extent we will be able to do so, or on what terms. If available, additional equity financing may be dilutive to stockholders, debt financing may involve restrictive covenants or other unfavorable terms and dilute our existing stockholders’ equity, and funding through collaboration, licensing or other commercial agreements may be on unfavorable terms, including requiring us to relinquish rights to certain of our technologies or products. If adequate financing is not available if and when needed, we may delay, reduce the scope of, or eliminate research or development programs, if any, postpone or cancel the pursuit of product candidates, or otherwise significantly curtail our operations to reduce our cash requirements and extend our capital.

Our consolidated statements of historical cash flows are summarized as follows (in thousands):

| Cash flows from operating activities: | Nine Months Ended September 30, 2024 | 2023 | Change |
| --- | ---: | ---: | ---: |
| Net loss | $(89,471) | $(56,696) | $(32,775) |
| Changes in operating assets and liabilities | (26,676) | 71,155 | (97,831) |
| Other adjustments to reconcile net loss to cash flows from operating activities: | 25,770 | 10,525 | 15,245 |
| Net cash (used in) provided by operating activities | $(90,377) | $24,984 | $(115,361) |
| Net cash (used in) provided by investing activities | $(123,393) | $43,833 | $(167,226) |
| Net cash provided by (used in) financing activities | $12,337 | $(31,415) | $43,752 |

Operating cash outflows for the nine months ended September 30, 2024 totaled $90.4 million primarily due to our net loss of $89.5 million reduced by $25.8 million of non-cash expenses, which included $28.8 million of stock-based compensation, partially offset by $4.1 million for amortization of discount on available for sale of marketable securities. In addition, there was a change in working capital of $26.7 million, including $22.1 million of deferred revenue related to the agreement to license YUTIQ® product rights to ANI.

Operating cash inflows for the nine months ended September 30, 2023 totaled $25.0 million, primarily due to our net loss of $56.7 million reduced by $10.5 million of non-cash expenses, which included $8.5 million of stock-based compensation, $1.3 million of loss on extinguishment of debt, $0.7 million for the provision of excess and obsolete inventory, and less than $0.1 million of other non-cash charges. This was further offset by changes in working capital of $71.2 million, including $57.4 million of deferred revenue related to the agreement to license YUTIQ® product rights to ANI, and $13.7 million of other working capital changes.

For the nine months ended September 30, 2024, $119.7 million of net cash was used for the purchase of marketable securities, and $3.7 million was used for the purchase of property and equipment.

For the nine months ended September 30, 2023, $46.4 million of net cash was provided by the sales of marketable securities, and $2.6 million was used for the purchase of property and equipment.

Net cash provided by financing activities for the nine months ended September 30, 2024 totaled $12.3 million and consisted of the following:

(i) $11.8 million of net proceeds from the issuance of 1,299,506 shares of our Common Stock sold utilizing our ATM.

(ii) $5.4 million from the exercise of stock options; and

(iii) $4.5 million used for the settlement of stock units and payment of equity issue costs

Net cash used in financing activities for the nine months ended September 30, 2023 totaled $31.4 million and consisted of the following:

(i) $40.5 million used to pay off the SVB loan

(ii) $1.4 million used to extinguish debt costs related to the SVB loan; and

(iii) $9.6 million of net proceeds from the issuance of 902,769 shares of our Common Stock sold utilizing our ATM.

## Market risk

As filed, 176 characters.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item.

## Controls and procedures

As filed, 2,173 characters.

### Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure, particularly during the period in which this Quarterly Report on Form 10-Q was being prepared.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving its desired objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2024, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2024 covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 14,923 characters.

This section augments and updates certain risk factors disclosed in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2023 (the Annual Report). The following risk factors should be read together with the other risk factors disclosed in the Annual Report. In addition to the other information in this Quarterly Report on Form 10-Q, all of the risk factors should be carefully considered in evaluating us and our common stock. Any of these risks, many of which are beyond our control, could materially and adversely affect our financial condition, results of operations or cash flows, or cause our actual results to differ materially from those projected in any forward-looking statements. We may also face other risks and uncertainties that are not presently known, are not currently believed to be material, or are not identified below because they are common to all businesses. Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods. For more information, see “Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q.

**We use our own facility for the manufacturing of YUTIQ® and rely on third party suppliers for key components, and any disruptions to our or our suppliers’ operations could adversely affect YUTIQ®’s commercial viability and our ability to supply YUTIQ® to ANI and Ocumension.**

Pursuant to our agreements with our commercialization partners, we currently manufacture commercial supplies of YUTIQ® ourselves at our Watertown, MA facility and rely on third party suppliers for key components of YUTIQ®. We have, and will continue, to perform extensive audits of our suppliers, vendors, and contract laboratories. The cGMP requirements govern, among other things, recordkeeping, production processes, and controls, personnel, and quality control. To ensure that we continue to meet these requirements, we have and will continue to expend significant time, money, and effort.

The commercial manufacture of medical products is complex and requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of medical products often encounter difficulties in production, particularly in scaling up and validating initial production and ensuring the absence of contamination. These problems include difficulties with production costs and yields, quality control, including stability of the product, quality assurance testing, operator error, shortages of qualified personnel, as well as compliance with strictly enforced federal, state, and foreign regulations. We cannot assure you that any issue relating to the manufacture of YUTIQ® will not occur in the future.

The FDA also may, at any time following approval of a product for sale, audit our manufacturing facilities. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulation occurs independent of such an inspection or audit, the FDA may issue a Form FDA-483 and/or a warning letter, which may require remedial measures that may be costly and time consuming for us to implement and that may include the temporary or permanent suspension of commercial sales, recalls, market withdrawals, seizures or the temporary or permanent closure of a facility. In February 2024, we received an FDA Form-483 at the conclusion of an FDA inspection of our Watertown facility which included certain observations specifically related to the manufacturing of YUTIQ®, and a subsequent determination that our facility had been classified as Official Action Indicated (OAI), which could lead to an enforcement action or, if left un-addressed, negatively affect our manufacturing of YUTIQ®. We submitted written responses to the FDA in March 2024 and May 2024 addressing the FDA’s observations.

On July 12, 2024, we received a warning letter from the FDA (“Warning Letter”), citing alleged violations of current good manufacturing practice (CGMP) requirements in connection with the February 2024 FDA inspection at the Watertown facility and the associated February 2024 Form FDA-483, specifically related to the manufacturing of YUTIQ®. The Warning Letter does not represent a final FDA determination of compliance. The Warning Letter requires that we implement certain corrective and preventive actions, including improvements to the process by which we investigate unexplained discrepancies, the implementation of additional written procedures for production and process control, and the adoption of additional control procedures to monitor the output and to validate the performance of manufacturing processes. Addressing FDA observations and advancing quality initiatives are key priorities for the Company, and the Company has implemented and plans to further implement improvements to strengthen quality and sustainable compliance. We responded to the FDA on August 1, 2024 and, based on current information, we believe the supply of YUTIQ® to patients should not be materially interrupted. However, if we are unable to remediate the findings to the FDA’s satisfaction, we may face additional consequences including an inability to satisfy our obligations under our supply agreements with ANI and Ocumension and possible FDA regulatory or legal actions. Notwithstanding, based on current information, we believe our other products in development, including DURAVYU™, are not impacted by this regulatory action.

***If our Contract Research Organizations (CROs), Contract Manufacturing Organizations (CMOs), Contract Development Manufacturing Organizations (CDMOs), vendors, and investigators do not successfully carry out their responsibilities or if we lose our relationships with them, our development efforts with respect to our product candidates could be delayed.***

We are dependent on CROs, CMOs, CDMOs, vendors, and investigators for pre-clinical testing and clinical trials related to our product development programs, including for DURAVYU™ and other product candidates. These parties are not our employees, and we cannot control the amount or timing of resources that they devote to our programs. If they do not timely fulfill their responsibilities or if their performance is inadequate, the development, and commercialization of our product candidates could be delayed.

The parties with which we contract for execution of clinical trials play a significant role in the conduct of the trials and the subsequent collection and analysis of data. Their failure to meet their obligations could adversely affect clinical development of our product candidates. In addition, if we or our CROs fail to comply with applicable current Good Clinical Practices (GCP), the clinical data generated in our clinical trials may be deemed unreliable and the Food and Drug Administration (FDA) may require us to perform additional clinical trials before approving any marketing applications. Upon inspection, the FDA may determine that our clinical trials did not comply with GCP.

Switching or adding additional CROs involves additional cost and requires management time and focus. Identifying, qualifying, and managing performance of third-party service providers can be difficult, time-consuming, and cause delays in our development programs. In addition, there is a natural transition period when a new CRO commences work and the new CRO may not provide the same type or level of services as the original provider. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition, and prospects. If any of our relationships with our CROs terminate, we may not be able to enter into arrangements with alternative CROs or to do so on commercially reasonable terms. As a result, delays may occur, which can materially impact our ability to meet our desired clinical development timelines.

Additionally, our CMOs may experience manufacturing difficulties due to resource constraints or as a result of labor disputes or unstable political environments. If our CMOs were to encounter any of these difficulties, our ability to provide our product candidate to patients in clinical trials, or to provide product for the treatment of patients once approved, would be jeopardized.

In addition, any facilities located outside the United States (U.S.) that are used by us or by our CMOs or CDMOs to manufacture, test, and optimize our product candidates will be subject to various regulatory requirements of the jurisdiction in which they are located and in addition be subject to trade laws and regulations of the U.S. that may restrict our ability to continue to utilize certain CMOs or CDMOs. Foreign CMOs or CDMOs may be subject to U.S. legislation or investigations, including the proposed BIOSECURE Act, sanctions, trade restrictions, and other foreign regulatory requirements, which could increase the cost or reduce the supply of material available to us, delay the procurement or supply of such material, delay or impact clinical trials, have an adverse effect on our clinical drug development efforts and could adversely affect our financial condition and business prospects. For example, we currently engage with WuXi Apptec (WuXi), to perform certain process development, manufacturing, and testing associated with one of our product candidates, EYP-2301. WuXi has been identified as a U.S. national security threat in the proposed BIOSECURE Act, which, if enacted, or if alternatively implemented through executive or administrative action, could restrict WuXi’s business in the U.S. or the ability of businesses in the U.S. to conduct business with WuXi.

Moreover, if a foreign regulatory authority curtails operations at such foreign facilities of our CMOs or CDMOs, or if trade laws are adopted limiting our ability to use such CMO or CDMO facilities, we may need to find alternative facilities, which could negatively impact our clinical development timelines.

Because we have relied on third parties, our internal capacity to perform certain functions is limited. Outsourcing these functions involves risks that third parties may not perform to our standards, may not produce results in a timely manner or may fail to perform at all. In addition, the use of third-party service providers requires us to disclose our proprietary information to these parties, which could increase the risk that this information will be misappropriated. We currently have a small number of employees, which limits the internal resources we have available to identify and monitor our third-party providers. To the extent we are unable to identify and successfully manage the performance of third-party service providers in the future, our ability to advance our product candidates through clinical trials will be compromised. Though we carefully manage our relationships with our CROs, CMOs, and CDMOs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition, and prospects.

***Interim, top-line, initial and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to confirmation, audit and verification procedures that could result in material changes in the final data.***

From time to time, we may publicly disclose interim, top-line, initial or preliminary data from our clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data. For example, in October 2024, we announced preliminary results from our Phase 2 VERONA trial for DME. DURAVYU™ is still being studied in the Phase 2 VERONA trial for diabetic macular edema and topline data is expected in the first quarter of 2025. When reporting interim, top-line, initial or preliminary data from an ongoing trial, we may make assumptions, estimations, calculations and conclusions as part of our analyses of data, and may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the interim, top-line, initial or preliminary results that we report, including the preliminary results from our Phase 2 VERONA trial for DME, may differ from future results of the same trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Interim, top-line, initial and preliminary data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Interim, top-line, initial and preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the interim, top-line, initial or preliminary data we previously published. As a result, interim, top-line, initial and preliminary data, including the preliminary results from our Phase 2 VERONA trial for DME, should be viewed with caution until the final data are available. Adverse differences between interim, top-line, initial or preliminary data and final data could significantly harm our business prospects and may cause the price of our common stock to fluctuate or decline.

Further, regulatory agencies and others, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could adversely impact the potential of the particular program, the likelihood of obtaining regulatory approval of the particular product candidate, commercialization of any approved product and the business prospects of the company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is derived from information that is typically extensive, and you or others may not agree with what we determine is material or otherwise appropriate information to include in our disclosure.

If the interim, top-line, initial or preliminary data that we report differs from actual results, or if regulatory authorities or others, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be significantly impaired, which could materially harm our business, operating results, prospects or financial condition.

Filed Nov 7, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-123267. Last ingested by Listed: Nov 4, 2026, 07:52 ET. No prices; not investment advice.