Eyenovia (NASDAQ:EYEN), Inc., a pharmaceutical preparations company, has amended its loan agreement with lenders, leading to a deferral of principal and interest payments until the end of February 2025, the company disclosed in a recent SEC filing.
The New York-based firm, which is listed on the Nasdaq Capital Market under the ticker NASDAQ:EYEN, entered into this amendment on Sunday, November 22, 2024, with Avenue Capital Management II, L.P. and related entities.
The amendment pertains to a loan and security agreement dated November 22, 2022, which provided for term loans totaling up to $15.0 million. Eyenovia owed $10.1 million as of the week prior to the amendment. The interest rate on the outstanding amount is the greater of 7.0% or the prime rate plus 4.45%, with a maturity date set for November 1, 2025.
In addition to the deferral, Eyenovia has agreed to issue approximately 1.9 million shares of common stock to the lenders at a price of $0.1052 per share, based on the five-day volume-weighted average price (VWAP) before the amendment. This equity issuance is exempt from registration under the Securities Act of 1933 and is expected to take place today.
The company also announced that Andrew D. Jones has transitioned from his role as Chief Financial Officer, Treasurer, and Secretary to a part-time consultant until December 31, 2024. Michael Rowe, the Chief Executive Officer and a member of the board, has taken over these roles. Rowe has been with Eyenovia since 2018 and has played significant roles in the company's operations, including its liaison with Senju Pharmaceuticals.
In other recent news, Eyenovia has secured a debt payment deferral with Avenue Capital Management L.P. until February 2025, as part of a broader restructuring effort. With a reported Q3 2024 net loss of $7.9 million, the company is actively exploring strategic alternatives, which may include a business combination, reverse merger, or asset sales. The company's recent financial challenges have led H.C. Wainwright and Brookline Capital Markets to downgrade its stock rating from Buy to Neutral.
Eyenovia is also implementing significant cost-cutting measures, including a reduction of over 70% in personnel-related expenses. Despite the termination of the CHAPERONE study, Eyenovia continues to develop collaborations with Formosa Pharmaceuticals, Senju Pharmaceuticals, and SGN Nanopharma, aiming to tap into the $3 billion U.S. dry eye market.
The company is nearing Phase III efficacy data readout for MicroPine and has launched MydCombi and Clobetasol, showing strong interest and efficacy. Furthermore, Eyenovia is developing its Gen 2 Optejet device, promising improved manufacturing efficiency.
InvestingPro Insights
Eyenovia's recent financial maneuvers, including the loan amendment and leadership changes, reflect the company's efforts to navigate challenging financial waters. InvestingPro data reveals that Eyenovia's market capitalization stands at a modest $9.75 million, indicating its small-cap status. This aligns with the company's need to restructure its debt and leadership to maintain operational flexibility.
InvestingPro Tips highlight that Eyenovia is "quickly burning through cash" and that "short term obligations exceed liquid assets." These insights provide context for the company's decision to defer loan payments and issue new shares, likely aimed at improving its cash position and meeting short-term financial obligations.
The company's financial health appears precarious, with InvestingPro data showing a significant revenue growth of 2557.1% in the last twelve months as of Q3 2024, but also an alarming operating income margin of -115,461.33%. This extreme negative margin underscores the company's current unprofitability and explains the need for financial restructuring.
Investors should note that InvestingPro Tips also indicate that "analysts do not anticipate the company will be profitable this year" and that the "stock price movements are quite volatile." These factors, combined with the recent corporate actions, suggest that Eyenovia faces significant challenges in its path to profitability and market stability.
For a more comprehensive analysis, InvestingPro offers 21 additional tips for Eyenovia, providing deeper insights into the company's financial situation and market performance.
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