During prenatal development, brain abnormalities or exposure to certain chemicals can result in an embryo developing a single, centralized eye. The brain is usually significantly reduced in size and the nose is usually absent or replaced with a non-functioning proboscis. This is a lethal mutation with most sufferers surviving for only minutes after birth, often due to difficulties breathing due to a lack of nostrils.
Source: Garzozi, H. J., Barkay, S. 1985. Cause of True Cyclopia. British J. of Ophthalmology. 69: 307-311