EyePoint Pharmaceuticals, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Financial statements are unaudited. EyePoint develops ophthalmic therapies using its Durasert technology and sells YUTIQ and DEXYCU; EYP-1901 is in Phase 2 development.
Financial performance and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Total revenue | $10.0 million | $9.1 million | $30.9 million | $25.4 million |
| Operating loss | $18.4 million | $15.3 million | $55.9 million | $37.2 million |
| Net loss | $18.4 million | $16.7 million | $58.8 million | $39.0 million |
| Net loss per share | $0.49 | $0.58 | $1.58 | $1.42 |
| Operating cash used | Not separately provided | Not separately provided | $52.4 million | $33.4 million |
- Q3 product sales were $9.7 million, up 13%; nine-month product sales were $30.0 million, up 25%. Q3 YUTIQ sales rose to $7.3 million from $3.9 million, while DEXYCU sales fell to $2.4 million from $4.7 million.
- Research and development expense was $11.2 million in Q3 and $34.1 million for nine months, up 31% and 74%, respectively, reflecting staffing and EYP-1901 trial activity. Nine-month G&A expense increased 61% to $26.3 million.
- At September 30, cash and cash equivalents were $75.4 million and marketable securities were $81.9 million, totaling $157.3 million. Total assets were $220.5 million; accumulated deficit was $627.9 million.
- Debt totaled approximately $39.7 million: $10.5 million in short-term borrowings and $29.3 million in long-term debt. The SVB facilities mature January 2027; term-loan amortization begins February 2024. Debt is secured by substantially all assets other than intellectual property and includes revenue or cash-balance covenants.
- Cash, cash equivalents and restricted cash declined by $103.2 million over nine months. Investing cash use of $50.2 million largely reflected purchases of marketable securities; financing cash use was $0.6 million, following refinancing of the CRG loan with SVB debt.
Changes versus comparable periods
- Revenue growth was led by YUTIQ, while DEXYCU declined. Management attributed nine-month sales growth partly to increased cataract surgeries, ASC reopening and sales efforts; Q3 demand for both products was down sequentially, with seasonality cited.
- Operating expenses grew faster than revenue, increasing the operating loss. Net loss for nine months widened by $19.8 million; increased R&D and G&A were major contributors.
- EyePoint replaced its CRG debt in March 2022 with a $30 million SVB term loan and a revolving facility of up to $15 million. The CRG repayment generated a $1.6 million debt-extinguishment loss; lower borrowing costs reduced interest expense year over year.
- Nine-month weighted-average shares outstanding increased to 37.3 million from 27.4 million, reflecting the prior-year equity offering.
Outlook, risks and unusual items
- Management projected that available cash and securities, together with anticipated product-sale cash inflows, would fund its operating plan into the second half of 2024, assuming current EYP-1901 Phase 2 expectations. The filing also states in its liquidity note that resources are expected to fund current and planned operations for at least 12 months from issuance; both estimates depend on uncertain trial costs, sales, and other factors.
- CMS’s November 2022 final rule ends DEXYCU’s separate Medicare pass-through payment after December 31, 2022. EyePoint expects a material adverse effect on DEXYCU revenue and anticipates a fourth-quarter impairment charge against its $20.9 million net intangible asset, as well as a charge for excess inventory. No adjustment was recorded in the September 30 statements.
- EyePoint and ImprimisRx agreed to continue DEXYCU commercial support through Q4 2022 and terminate their commercial alliance effective January 1, 2023, in connection with the reimbursement change.
- The company received an August 2022 subpoena from the U.S. Attorney’s Office for documents concerning sales, marketing and promotional practices, including DEXYCU. It is cooperating; duration, scope and outcome are uncertain, and an adverse resolution could be material.
- EYP-1901 Phase 2 DAVIO2 (wet AMD) and PAVIA (NPDR) trials began dosing in 2022. DAVIO2 topline data was expected in the second half of 2023. EyePoint paused enrollment in the YUTIQ 50 program while assessing additional trial requirements and higher anticipated costs.
- COVID-19 effects, reimbursement and pricing changes, clinical-trial outcomes, manufacturing, competition, financing needs and macroeconomic cost pressures remain risks. The company expects continuing operating losses and may need additional capital.
Key facts for investors to verify
- Actual DEXYCU sales, reimbursement, inventory and impairment effects following the January 2023 loss of separate Medicare payment.
- Progress, timelines, costs and clinical results for EYP-1901’s DAVIO2 and PAVIA trials, and any revisions to the cash-runway estimate.
- Developments and potential financial or operational consequences of the DOJ investigation.
- Compliance with SVB revenue or cash covenants as product revenue and cash burn evolve.
- Whether YUTIQ growth and commercialization can offset DEXYCU pressures and support liquidity without materially dilutive financing.