Filing summary
Period and issuer: The supplied filing is pSivida Corp.’s Form 10-Q for the quarter and nine months ended March 31, 2014 (fiscal 2014 third quarter), not a 2013 Q3 filing. The issuer named in the filing is pSivida Corp., not Eyepoint, Inc.
Business context
pSivida develops sustained-release drug-delivery technologies, principally for diseases of the back of the eye. Its key programs include Medidur for posterior uveitis, licensed ILUVIEN for chronic diabetic macular edema (DME), and a latanoprost product being developed under a Pfizer collaboration. Retisert is marketed by Bausch & Lomb.
Financial performance and position
| Metric | Three months ended March 31 | Nine months ended March 31 |
|---|---|---|
| Revenue | 2014: $1.992 million; 2013: $0.513 million | 2014: $3.181 million; 2013: $1.651 million |
| Operating loss | 2014: $2.219 million; 2013: $2.812 million | 2014: $9.478 million; 2013: $8.050 million |
| Net loss | 2014: $2.187 million; 2013: $2.794 million | 2014: $9.388 million; 2013: $7.953 million |
| Net loss per share | 2014: $0.08; 2013: $0.12 | 2014: $0.35; 2013: $0.35 |
| Cash used in operations | Nine months 2014: $7.886 million; 2013: $5.365 million |
At March 31, 2014, cash and cash equivalents were $18.555 million and marketable securities were $2.712 million, totaling $21.267 million. Current assets were $22.462 million and current liabilities $2.276 million. Total liabilities were $7.675 million, primarily deferred revenue; the company reported no borrowings or line of credit. No gross margin is presented in the filing.
Changes versus prior comparable periods
- Quarterly revenue rose $1.479 million, mainly from $1.5 million recognized on completion of a Durasert feasibility study; this was not described as recurring product revenue.
- Nine-month revenue increased $1.530 million, also primarily due to that feasibility-study consideration.
- Quarterly net loss narrowed by $0.607 million, despite higher operating expenses. Nine-month net loss widened by $1.435 million as R&D and total operating expenses increased.
- Nine-month R&D expense rose 55% to $7.267 million, principally reflecting Medidur clinical-development costs. General and administrative expense rose 9% to $5.468 million.
- Operating cash use increased $2.521 million year over year. Financing provided $19.058 million, including equity offerings, ATM sales, and option exercises; cash increased to $18.555 million from $6.899 million at June 30, 2013.
Outlook, developments, and risks
- Management estimated that cash, cash equivalents, marketable securities, and expected collaboration inflows would fund current and planned operations through the third quarter of calendar 2015. This estimate includes Medidur development costs but excludes potential Alimera milestone or profit-share receipts.
- Alimera resubmitted ILUVIEN’s U.S. NDA in March 2014; the FDA’s PDUFA goal date was September 26, 2014. A third FDA Complete Response Letter had raised benefit-risk, safety, and manufacturing-process concerns. Approval would trigger a $25 million payment to pSivida, but approval and commercialization were uncertain.
- ILUVIEN had launched in the U.K. and Germany. U.K. and Scottish reimbursement developments and an April 2014 distribution agreement for Australia and New Zealand were reported. pSivida’s share depends on Alimera’s receipts and applicable agreement terms.
- pSivida planned to seek Medidur approval using its ongoing Phase III trial and inserter data if ILUVIEN were approved; otherwise, it expected to follow its original two-trial plan. The company said it would consult the FDA as more data became available. CRO agreements represented up to approximately $10.1 million of contractual obligations as of March 31, 2014.
- Management warned that further funding beyond the stated runway could depend on ILUVIEN receipts, partnerships, or additional financing. Financing might be unavailable or dilutive, and insufficient capital could lead to delayed, reduced, or discontinued programs. Other material risks include clinical and regulatory outcomes, market acceptance and reimbursement, reliance on collaborators, and ongoing operating losses.
- The company reported routine legal proceedings that management did not expect to have a material effect. It entered a new lease through April 2019, with minimum initial-term payments totaling $2.025 million, and posted $150,000 of restricted cash as lease security.
Important facts for investors to verify
- Confirm the intended issuer and reporting period: the supplied document is pSivida’s March 31, 2014 10-Q, not a 2013 Q3 EyePoint filing.
- Track the FDA’s ILUVIEN decision and whether the $25 million milestone becomes payable; also verify Alimera’s ability to secure reimbursement and generate sales.
- Monitor Medidur Phase III progress, costs, and the FDA-agreed evidence required for an application.
- Assess cash burn against management’s runway estimate, the availability and potential dilution of further equity financing, and the timing of collaboration cash receipts.
- Separate recurring royalties and collaboration revenue from the $1.5 million feasibility-study recognition when evaluating revenue trends.