Filing summary
Reporting period and entity: The supplied filing is pSivida Corp. and subsidiaries’ unaudited Form 10-Q for the quarter ended March 31, 2013, covering the three and nine months then ended. This differs from the request metadata, which identifies EyePoint, Inc. and 2012 Q3; the filing text does not identify EyePoint or a 2012 reporting period.
Business context
pSivida develops sustained-release drug-delivery technologies, principally for chronic eye conditions, using its Durasert and BioSilicon platforms. Its commercial products include Retisert, licensed to Bausch & Lomb; ILUVIEN for diabetic macular edema is being developed and commercialized by licensee Alimera. Principal development programs include a Durasert insert for posterior uveitis, a latanoprost insert for glaucoma and ocular hypertension, and BioSilicon/Tethadur research.
Financial performance and position
Amounts below are in millions of U.S. dollars unless stated otherwise.
| Metric | Three months ended Mar. 31, 2013 | Three months ended Mar. 31, 2012 | Nine months ended Mar. 31, 2013 | Nine months ended Mar. 31, 2012 |
|---|---|---|---|---|
| Revenue | $0.513 | $0.538 | $1.651 | $2.827 |
| Operating expenses | $3.325 | $3.265 | $9.701 | $25.728 |
| Operating loss | $(2.812) | $(2.727) | $(8.050) | $(22.901) |
| Net loss | $(2.794) | $(2.686) | $(7.953) | $(22.573) |
| Net loss per share | $(0.12) | $(0.13) | $(0.35) | $(1.09) |
| Operating cash flow | Not provided for the quarter | Not provided for the quarter | $(5.365) | $(7.163) |
- Revenue comprised collaborative research and development and royalties. For the nine-month period, collaborative R&D revenue fell to $0.603 million from $1.823 million; royalty income was $1.048 million versus $1.004 million.
- At March 31, 2013, cash and cash equivalents were $7.998 million and marketable securities were $5.699 million, totaling $13.697 million. Current assets were $15.205 million and current liabilities $2.685 million, for working capital of approximately $12.520 million.
- Total liabilities were $7.879 million, including $6.087 million of deferred revenue. The company reported no borrowings or credit facilities. Deferred revenue is not described as interest-bearing debt.
- Cash increased by $3.373 million from June 30, 2012. Investing activities provided $4.077 million, and financing activities provided $4.669 million, primarily from an August 2012 equity and warrant offering; operating activities used $5.365 million.
- No gross profit or gross margin measure is presented. The company continued to report operating and net losses.
Material changes versus comparable periods
- Quarterly revenue declined 5%, while quarterly net loss widened from $2.686 million to $2.794 million. R&D spending increased 5% to $1.587 million.
- Nine-month revenue decreased 42%, primarily because the prior-year period included $1.1 million of revenue recognized after termination of the Intrinsiq license and higher revenue under the Pfizer agreement.
- Nine-month net loss narrowed to $7.953 million from $22.573 million. The prior-year period included a $14.830 million intangible-asset impairment charge; therefore, the improvement is substantially affected by that prior-period unusual item. R&D and G&A expenses also declined.
- Quarterly royalties from Bausch & Lomb fell to $0.274 million from $0.380 million, attributed to lower Retisert sales and cessation of Vitrasert royalties. Nine-month royalties were approximately flat year over year.
- Common shares outstanding increased to 23.297 million from 20.803 million at June 30, 2012, following issuance of 2.494 million shares in the August 2012 offering.
Outlook, commentary, and risks
- Management estimated that $13.7 million of cash, cash equivalents and marketable securities, together with expected Retisert royalties and other collaboration inflows, would fund planned operations into the fourth quarter of fiscal 2014. This estimate excluded potential Alimera milestone or net-profit receipts and included planned posterior-uveitis Phase III trials.
- Alimera resubmitted its U.S. ILUVIEN application; the FDA’s stated decision goal date was October 17, 2013. FDA approval would trigger a $25 million milestone payable to pSivida, plus potential profit-sharing. Approval, commercialization, market acceptance and resulting receipts were uncertain.
- ILUVIEN had marketing authorization in six European countries, was available in Germany and to certain U.K. patients, and Alimera expected a direct commercial launch in France later in 2013 while pursuing reimbursement.
- The company expected additional R&D spending during the remainder of fiscal 2013 for planned posterior-uveitis Phase III work. Its ability to fund operations beyond the stated runway depended on collaboration receipts, product progress and/or additional financing.
- Key risks include clinical-trial outcomes and costs, regulatory approvals, Alimera’s ability to commercialize ILUVIEN and generate profit-share payments, declining royalties, Pfizer’s decision on its latanoprost option, and the availability and terms of future financing. Additional equity financing could dilute shareholders; inadequate funding could require program delays or reductions.
- The filing reported routine legal proceedings that management did not expect to have a material effect, no material off-balance-sheet arrangements, and no material changes to previously disclosed risk factors. Management concluded disclosure controls were effective at a reasonable-assurance level.
Important facts for investors to verify
- Confirm the issuer and period: the supplied filing is pSivida Corp., quarter ended March 31, 2013, not EyePoint, Inc. or 2012 Q3.
- Check the FDA’s eventual decision on Alimera’s ILUVIEN resubmission and whether any milestone or profit-sharing revenue was earned.
- Track actual cash use, collaboration and royalty receipts, and whether the projected runway included the planned clinical-trial spending.
- Assess commercial trends in Retisert and the reported cessation of Vitrasert royalties, along with the progress and cost of posterior-uveitis trials.
- Consider the August 2012 financing and potential dilution from outstanding warrants and options; the filing reported 1.176 million warrants and 3.670 million options outstanding at March 31, 2013.