Business context and reporting period
The filing is for pSivida Corp. and subsidiaries, a sustained-release drug-delivery developer focused primarily on chronic eye diseases. It covers the three and six months ended December 31, 2015—fiscal 2016 second quarter and first half, respectively. The request metadata names Eyepoint, Inc.; the filing itself names pSivida Corp., so the issuer identity should be verified.
Key programs include Medidur for posterior uveitis, then in two Phase III trials; licensed ILUVIEN for diabetic macular edema (DME); and Retisert, which generated royalties. The filing describes ILUVIEN as sold in the U.S. and three EU countries and approved in 17 EU countries.
Financial results and liquidity
Amounts below are in U.S. dollars; financial statement figures are unaudited.
| Metric | Three months ended Dec. 31, 2015 | Six months ended Dec. 31, 2015 |
|---|---|---|
| Total revenue | $0.526 million | $0.992 million |
| Operating expenses | $5.764 million | $11.214 million |
| Operating loss | $5.238 million | $10.222 million |
| Net loss | $5.186 million | $10.119 million |
| Net loss per share, basic and diluted | $0.18 | $0.34 |
| Operating cash flow | $7.667 million used in the six-month period |
Quarterly revenue was nearly unchanged from $0.521 million a year earlier, while net loss widened from $4.075 million. First-half revenue fell from $25.828 million and net income of $16.491 million in the prior-year period, principally because that period included a one-time $25.0 million ILUVIEN FDA-approval milestone. First-half royalty income rose 15% to $0.670 million. Research and development expense increased 30% to $7.203 million, mainly due to Medidur clinical-trial costs; general and administrative expense increased 11% to $4.011 million.
At December 31, 2015, cash and cash equivalents were $11.210 million and marketable securities were $9.881 million, totaling $21.1 million. Current assets were $21.862 million against current liabilities of $3.883 million. Total liabilities were $9.526 million, including $5.612 million of deferred revenue; the company reported no borrowings or credit facilities. Cash and cash equivalents decreased $7.911 million during the six months.
Material developments, outlook and risks
- In December 2015, pSivida reported positive top-line results from the first Medidur Phase III trial: the trial met its primary efficacy endpoint with high statistical significance, and the company described safety results as positive. The second Phase III trial remained ongoing.
- Subject to favorable results from the second trial, management planned to submit a U.S. NDA in the first half of 2017, using results from both trials and additional supporting data. It planned to pursue EU marketing approval based on the first trial. These are plans, not assurances of approval or timing.
- In January 2016, after quarter-end, the company sold 4.44 million shares at $4.00 per share, for $17.8 million gross proceeds and estimated net proceeds of approximately $16.4 million. The financing increases dilution and is not reflected in December 31 cash balances.
- Management estimated that December 31 resources, January offering proceeds and expected collaboration cash inflows would fund planned operations into the fourth quarter of calendar 2017. This estimate excluded potential ILUVIEN receipts. Funding beyond that point depends on collaboration cash flows and/or additional financing; management cautioned that future revenue and financing are not assured.
- Alimera’s ILUVIEN profit-share receipts are uncertain and depend on sales and country-level net profits, including potential offsets for Alimera’s prior losses. pSivida received no ILUVIEN net-profit share in the reported quarter. Other risks include Medidur trial and regulatory outcomes, ILUVIEN market acceptance and reimbursement, declining Retisert royalties, need for capital, and possible dilution.
- Management reported effective disclosure controls at the reasonable-assurance level and no material change in internal control over financial reporting. Routine legal proceedings were not expected to have a material effect; no material change to previously disclosed risk factors was reported.
Key facts for investors to verify
- Confirm issuer identity: the supplied metadata says Eyepoint, Inc., while the filing identifies pSivida Corp.
- Track results and timing of the second Medidur Phase III trial, and the evidence and regulatory requirements for U.S. and EU submissions.
- Monitor ILUVIEN sales, Alimera’s country-level net profits and any offsets that affect pSivida’s profit share.
- Assess cash use against management’s projected runway, including the effect of the January 2016 offering and any future financing needs.
- Distinguish recurring royalty and collaboration revenue from the prior-year $25.0 million non-recurring milestone when comparing periods.