pSivida Corp. (now identified in the request as Eyepoint, Inc.) — Form 10-Q Summary
Reporting period: Three months ended September 30, 2012, the company’s fiscal first quarter. The filing names the registrant as pSivida Corp.; financial statements are unaudited. Unless noted otherwise, amounts below are in U.S. dollars.
Business context and results
pSivida develops sustained-release drug-delivery products, principally for chronic eye diseases, using its Durasert and BioSilicon platforms. It reported three approved products and two principal product candidates under development. Its results depend substantially on collaboration partners, especially Alimera Sciences and Bausch & Lomb.
| Metric | Q1 FY2013 | Q1 FY2012 | Change / context |
|---|---|---|---|
| Revenue | $0.553 million | $1.659 million | Down 67%; prior-year revenue included $1.1 million from termination of Intrinsiq’s license. |
| Research and development | $1.523 million | $2.129 million | Down 28%, principally from lower intangible-asset amortization after the prior-year impairment. |
| General and administrative | $1.620 million | $2.061 million | Down 21%, primarily due to lower professional fees and stock-based compensation. |
| Operating loss | $2.590 million | $2.531 million | Loss increased $0.059 million. |
| Net loss | $2.551 million | $2.427 million | Loss increased $0.124 million; basic and diluted loss per share was $0.11 versus $0.12. |
| Operating cash flow | $(1.621) million | $(2.660) million | Cash used decreased $1.039 million. |
Royalty income rose to $0.384 million from $0.198 million, reflecting increased Retisert royalties. Collaborative research and development revenue fell to $0.169 million from $1.461 million. The filing does not provide a clear gross margin figure. No borrowings or line-of-credit facilities were reported.
Financial position and liquidity
- At September 30, 2012, cash and cash equivalents were $8.388 million and marketable securities were $9.258 million, or $17.646 million combined, compared with $14.571 million at June 30, 2012.
- Current assets were $18.900 million; current liabilities were $3.462 million. Total liabilities were $7.176 million, including deferred revenue; the filing reports no debt borrowings.
- Net cash from financing was $4.735 million, principally from an August registered direct offering. The company sold 2,494,419 shares and warrants for gross proceeds of $5.4 million; placement-agent fees and other issuance costs were $0.694 million.
- Management said available cash, cash equivalents and marketable securities, together with expected royalties, should fund current and planned operations through calendar 2013, including planned posterior-uveitis Phase III trials. Funding beyond 2013 depends on collaboration receipts, commercialization and/or additional financing.
Material developments, outlook and risks
- Alimera had European marketing authorization for ILUVIEN for diabetic macular edema in the U.K., Austria, France, Germany and Portugal, with recommendations for approval in Italy and Spain. Alimera planned direct launches in Germany, the U.K. and France during 2013 and intended to resubmit its U.S. NDA in Q1 2013. These were partner plans, not guaranteed outcomes.
- Under the Alimera agreement, pSivida may receive 20% of defined net profits on a country-by-country basis and a $25 million milestone within 30 days after any FDA approval. The filing says the timing and likelihood of approval, commercialization, profits and related receipts are uncertain.
- The FDA had cleared pSivida to proceed directly to two Phase III trials of the micro-insert for posterior uveitis, involving approximately 300 patients. Management said R&D spending could increase depending on when internally funded trials begin. A latanoprost product remained in an investigator-sponsored Phase I/II study; Pfizer held an option to license it.
- Key risks include regulatory and clinical-trial outcomes, ILUVIEN launch execution and market acceptance, partner financing and performance, need for capital after 2013, possible dilution or unfavorable financing terms, competition, intellectual-property protection and potential further intangible-asset impairment.
- The company had an accumulated deficit of $254.3 million and a history of operating losses. Its $14.8 million intangible-asset impairment in the quarter ended December 31, 2011 followed the FDA’s 2011 Complete Response Letter for ILUVIEN and a decline in share price.
- Management reported effective disclosure controls at the reasonable-assurance level and no material changes in internal control over financial reporting during the quarter. No material changes to previously disclosed risk factors were reported.
Important facts for investors to verify
- Progress and timing of Alimera’s planned European launches and U.S. NDA resubmission, and any resulting approvals, revenues or milestone payments.
- Whether pSivida initiates and funds the planned posterior-uveitis Phase III trials, and the associated costs and clinical results.
- Cash burn and financing needs against management’s stated runway through calendar 2013; confirm the amount and terms of any subsequent financing or collaboration funding.
- Royalty trends from Bausch & Lomb and whether ILUVIEN generates partner profits that qualify for pSivida’s contractual share.
- Progress of the latanoprost program and whether Pfizer exercises its option, as well as the dilution implications of outstanding warrants, options and future equity issuance.