Filing summary
Period and entity: This filing is pSivida Corp.’s unaudited Form 10-Q for the quarter ended March 31, 2017, covering the three and nine months then ended. The request metadata identifies Eyepoint, Inc. and 2016 Q3; that does not match the filing text.
Business context and financial performance
pSivida develops sustained-release drug products, primarily for chronic eye diseases. Its lead candidate, Durasert three-year uveitis, was in Phase 3 trials. The company also receives royalties and profit-share payments from licensed products including ILUVIEN and Retisert. Amounts below are in millions of dollars except per-share data.
| Metric | Three months ended Mar. 31, 2017 | Nine months ended Mar. 31, 2017 |
|---|---|---|
| Revenue | $0.590 | $6.838 |
| Operating expenses | $5.750 | $19.278 |
| Operating loss | $(5.160) | $(12.440) |
| Net loss | $(5.140) | $(12.369) |
| Net loss per share | $(0.15) | $(0.36) |
| Cash used in operating activities | Not separately stated | $(16.038) |
- Quarterly revenue rose 82% from $0.324 million; year-to-date revenue rose 420% from $1.316 million. The nine-month increase chiefly reflects $5.6 million recognized when the Pfizer agreement terminated, rather than recurring product sales.
- Quarterly net loss widened slightly from $5.041 million; nine-month net loss narrowed from $15.160 million. There is no meaningful gross-margin figure presented.
- At March 31, cash and cash equivalents were $12.871 million and marketable securities were $2.499 million, totaling $15.370 million. Current assets were $16.470 million versus current liabilities of $4.940 million.
- Total liabilities were $4.995 million; the company reported no borrowings or credit facilities. Stockholders’ equity was $12.510 million.
Material changes and unusual items
- For the nine-month period, R&D expense increased 4% to $10.667 million and G&A expense rose 35% to $8.611 million. G&A included costs associated with the CEO transition, executive departures, legal matters, and professional fees.
- Operating cash use increased to $16.038 million from $11.969 million a year earlier. Financing provided $2.404 million, compared with $16.868 million, primarily because the prior-year period included a larger public offering.
- The company sold 1.412 million shares through its ATM program in March for $2.45 million gross proceeds. From April 1 through May 4, it sold a further 3.600 million shares for approximately $6.3 million gross proceeds. These issuances dilute shareholders.
- In May 2017, pSivida and Alimera settled an arbitration over ILUVIEN profit-share audit findings. The company said $136,000 of profit share and a $204,000 audit-cost reimbursement would be recognized in fiscal Q4 2017.
- The U.K. R&D facility closure and consolidation in the U.S. resulted in $472,000 of restructuring costs in the nine months; all related restructuring costs were paid by March 31.
Outlook, commentary, and risks
- Management expected available resources, subsequent ATM proceeds, and existing collaboration-agreement inflows to fund current and planned operations through approximately Q3 fiscal 2018. The estimate excluded potential Alimera receipts and was dependent on financing and cash-flow assumptions.
- Management said extending the runway could require expense reductions or deferrals and additional equity financing. It cautioned that future funding and significant Alimera revenue were not assured.
- The first Durasert Phase 3 trial met its primary efficacy endpoint through six months with high statistical significance, with results maintained through 12 months. Management expected an EU marketing application in June 2017 based on that trial; top-line results from the second Phase 3 trial were also expected in June, with a U.S. NDA planned for Q4 calendar 2017 if results were favorable.
- Key risks include clinical and regulatory outcomes, commercialization and reimbursement of ILUVIEN, declining Retisert royalties, access to capital, possible dilution, and the company’s continuing operating losses and cash outflows.
Most important facts for investors to verify
- Confirm the entity and reporting period: the supplied filing is pSivida Corp., quarter ended March 31, 2017, not an Eyepoint 2016 Q3 filing.
- Track cash runway against operating cash use and the company’s stated Q3 fiscal 2018 funding horizon.
- Separate recurring royalties and collaboration receipts from the one-time $5.6 million Pfizer deferred-revenue recognition.
- Check subsequent Durasert trial results and whether the anticipated EU and U.S. regulatory filings occurred.
- Review the Alimera settlement’s subsequent-quarter accounting and the impact of ATM share issuance, including any required shareholder approvals.