Business context and reporting period
Filing identity: The supplied 10-K identifies the registrant as pSivida Corp., not EyePoint, Inc. It reports the fiscal year ended June 30, 2013; the filing also provides fourth-quarter results for the quarter ended June 30, 2013. Thus, the “2012 Q4” metadata does not match the period stated in the filing.
pSivida develops sustained-release drug-delivery technologies, primarily for eye diseases. Its portfolio includes marketed products licensed to partners, the Phase III Medidur program for posterior uveitis, and earlier-stage programs. The company relies on partners for product sales and marketing.
Financial results and position
| Metric | FY2013 | FY2012 |
|---|---|---|
| Revenue | $2.143 million | $3.526 million |
| Operating expenses | $14.174 million | $28.737 million |
| Operating loss | $12.031 million | $25.211 million |
| Net loss | $11.900 million | $24.835 million |
| Net loss per share | $0.52 | $1.19 |
| Cash used in operations | $8.745 million | $9.001 million |
- FY2013 revenue comprised $780,000 of collaborative research and development revenue and $1.363 million of royalties, primarily from Retisert. Revenue fell 39% year over year, mainly because FY2012 included $1.1 million recognized after termination of the Intrinsiq license.
- Operating expenses declined 51%; FY2012 included a $14.830 million intangible-asset impairment charge. Excluding that unusual charge, losses remained substantial.
- Research and development expense was approximately $7.0 million in both years. Management expected FY2014 R&D expense to rise significantly as Medidur Phase III enrollment progressed.
- Fourth-quarter FY2013 revenue was $492,000, operating loss $3.981 million, and net loss $3.947 million. In fourth-quarter FY2012, those figures were $699,000, $2.310 million, and $2.262 million, respectively.
- At June 30, 2013, cash and cash equivalents were $6.899 million and marketable securities were $3.374 million. Total assets were $16.249 million; total liabilities were $8.549 million, including $5.984 million of deferred revenue. No borrowings or interest-bearing debt are identified in the supplied balance sheet.
- Stockholders’ equity was $7.700 million, down from $13.636 million; accumulated deficit was $263.658 million. The company had 23.297 million shares outstanding at year-end.
Material changes, outlook and risks
- Alimera launched ILUVIEN for diabetic macular edema in the U.K. and Germany during FY2013; the filing reports limited sales in the launch quarter. A French launch was expected in the first quarter of 2014. Alimera’s U.S. application had an FDA goal date of October 17, 2013, following two prior complete response letters. Approval would trigger a $25 million milestone to pSivida; approval and timing were uncertain.
- pSivida initiated its first planned Phase III Medidur trial in June 2013 and expected to fund planned trial costs through calendar 2014, subject to available resources. Medidur was being developed independently and would require further clinical and regulatory success.
- Management said $10.3 million of cash, cash equivalents and marketable securities at June 30, plus $9.9 million net proceeds from a July 2013 stock offering and expected inflows, were expected to fund current and planned operations through calendar 2014. This estimate excluded possible Alimera milestone or profit-share receipts. The company expected to need additional resources beyond that period; funding availability and terms were uncertain.
- Liquidity was supported by the July 2013 equity offering, but further equity financing could dilute shareholders. Operating cash outflow remained significant, and partner revenues were uncertain. Retisert royalties were not expected to grow materially and could decline; Bausch + Lomb discontinued Vitrasert sales during FY2013.
- ILUVIEN and Medidur deliver fluocinolone acetonide, which carries risks including cataracts and elevated intraocular pressure. The FDA had previously cited safety concerns for ILUVIEN. Commercial prospects also depend on reimbursement, pricing, competition and partner execution.
- The company disclosed a contract research organization agreement for the first Medidur Phase III trial with potential services of up to approximately $11 million as of June 30, 2013; actual payments depend on trial progress, and the agreement could be terminated subject to specified costs. Minimum contractual obligations shown elsewhere were $504,000, primarily leases and purchase orders.
- No material legal proceedings were reported in the main filing disclosures. Management stated that disclosure controls and internal control over financial reporting were effective; the external auditor did not attest to internal control.
Important facts for investors to verify
- Confirm the registrant and reporting period: this is pSivida Corp.’s FY2013 10-K, not an EyePoint filing or a fiscal 2012 fourth-quarter report.
- Check subsequent FDA decisions and actual U.S. and European commercial performance for ILUVIEN; the filing’s October 2013 FDA goal date and launch plans were forward-looking at filing.
- Track Medidur trial enrollment, costs, results and financing needs, including the CRO commitment and management’s calendar-2014 runway estimate.
- Review the July 2013 offering’s dilution and whether later financing or partner receipts changed liquidity; year-end figures predate that offering.
- Assess dependence on Bausch + Lomb and Alimera, reimbursement access, steroid-related safety risks, and the possibility of further intangible-asset impairment.