EyePoint Pharmaceuticals, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; financial statements are unaudited. EyePoint develops and commercializes ophthalmic therapeutics. Its portfolio includes YUTIQ and DEXYCU, and EYP-1901, an investigational sustained-delivery treatment in Phase 2 trials for wet AMD and non-proliferative diabetic retinopathy (NPDR).
Financial performance and position
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Total revenue | $7.7 million | $9.3 million; down 17% |
| Product sales, net | $7.4 million | $9.0 million; down 18% |
| Operating expenses | $29.2 million | $27.6 million; up 6% |
| Loss from operations | $21.6 million | $18.3 million |
| Net loss | $21.2 million; $0.56 per share | $21.0 million; $0.56 per share |
| Operating cash used | $16.8 million | $20.2 million |
Revenue was primarily from product sales. Research and development expense increased 37% to $13.6 million, mainly due to DAVIO 2 and PAVIA trial costs and personnel. Sales and marketing expense decreased 14% to $5.7 million, primarily reflecting reduced DEXYCU promotion and commissions. Interest and other income rose to $1.2 million from $61,000; interest expense fell to $812,000 from $1.2 million.
At March 31, 2023, cash and cash equivalents were $105.8 million and marketable securities were $16.7 million, totaling $122.5 million. Total assets were $154.6 million, current liabilities $27.2 million, and total liabilities $76.2 million. Debt included $29.4 million of long-term debt and $5.3 million of short-term borrowings. The term loan matures January 1, 2027; principal installments begin February 2024. The revolving facility has a maximum commitment of $15 million, subject to its borrowing base.
Material changes and developments
- Net product sales fell because DEXYCU sales declined following the end of Medicare pass-through reimbursement on January 1, 2023. EyePoint said DEXYCU was no longer actively marketed in the United States.
- Despite lower reported product sales, physician purchases of YUTIQ from distributors were up 43% year over year, which the company attributed to underlying growth and demand from retinal specialists.
- DAVIO 2 enrollment for EYP-1901 in wet AMD was completed in March, with 160 patients enrolled versus an original target of 144. PAVIA enrollment in NPDR was expected to complete in Q2 2023, earlier than the prior Q4 expectation, following accelerated enrollment and a reduced minimum trial size of 60 patients.
- In February 2023, EyePoint entered a research collaboration with Rallybio to evaluate sustained delivery of a complement C5 inhibitor, initially for geographic atrophy.
- The company entered a lease in January for a planned 40,000-square-foot manufacturing facility in Northbridge, Massachusetts. The 15-year, four-month initial term is expected to involve approximately $40.8 million in base rent; construction was expected to be completed in the second half of 2024. No lease asset or liability was recorded at quarter-end because the lease had not commenced.
Outlook, liquidity, and risks
Management expects cash, cash equivalents, marketable securities, and anticipated net cash inflows from product sales to fund its operating plan into the second half of 2024, assuming current expectations for EYP-1901 Phase 2 timing and outcomes. The liquidity note separately states that available resources and expected product-sale inflows are expected to fund current and planned operations for at least the next twelve months from issuance of the statements. EyePoint expects continued losses and does not expect product sales to fund near-term operations; additional capital may be needed.
- A March 2023 loan amendment requires the company to maintain unrestricted, unencumbered cash and cash equivalents of at least the greater of $50 million or six-month cash burn. Covenant breaches could restrict credit access or accelerate repayment.
- In August 2022, the U.S. Attorney’s Office for the District of Massachusetts subpoenaed records concerning sales, marketing, and promotional practices, including DEXYCU. The company is cooperating and said it cannot predict the investigation’s scope, duration, or outcome, or whether it will have a material effect.
- Management cited clinical-trial execution and results, YUTIQ commercialization, manufacturing capacity, competition, access to financing, and pandemic-related effects as uncertainties. COVID-related impacts on demand, receivables, and inventory estimates remained uncertain.
- Operating cash use improved year over year, but the quarter’s cash increase was supported by $35.5 million of marketable-security sales and maturities, rather than operating cash generation.
Key facts for investors to verify
- Whether YUTIQ demand growth translates into higher product revenue and whether lower DEXYCU sales persist.
- DAVIO 2 and PAVIA trial results, timing, and any resulting changes in development plans or spending.
- Cash runway assumptions, quarterly operating cash use, and compliance with the amended minimum-liquidity covenant.
- Any developments, costs, or potential consequences from the DOJ investigation.
- Progress, commencement, and financial obligations of the Northbridge manufacturing-facility lease.