EyePoint Pharmaceuticals, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Unaudited consolidated results. EyePoint develops and commercializes ocular therapies; its marketed products are YUTIQ and DEXYCU, with EYP-1901 and YUTIQ 50 in development. Unless noted otherwise, amounts below are in U.S. dollars.
Financial results and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Total revenue | $9.1M | $15.7M | $25.4M | $27.3M |
| Product sales, net | $8.6M | $5.8M | $24.1M | $14.2M |
| Operating loss | $(15.3)M | $(2.0)M | $(37.2)M | $(24.6)M |
| Net loss | $(16.7)M | $(3.8)M | $(39.0)M | $(29.9)M |
| Net loss per share, diluted | $(0.58) | $(0.30) | $(1.42) | $(2.44) |
- Q3 product sales comprised YUTIQ $3.9M and DEXYCU $4.7M; nine-month sales were $11.1M and $13.0M, respectively.
- Operating expenses were $24.4M in Q3 and $62.6M for nine months. The filing does not provide a headline operating margin; the company remained loss-making.
- Cash and cash equivalents were $119.7M at September 30, 2021, versus $44.9M at year-end 2020. Current assets were $141.8M and current liabilities $19.9M.
- Operating cash use was $33.4M for nine months, compared with $20.3M in the prior-year period. Investing cash use was $0.2M; financing provided $108.4M.
- Long-term debt on the balance sheet was $36.4M. The CRG term loan matures December 31, 2023, bears 12.5% annual interest, and is interest-only until maturity; the filing reports its carrying value including exit fee as approximately $38.7M.
Material changes versus comparable periods
- Nine-month product sales grew 70%, reflecting recovery in customer demand as physician visits and procedures resumed after pandemic-related disruption. Q3 product sales increased 49% year over year.
- Total revenue fell 42% in Q3 and 7% for nine months, despite higher product sales. The main comparison effect was $9.5M of Ocumension collaboration revenue recognized in Q3 2020; prior-year nine-month revenue also included a $2.0M DEXYCU license payment.
- Research and development expense rose 108% in Q3 and 60% for nine months, primarily from EYP-1901 clinical and development work, YUTIQ 50 trial preparation, and expanded research and clinical staffing.
- Nine-month net loss increased by $9.1M. The prior-year comparison included higher collaboration revenue; 2021 included a $2.1M gain from PPP loan forgiveness. Q3 net loss widened by $12.9M.
- February’s underwritten stock offering generated approximately $107.9M net proceeds; shares outstanding increased to 28.8M at September 30 from 18.1M at year-end 2020.
Outlook, risks and unusual items
- Management stated that cash, together with anticipated product-sale inflows, was expected to fund the operating plan through December 31, 2022, subject to assumptions about clinical timing and results, commercialization, and other spending. The filing also notes that product revenue is not expected to fund near-term operations and that additional capital may be needed.
- Management anticipated starting a Phase 3 trial of YUTIQ 50 in Q4 2021. EYP-1901 was in the Phase 1 DAVIO trial; management described positive three-month safety data reported in October 2021. These are development expectations and reported safety findings, not proof of efficacy or approval.
- COVID-19 and new variants could again reduce patient services and demand. The company also cited clinical, manufacturing, reimbursement, competition, intellectual-property, and financing risks.
- DEXYCU reimbursement remained a key uncertainty: pass-through coverage was scheduled to expire in 2022, and a proposed extension and a new Category III CPT code could affect payment pathways. The extension was still subject to the final CMS rule.
- The CRG loan includes minimum product-revenue covenants: $25M for 2021 after amendment and $90M for 2022, as well as a liquidity covenant. A covenant breach without a waiver could trigger default, accelerated repayment, and enforcement against collateral. A DEXYCU commercialization partner’s sales are concentrated among a limited number of customers.
- The SEC Enforcement Division concluded its investigation and advised the company it did not intend to recommend an enforcement action. The company said routine legal proceedings were not expected to have a material effect.
Important facts for investors to verify
- Whether YUTIQ and DEXYCU demand and net sales continue to grow, and the effect of channel inventory, rebates, returns, and customer concentration.
- Actual cash burn versus management’s runway assumptions, and whether additional equity, debt, or collaboration financing is required.
- Progress, safety, efficacy, enrollment, and timing for EYP-1901 and YUTIQ 50 trials; confirm later filings for updated milestones.
- Compliance with CRG’s revenue and liquidity covenants, loan terms, and any further amendments or waivers.
- Final reimbursement arrangements for DEXYCU and the outcome of the proposed pass-through extension.