EyePoint Pharmaceuticals, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; unaudited. EyePoint develops and commercializes therapies for serious eye disorders. Its commercial products are YUTIQ and DEXYCU; its pipeline includes EYP-1901 and YUTIQ50.
Financial results and position
Amounts below are in millions of dollars, except per-share data and percentages.
| Metric | Q1 2021 | Q1 2020 / prior date |
|---|---|---|
| Total revenue | $7.323 | $7.489 |
| Product sales, net | $6.802 | $4.687 |
| Operating expenses | $18.258 | $18.933 |
| Operating loss | $(10.935) | $(11.444) |
| Net loss | $(12.280) | $(13.174) |
| Net loss per share, basic and diluted | $(0.50) | $(1.14) |
| Cash used in operating activities | $(15.099) | $(16.345) |
| Cash and cash equivalents at period end | $138.579 | $44.909 at Dec. 31, 2020 |
| Total liabilities | $71.433 | $73.176 at Dec. 31, 2020 |
| Long-term debt | $38.124 | $37.977 at Dec. 31, 2020 |
Q1 2021 financing cash flow was $108.769 million, primarily from the February public offering and ATM sales. Cash, cash equivalents and restricted cash increased by $93.670 million during the quarter. The filing does not provide a headline gross-margin measure; cost of sales excluding acquired-intangible amortization was $1.390 million.
Material changes versus Q1 2020
- Product sales rose 45% to $6.802 million. YUTIQ sales declined to $3.029 million from $3.575 million, while DEXYCU increased to $3.773 million from $1.112 million.
- Total revenue decreased 2%, as higher product sales were offset by lower license and collaboration revenue ($0.341 million versus $2.020 million) and royalty income ($0.180 million versus $0.782 million). The prior-year license revenue primarily included a $2.0 million Ocumension payment for DEXYCU rights; royalty income fell following monetization of Alimera royalties.
- Operating expenses declined 4%. Lower sales and marketing costs, partly associated with reduced commercial spending during the pandemic, more than offset higher R&D and general and administrative costs.
- Net loss narrowed by $0.894 million. Interest expense also declined, mainly reflecting the partial CRG loan repayment in Q4 2020.
- In February, EyePoint issued 10.465 million shares in an underwritten offering for approximately $107.9 million net proceeds. Shares outstanding rose to 28.741 million at March 31, 2021 from 18.140 million at year-end.
Outlook, risks and notable items
- Management stated that $138.6 million of cash and cash equivalents, together with anticipated product-sale inflows, was expected to fund its operating plan through December 31, 2022, based on assumptions about EYP-1901 trial timing and planned Phase 2 initiation. The company continues to expect significant expenses and operating losses; sales are not expected to fund near-term operations.
- COVID-19 continued to adversely affect demand, particularly through reduced physician visits and postponed elective procedures. Management said product demand could remain depressed until restrictions are removed; future effects were uncertain.
- EYP-1901 entered a Phase 1 trial, with initial data expected in Q4 2021. EyePoint was preparing to initiate YUTIQ50 clinical trials later in 2021. These are forward-looking plans, not assured outcomes.
- The CRG term loan bears 12.5% annual interest, is due December 31, 2023, and is secured by substantially all company and guarantor assets. A May 3, 2021 amendment, after quarter-end, reduced the 2021 minimum product-revenue covenant from $45 million to $25 million. Failure to comply with covenants could trigger default and accelerated repayment.
- DEXYCU Medicare Part B pass-through reimbursement was scheduled to expire March 31, 2022 unless extended. The $2.0 million PPP loan forgiveness application remained under review by the SBA.
- In April 2021, Ocumension’s YUTIQ NDA was accepted for review in China. On May 4, 2021, the SEC Enforcement Division informed EyePoint that it had concluded its investigation and did not intend to recommend an enforcement action based on information then available.
- Management reported effective disclosure controls and no material changes to internal control over financial reporting during the quarter. Routine legal proceedings were not expected to have a material effect.
Key facts for investors to verify
- Whether commercial demand and distributor orders recover, including the trajectory of YUTIQ and DEXYCU sales and the impact of the pandemic.
- Clinical progress and data timing for EYP-1901, and the planned initiation and development path for YUTIQ50.
- Compliance with the amended CRG revenue covenant, debt service and any further financing needs.
- Whether DEXYCU pass-through reimbursement is extended beyond March 31, 2022, and whether the PPP loan is forgiven.
- Cash runway assumptions, including clinical-development spending and actual product revenue; management’s stated runway depends on those assumptions.
- Potential dilution from equity issuance and outstanding equity awards; the company reported 28.741 million common shares outstanding at April 30, 2021.