Business context and reporting period
EyePoint Pharmaceuticals, Inc. (Nasdaq: EYPT) is an ophthalmic pharmaceutical company developing sustained-release eye treatments. This Form 10-K covers the fiscal year ended December 31, 2021; it is an annual report, not a standalone fourth-quarter filing.
Its commercial products are YUTIQ, a treatment for chronic non-infectious posterior-segment uveitis, and DEXYCU, a treatment for post-operative ocular inflammation. Its lead candidate, EYP-1901, is an investigational sustained-delivery anti-VEGF treatment; YUTIQ 50 is also in clinical development.
Financial results and liquidity
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Total revenue | $36.9 million | $34.4 million |
| Product sales, net | $35.3 million | $20.8 million |
| Operating loss | $55.3 million | $37.3 million |
| Net loss | $58.4 million | $45.4 million |
| Net loss per share, basic and diluted | $2.03 | $3.54 |
| Cash used in operating activities | $50.1 million | $14.4 million |
- Product sales comprised YUTIQ revenue of $17.0 million (up from $13.9 million) and DEXYCU revenue of $18.4 million (up from $7.0 million).
- Total revenue rose 7%, while operating expenses increased 29% to $92.2 million. R&D expense increased 64% to $28.5 million, principally reflecting clinical development and expanded research and clinical teams.
- At year-end, cash and cash equivalents were $178.6 million and marketable securities were $33.0 million, totaling $211.6 million. Current assets were $237.7 million and current liabilities $23.7 million.
- Net cash provided by financing activities was $216.9 million, largely from two equity offerings. Shares outstanding increased from 18.1 million at year-end 2020 to 33.9 million at year-end 2021; the November offering also included pre-funded warrants.
- At December 31, 2021, long-term debt on the balance sheet was $36.6 million; the reported carrying value including the debt exit fee was approximately $38.9 million. The debt was under the CRG facility.
Material changes versus the prior comparable period
- Product sales grew 70%, attributed to recovering customer demand as physician visits and procedures resumed after pandemic-related disruption.
- License and collaboration revenue fell 94% to $0.8 million, mainly because 2020 included $9.5 million from an Ocumension milestone arrangement and approximately $2.0 million for the DEXYCU China license.
- Royalty income declined 48% to $0.9 million, reflecting the sale of future Alimera-related royalties to SWK. The company recognized a non-cash portion of the proceeds over time.
- Operating loss widened by $18.0 million, and operating cash outflow increased by $35.7 million. The company attributed this chiefly to increased operating expenses and changes in working capital, including receivables and deferred revenue.
- DEXYCU inventory write-offs associated with updated demand estimates totaled approximately $1.3 million in 2021, including $1.2 million charged to cost of sales and $0.1 million to sales and marketing.
Outlook, risks and unusual items
- Management expected year-end cash, cash equivalents and investments, together with anticipated product-sale cash inflows, to fund its operating plan into the second half of 2024, assuming current expectations for EYP-1901 Phase 2 timing and outcomes. The company expects continued losses and does not expect product sales to fund near-term operations independently.
- Management expected R&D and G&A expenses to increase in 2022. It planned to initiate EYP-1901 Phase 2 trials in wet AMD in the third quarter of 2022 and diabetic retinopathy in the second half of 2022; initial wet AMD top-line data were anticipated in the second half of 2023. These are forward-looking expectations, not guarantees.
- Interim Phase 1 DAVIO results reported in November 2021 showed no ocular serious adverse events and a 79% reduction in treatment burden at six months; the company reported additional positive results through eight months in February 2022. The trial was small and early-stage, and further trials are required.
- YUTIQ 50’s first patient entered a Phase 3 trial in November 2021. The filing does not provide a clear expected data-release date.
- COVID-19 and the Omicron variant continued to threaten demand, physician access and elective cataract procedures. DEXYCU’s separate Medicare payment extension was scheduled through December 31, 2022; continuation beyond that date remained uncertain.
- DEXYCU sales and marketing responsibility shifted to ImprimisRx effective January 1, 2022. EyePoint retained product revenue, manufacturing, distribution and regulatory responsibilities and pays a commission based on sales.
- Subsequent to year-end, on March 9, 2022, EyePoint entered into a Silicon Valley Bank facility with a $30 million term loan and up to $15 million revolving credit, using proceeds to repay the CRG loan. The new facilities mature January 1, 2027 and include revenue or liquidity covenants. The filing states that repayment of the CRG facility was expected to produce an approximately $1.5 million extinguishment loss in first-quarter 2022.
- The company reported that the SEC had concluded its investigation and did not intend to recommend an enforcement action. It also disclosed a September 2021 FDA inspection that resulted in a Form 483; the FDA had not yet determined whether the facility would remain classified as Official Action Indicated.
- Other notable exposures include reliance on Equinox for EYP-1901’s vorolanib license and API supply, manufacturing and supplier concentration, reimbursement and pricing uncertainty, clinical and regulatory risk, and customer concentration. Two distributors accounted for 89.7% of 2021 revenue.
Most important facts for investors to verify
- Whether product demand and cash generation support management’s stated runway into the second half of 2024, particularly if clinical costs rise or the pandemic again disrupts procedures.
- Whether EYP-1901 Phase 2 trials start and report on the anticipated timelines, and whether larger controlled trials confirm the early safety and efficacy observations.
- Whether DEXYCU retains separate Medicare payment after December 31, 2022, and whether ImprimisRx’s sales performance and agreement terms support sustained revenue.
- Compliance with the SVB facility’s quarterly revenue or liquidity covenants, and the effect of its interest, fees and repayment terms on liquidity.
- The status and consequences, if any, of the FDA’s review of the September 2021 inspection and Form 483 observations.
- Revenue-reserve estimates, DEXYCU inventory assumptions, distributor concentration and the degree to which equity issuance and potential dilution may continue.