Filing summary
Filing and period: The supplied filing is pSivida Corp.’s unaudited Form 10-Q for the quarter and nine months ended March 31, 2012 (fiscal Q3 2012), filed May 10, 2012. This differs from the request metadata, which identifies Eyepoint, Inc. and 2011 Q3.
Business context
pSivida develops sustained-release drug-delivery technologies for chronic eye diseases. Its lead candidate, ILUVIEN, is licensed to Alimera Sciences. The company also has development programs for posterior uveitis and a latanoprost implant, and receives royalties from Bausch & Lomb on Retisert and Vitrasert.
Financial performance and position
Amounts below are U.S. dollars; financial statement amounts are reported in thousands unless stated otherwise.
| Metric | Three months ended Mar. 31, 2012 | Nine months ended Mar. 31, 2012 | Comparable 2011 period |
|---|---|---|---|
| Revenue | $0.538 million | $2.827 million | $0.360 million and $1.250 million |
| Operating loss | $2.727 million | $22.901 million | $3.139 million and $9.695 million |
| Net loss | $2.686 million | $22.573 million | $2.685 million and $8.488 million |
| Net loss per share | $0.13 | $1.09 | $0.13 and $0.45 |
| Net cash used in operations | Not separately presented | $7.163 million | $4.415 million |
Nine-month revenue increased 126%, mainly from recognizing $1.1 million of deferred revenue after termination of the Intrinsiq license and $559,000 under the amended Pfizer agreement. The quarter’s revenue increase reflected Pfizer-related research revenue and higher Retisert royalties. No gross margin is presented, so a gross margin comparison is not available.
Nine-month operating expenses were $25.728 million, including a $14.830 million non-cash impairment charge for Durasert and BioSilicon intangible assets. Excluding that charge, operating expenses were $10.898 million. The impairment followed Alimera’s November 2011 FDA complete response letter and a sharp decline in pSivida’s market capitalization.
At March 31, 2012, cash and cash equivalents were $6.375 million and marketable securities were $10.087 million, totaling $16.462 million, down from $24.128 million at June 30, 2011. Total assets were $22.833 million, total liabilities $7.278 million, and stockholders’ equity $15.555 million. The company reported no borrowings or line of credit facilities. Nine-month investing cash flow was positive $0.515 million and financing cash flow was positive $0.114 million.
Material changes, outlook and risks
- Intangible assets fell to $4.451 million after the $14.830 million impairment. The remaining carrying value was expected to amortize over approximately 5.75 years.
- Alimera received a positive EU decentralized-procedure outcome for ILUVIEN and Austria and the U.K. had granted marketing authorization by the filing date. Further national approvals, pricing, reimbursement and commercialization timing remained uncertain. Alimera had committed to a five-year post-authorization registry study.
- The FDA had not approved ILUVIEN for DME and stated that additional clinical trials were needed. pSivida therefore was not entitled to the $25 million FDA-approval milestone from Alimera.
- Under the amended Pfizer agreement, Pfizer held an option to license the latanoprost product, subject to the agreement’s conditions; there was no assurance Pfizer would exercise it. The prior quarterly Pfizer research funding had ended.
- Management said existing cash, cash equivalents and marketable securities, together with expected royalties, should fund current operations into fiscal 2014. The company expected to seek additional capital or partnerships and might adjust spending, including delaying development. It did not intend to begin pivotal posterior-uveitis trials without additional funding.
- Key risks include continued operating losses and need for capital, regulatory and clinical uncertainty, dependence on partners, possible further impairment, declining or insufficient royalty income, product safety and competition. Management reported disclosure controls were effective at the reasonable-assurance level and no material change in internal control during the period.
Important facts for investors to verify
- Confirm the issuer and period: the filing identifies pSivida Corp. and the quarter ended March 31, 2012, not Eyepoint, Inc. or 2011 Q3.
- Track Alimera’s remaining EU approvals, pricing and reimbursement, launch progress, and any revenue or profit participation payable to pSivida.
- Monitor FDA discussions and any further trials or regulatory action for ILUVIEN, including potential implications for the $25 million milestone.
- Assess cash burn and financing needs against management’s stated runway into fiscal 2014, including any changes to research and development plans.
- Review progress and funding for the latanoprost and posterior-uveitis programs, and whether Pfizer exercises its option.
- Evaluate royalty trends from Bausch & Lomb and the assumptions behind the impairment valuation and any future impairment tests.