pSivida Corp. (now associated with EyePoint) — Form 10-Q summary
Reporting period: Quarter and six months ended December 31, 2011, the second quarter of fiscal 2012. The filing identifies the registrant as pSivida Corp.; the supplied metadata names Eyepoint, Inc.
Business context and key financial metrics
pSivida develops sustained-release drug-delivery technologies, principally Durasert and BioSilicon, for chronic eye diseases. Its lead candidate, ILUVIEN, was licensed to Alimera Sciences. Amounts below are in U.S. dollars; financial statement figures are in millions except per-share data.
| Metric | Three months ended Dec. 31, 2011 | Six months ended Dec. 31, 2011 | Comparable 2010 period |
|---|---|---|---|
| Revenue | $0.630 | $2.289 | $0.414 and $0.890, respectively |
| Operating expenses | $18.273 | $22.463 | $3.535 and $7.446, respectively |
| Operating loss | $17.643 | $20.174 | $3.121 and $6.556, respectively |
| Net loss | $17.460 | $19.887 | $2.695 and $5.803, respectively |
| Basic and diluted loss per share | $0.84 | $0.96 | $0.15 and $0.31, respectively |
| Operating cash used | Not separately presented | $5.020 | $2.802 for six months |
At December 31, 2011, cash and cash equivalents were $8.408 million and marketable securities were $10.272 million, totaling $18.680 million. Current assets were $19.853 million and current liabilities $2.634 million. Total liabilities were $7.155 million; the company reported no borrowings or credit facilities. Intangible assets fell to $4.596 million after a $14.830 million impairment charge. The filing reports no gross margin measure.
Material changes versus the prior comparable periods
- Quarterly revenue rose 52% to $0.630 million; six-month revenue rose 157% to $2.289 million. The six-month increase principally reflected $1.1 million of Intrinsiq deferred revenue recognized when its license terminated and $0.470 million of Pfizer-related revenue under a revised agreement.
- Royalty income was $0.426 million for the quarter, up from $0.326 million, but $0.624 million for six months, down from $0.728 million, reflecting the different quarterly and year-to-date trends in Bausch & Lomb royalties.
- Research and development expense increased 30% for the quarter and 26% for six months, largely from personnel and latanoprost trial costs, and the absence of a prior-year federal grant. General and administrative expense decreased 27% and 16%, respectively, primarily due to lower stock-based compensation and professional fees.
- The FDA’s November 2011 complete response letter for ILUVIEN and a steep decline in market capitalization prompted the $14.830 million impairment: $3.141 million for Durasert and $11.689 million for BioSilicon.
- Six-month operating cash use increased $2.218 million year over year. Cash and cash equivalents decreased $4.504 million from June 30, 2011; marketable securities declined $0.944 million.
Outlook, commentary, risks, and unusual items
- The FDA said Alimera’s resubmitted ILUVIEN application lacked sufficient evidence of safety and efficacy, cited adverse-reaction risks, and called for two additional clinical trials. The $25 million FDA-approval milestone to pSivida was therefore not payable, and U.S. commercialization was not proceeding.
- Alimera reported that it expected an EU decision on ILUVIEN in the first half of 2012; approval and any resulting revenue to pSivida remained uncertain. The filing described no committed collaborative-partner funding.
- Management believed available cash, equivalents, marketable securities, and expected royalty income would support current and planned operations into at least the beginning of calendar 2013. It warned that financing might be needed and could be unavailable or obtained only on unfavorable or dilutive terms; possible responses included partnerships, asset or securities sales, and delaying trials or reducing operations.
- Pfizer’s revised agreement ended its former $500,000 quarterly research funding. Pfizer held an option to license the latanoprost product, subject to agreement terms and development status; there was no assurance it would exercise the option.
- Other material risks include continuing losses, declining or insufficient royalties, clinical and regulatory failure, further impairment, dependence on licensees and third parties, competition, and potential dilution. The company reported effective disclosure controls and no material change in internal control over financial reporting during the period.
Important facts for investors to verify
- Subsequent FDA discussions and whether Alimera proceeded with the additional ILUVIEN trials; also the outcome and timing of the EU review.
- Cash burn, royalty receipts, and whether the stated runway into early 2013 remained achievable.
- Progress and funding requirements for the latanoprost and posterior-uveitis programs, and any Pfizer option decision.
- Assumptions underlying the $14.830 million impairment and the risk of further write-downs.
- Any new financing, partnership, asset-sale, or operating-plan changes, including their effects on existing shareholders.