Business context and reporting period
The filing is pSivida Corp.’s Form 10-Q for the quarter ended December 31, 2014 (the second quarter of its fiscal year), with six-month results compared with the prior-year period. The supplied filing identifies the registrant as pSivida Corp.; it does not identify it as Eyepoint, Inc. The company develops sustained-release drug-delivery products, including Medidur for posterior uveitis and licensed ILUVIEN for diabetic macular edema (DME).
Financial results and liquidity
Amounts below are in millions of U.S. dollars, except per-share data.
| Metric | Three months ended Dec. 31, 2014 | Three months ended Dec. 31, 2013 | Six months ended Dec. 31, 2014 | Six months ended Dec. 31, 2013 |
|---|---|---|---|---|
| Revenue | $0.521 | $0.592 | $25.828 | $1.189 |
| Operating income (loss) | ($4.116) | ($3.541) | $16.673 | ($7.259) |
| Net income (loss) | ($4.075) | ($3.514) | $16.491 | ($7.201) |
| Net income (loss) per diluted share | ($0.14) | ($0.13) | $0.54 | ($0.27) |
- Six-month revenue included a one-time $25.0 million milestone earned when the FDA approved ILUVIEN in September 2014. The milestone was received in October. Excluding that milestone, six-month revenue was approximately $0.828 million; the filing does not present this as a GAAP subtotal.
- Quarterly revenue fell 12% year over year, while operating expenses rose 12% to $4.637 million. R&D increased 11% to $2.767 million and G&A increased 9% to $1.870 million. No gross margin is separately reported.
- For the six months, R&D was $5.551 million, up 11%; G&A was $3.604 million, up 2%. Royalty income was $0.357 million for the quarter, up 22%, and $0.583 million for the six months, down 19%.
- Cash and cash equivalents were $29.751 million and marketable securities were $5.935 million at December 31, 2014, totaling $35.686 million. Current assets were $37.348 million versus current liabilities of $2.273 million.
- Six-month operating cash flow was $17.257 million, compared with cash used of $6.034 million a year earlier; the improvement chiefly reflected the Alimera milestone payment. Investing activities used $3.065 million and financing activities provided $0.235 million. Cash increased by $14.417 million during the period.
- Total liabilities were $7.905 million, including $5.584 million of noncurrent deferred revenue. The company reported no borrowings or credit facilities. Accumulated deficit was $260.522 million.
Material changes and management commentary
- The FDA’s ILUVIEN approval drove the reported six-month revenue and profit reversal. The company said U.S. commercial availability was expected in calendar Q1 2015; ILUVIEN was already sold in the U.K. and Germany, with a Portugal launch in January 2015. The company’s share of Alimera net profits depends on sales and country-level results; management said timing and amount of any such receipts were uncertain.
- Management estimated that $35.7 million of cash, cash equivalents and marketable securities would fund current and planned operations into calendar 2017, excluding potential ILUVIEN net-profit receipts. It expected quarterly operating cash outflows until product revenues become sufficient and noted future funding could depend on product receipts, collaborations or financing.
- The company continued a pivotal Phase III trial of Medidur and expected significant R&D spending through its development. It planned an FDA meeting on its regulatory strategy; the FDA could require a second Phase III trial.
- The Latanoprost Product remained under evaluation; the company could not estimate the remaining performance period under its Pfizer arrangement. Approximately $5.6 million of related deferred revenue was classified as noncurrent.
- Management reported no material change to previously disclosed risk factors. Highlighted risks include commercialization and reimbursement of ILUVIEN, clinical and regulatory outcomes for Medidur, declining Retisert royalties, development and licensing uncertainty, financing needs, intellectual property, product liability, manufacturing and competition. Routine legal proceedings were not expected to have a material effect.
- An ATM facility allowed up to $10.7 million of additional share sales as of December 31, 2014; no shares were sold under it during the reported quarter or six-month period. Further equity financing could dilute shareholders.
Important facts for investors to verify
- Whether ILUVIEN launched in the U.S. as expected and whether sales generate net-profit payments to pSivida under the Alimera agreement.
- Medidur Phase III progress, the FDA’s requirements for an application, and whether another Phase III trial will be required.
- Cash use after the one-time milestone, the assumptions behind the stated runway into 2017, and any need for additional financing.
- Trends in Retisert royalties, other collaboration revenue, and the timing or outcome of Pfizer’s option relating to the Latanoprost Product.
- The filing’s registrant identity and reporting period: pSivida Corp., quarter ended December 31, 2014, rather than an identified Eyepoint, Inc. filing.