EyePoint Pharmaceuticals, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Unaudited consolidated results. EyePoint is a clinical-stage ophthalmology company; its principal disclosed development candidate is EYP-1901, in Phase 2 trials for wet age-related macular degeneration (wet AMD) and non-proliferative diabetic retinopathy (NPDR).
Key financial metrics
Amounts in millions, except per-share data.
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Total revenue | $9.1 | $11.6 | $16.8 | $20.9 |
| Operating loss | $(22.8) | $(19.2) | $(44.3) | $(37.5) |
| Net loss | $(22.9) | $(19.4) | $(44.1) | $(40.4) |
| Net loss per share | $(0.61) | $(0.52) | $(1.17) | $(1.08) |
| Operating cash flow | Not separately stated | Not separately stated | $40.2 | $(39.3) |
- At June 30, cash and cash equivalents were $139.6 million and marketable securities were $2.9 million, or approximately $142.5 million combined. Current assets were $167.1 million and current liabilities $68.9 million.
- EyePoint reported no short- or long-term debt at June 30, after repaying its SVB loan in May. Operating lease liabilities totaled $6.4 million.
- Product sales were $5.3 million in Q2 and $12.7 million for the first half. License and collaboration revenue was $3.6 million in Q2 and $3.6 million for the first half; royalty income was $0.2 million and $0.5 million, respectively.
Changes versus comparable periods
- Q2 revenue declined 21% year over year; first-half revenue declined 20%. Product sales fell 53% in Q2 and 38% in the first half, reflecting minimal DEXYCU sales following loss of pass-through reimbursement and the May sale of YUTIQ rights.
- License and collaboration revenue rose substantially due to revenue recognized under the Alimera transaction. The $75 million upfront payment was initially recorded as deferred revenue; revenue is recognized over time as EyePoint fulfills the combined license and supply obligation.
- Q2 net loss widened 18% to $22.9 million; first-half net loss widened 9% to $44.1 million. Research and development expense increased 21% in Q2 and 28% in the first half, largely due to EYP-1901 trial costs. Sales and marketing expense declined as commercial activity was reduced.
- First-half operating cash flow turned positive from a $39.3 million outflow to a $40.2 million inflow. This was principally driven by $71.3 million of deferred revenue associated with Alimera, not by operating profitability.
Transactions, outlook, and risks
- In May, EyePoint granted Alimera rights to YUTIQ in specified territories for $75 million upfront, plus $7.5 million in scheduled 2024 payments. Beginning in 2025, EyePoint may receive low-to-mid double-digit royalties on qualifying U.S. net sales above specified thresholds through 2028. EyePoint continues to supply YUTIQ during the initial supply-agreement term. Rights in China and certain Asian markets remain licensed to Ocumension.
- EyePoint says its $142.5 million of cash, equivalents, and marketable securities is expected to fund its operating plan into 2025 under current EYP-1901 trial assumptions. The financial-statement note separately says resources are expected to fund current and planned operations for at least 12 months from issuance. The company expects continuing losses and says additional capital may be needed; actual cash needs depend on trial results, spending, partnerships, and other factors.
- DAVIO 2, a Phase 2 wet AMD trial, enrolled 160 patients; PAVIA, a Phase 2 NPDR trial, enrolled 77 and completed enrollment in June. The filing describes trial endpoints but does not provide efficacy results. Management reported no drug-related ocular or systemic serious adverse events in the interim DAVIO 2 safety update through July 1, 2023.
- EyePoint decided to forgo further investment in DEXYCU and recorded a $0.5 million inventory provision. It also recorded approximately $1.4 million of severance and restructuring charges following the YUTIQ transaction. In July, Jay S. Duker became CEO; Nancy S. Lurker became Executive Vice Chair.
- The company repaid the SVB loan in full in May, including principal and fees, and recorded a $1.3 million loss on extinguishment of debt. It reported a subsequent ATM sale of 721,274 shares for approximately $7.7 million gross proceeds as of July 31, 2023.
- A U.S. Attorney’s Office subpoena concerning DEXYCU sales, marketing, and promotional practices remains under investigation. EyePoint is cooperating but cannot predict the matter’s duration, scope, or outcome, or whether it could materially affect the company.
Important facts for investors to verify
- Whether the Alimera 2024 payments are received and whether future sales meet the thresholds needed to generate royalties.
- Whether the reported cash runway into 2025 remains supportable as EYP-1901 trial costs and results develop; distinguish deferred-revenue-driven cash flow from recurring operating performance.
- Upcoming DAVIO 2 and PAVIA clinical results, safety findings, and development timelines; the filing provides no efficacy outcomes.
- The financial and operational consequences of the DOJ investigation and the decision to stop further investment in DEXYCU.
- The extent of dilution from subsequent ATM share sales and potential future capital-raising needs.