EyePoint Pharmaceuticals Inc (EYPT) 2010 Q4 法說會逐字稿

Good day ladies and gentlemen and welcome to the fourth quarter 2010 pSivida corporate earnings conference call.

My name is Noelia and I will be your coordinator for today.

At this time, all participants are in a listen-only mode.

We will be facilitating a Q&A session towards the end of this conference.

(Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Ms.

Lori Freedman, Vice President Corporate Affairs, General Counsel and Secretary.

Please proceed.

Thank you Noelia.

Good afternoon, everyone and thank you for joining us.

After the market closed today, we released our fourth quarter and fiscal 2010 financial results.

A copy of the release is available in the investor section of our website at www.pSivida.com.

On the call with me today is Dr.

Paul Ashton, President and Chief Executive Officer.

Before I hand the call over to Paul, I need to remind everyone that some of our prepared remarks as well as answers to your questions will be forward-looking in nature.

These forward-looking statements are inherently subject to risks and uncertainties.

All statements other than statements of historical fact are forward-looking statements and we cannot guarantee that the results and other expectations expressed, anticipated or implied will be realized.

Actual results could differ materially from those anticipated, estimated or projected in the forward-looking statements.

For a more detailed discussion of the risk factors that could impact our future results and financial conditions, I refer you to our filings with the SEC including our fiscal 2009 annual report on Form 10-K which was filed on September 25, 2009, and our Form 8-K filed on December 23, 2009.

The Company undertakes no obligation to update any forward-looking in order to reflect events or circumstances that may arise after this conference call.

With that, I'd like to turn the call over to Paul.

Thank you Lori and welcome everyone as we discuss the results of our fourth quarter and fiscal 2010.

Revenues in 2010 were $23 million, up approximately 90% over last year.

On this revenue, we recorded a full-year profit of $8.8 million or $0.46 a share compared with a loss of $2.5 million last year.

We ended the year with $17.6 million in cash, approximately $10.7 million more than we were when we started the year.

It's great to have a profitable year and a solid cash position, good though as this is, we believe it's important to focus on the upside potential for the Company both in the near term, meaning 2011, and the longer term.

To understand how we have view the upside, I think it's important to first review what we have accomplished.

Over the past several years, we have successfully executed our business strategy, continued the development of products and improved our overall financial position.

Let's review these accomplishments.

At pSivida, we develop miniaturized, tiny, sustained release, drug delivery products.

We have developed and licensed three generations of products to treat back of the eye diseases.

Our two earlier products are two of the only three sustained release products FDA Approved to treat these diseases.

Our third generation product, Iluvien, is currently under priority review of the FDA and Iluvien is truly tiny.

It's injected directly into the back of the eye in a regular office visit using a specially designed inserter that's only 1/2000 of an inch across.

Once in the eye, Iluvien slowly releases its drug for over two years.

We have structured a series of collaborations that have powered the developments of products using our propriety technology system.

Our first FDA Approved product Vitrasert, with license to [Care and Vision], subsequently acquired by Bausch & Lomb.

Our second FDA Approved product, Retisert, is also licensed to Bausch & Lomb, which fully funded its (inaudible).

More recently, we developed Iluvien, which we licensed to Alimera Sciences.

As those of you who closely follow our story know, we have a collaboration with Pfizer which is progressing very well.

Because of the terms of our agreement with Pfizer, we can't provide any details, but I will say that we are pleased with the progress and efforts by both parties to date.

We have focused a lot of time on developing products for diseases of the back of the eye which affect many people and for which there are limited treatment options.

In the US alone, it's estimated over 10 million people suffer from potentially blinding back of the eye diseases.

The big problem with developing treatments for these diseases is often not pharmacology.

The industry has got a pretty good handle on what types of drugs would be useful to treat these diseases.

The big problem is in fact getting these drugs to the target site, the back of the eye, in enough quantity and for a sustained period of time.

Eye doctors typically don't penetrate to the back of the eye and systematically apply drugs typically have to be given at such a high concentration that patients can develop systemic toxicities.

This leaves direct injection into the eye.

While drugs certainly can be and are injected directly into the eye, the required frequency of these injections often every two months or so or even less, the frequency presents some issues.

These include poor compliance, that leads to a lot of efficacy and of course, risks of infection and cataracts accumulates with increasing numbers of injections.

The ability to avoid these problems is one of the reasons we are very enthusiastic about Iluvien, a product that releases drug on a sustained basis for over two years after a single injection.

Another reason we are excited about Iluvien is the potential size of the market.

Approval is being sought to use Iluvien to treat diabetic macular edema but it's also an earlier stage clinical trials under Alimera's license agreement to treat Wet-AMD, Dry-AMD and retinal vein occlusion.

These are big diseases.

There are approximately one million people in the US with DME alone and that figures growing all of the time as a result of the obesity epidemic which is fueling a dramatic increase in diabetes.

The US DME market has been estimated to be anywhere from about $1.5 billion to $4 billion annually.

Because there are currently no FDA Approved drugs, no one really knows exactly what the market would be for a drug treatment.

Today the disease is managed with laser photocoagulation, essentially burning a few holes into the macular.

Unfortunately, this isn't terribly effective and consequently DME is the leading cause of vision loss in Americans under 70 years of age.

Now, the Iluvien development program in DME is almost complete.

The last patients of approximately 1,000 in Phase III clinical trials is due to complete his or her final three-year follow-up next month.

As I'm sure you're all aware, based on the promising two-year results, Alimera filed an NDA in June of last year and at the end of last month, the FDA granted priority review.

As a result, we expect a decision from the FDA by the end of this year.

An FDA approval for Iluvien will trigger a $25 million milestone payment from Alimera to us and most importantly pave the way for sales.

Alimera has said if they receive an end of the year approval, they plan to offer sales in Q1 2011.

Under our license agreement pSivida will receive 20% of the profit of sales of Iluvien by Alimera.

We are obviously very excited and optimistic regarding the outlook for Iluvien in DME and other indications.

In addition to Iluvien, we are also working on new ways to treat and address ophthalmic diseases as well as applying our existing technologies to other fields.

For example, at this year's ARVO Conference we presented research relating to potential treatments for glaucoma and [retina stigmatose].

We have made great strides in developing our Durasert technology system from an idea years ago to now a third generation product.

We're optimistic that we will be able to follow the same development path through to products with our BioSilicon technology which has the potential to deliver proteins, small drug molecules and even antibodies.

So in conclusion, we have made significant progress this year and over the last year and this year we generated some profit.

Going forward, revenues and profits are likely to continual to be lumpy as they will be driven at least in the short term by such as license fees and milestone payments until we generate an ongoing revenue stream from products such as Iluvien.

PSivida is all about products.

And going forward, our value will be derived from the products we are developing.

With that thought, I'm going to take you through the financial results for the last quarter and the last fiscal year.

The fourth quarter ended June 30, 2010, we reported revenues of $15.7 million, an increase of $12.5 million from the $3.2 million reported for the fourth quarter of last year.

The increase was predominantly due to the payment in full by Alimera of a $15 million conditional note in that quarter.

Revenues for the 2010 fourth quarter also included $342,000 of royalties earned on sales of Retisert by Bausch & Lomb.

This month a completion of a 2005 agreement from which we received $3 million in consideration for $6.5 million of Retisert royalties that would have otherwise been payable to us.

With respect to our Pfizer collaboration agreement, we continued to receive quarterly research and development funding of $500,000, cumulative Pfizer research payments to date of approximately $5.8 million are classified as non-current deferred revenue on our balance sheet at June 30, 2010.

It is a time period for obligation is not defined, none of the Pfizer payments are recognized as revenue in our financial statements.

Net income for the fourth quarter was $13.1 million or $0.68 per share on a fully diluted basis compared with a net loss of $534,000 or $0.03 a share for the prior year period.

Fourth quarter research and development expense of fiscal 2010 and fiscal 2009 each totaled approximately $1.8 million.

General and administrative expense totaled approximately $1.8 million for the fourth quarter compared to approximately $1.4 million for the prior year period.

This reflects higher levels of stock-based compensation.

2010 fourth quarter also included non-operating income of $884,000, compared to a non-operating expense of $556,000 for the fourth quarter 2009.

This is primarily related to a change in the valuation of our outstanding investor warrants that have exercised price denominated in Australian laws.

Moving onto our full year results, revenues of fiscal 2010 totaled $23.1 million compared to $12.2 million last year, an increase of approximately $10.9 million again due primarily to the element of notary payments.

R&D expense in fiscal 2010, totaled $7 million, an approximate $1 million decrease, compared to the $8 million for fiscal 2009.

This is predominantly related to completion of BrachySil clinical studies.

G&A expense in fiscal 2010 were $7 million, a $1.8 million decrease compared to $8.8 million in fiscal 2009.

This is primarily due to the absence in fiscal 2010 or 2009 loss on note receivable and severance cost.

This is partially offset by increased stock-based compensation.

Net income for fiscal 2010 was $8.8 million or $0.46 per share on a fully diluted basis.

This compares to a net loss of $2.5 million or $0.14 a share for fiscal 2009.

Improved results primarily reflect the element of no payment and a $1.3 million year-over-year swing in the change of the value of derivatives related to the Australian denominated investor warrants discussed earlier.

Moving to our cash balance, June 30, 2010, we reported cash, cash equivalents, marketable securities of approximately $17.6 million.

A net increase of approximately $13.6 million during the fourth quarter and a net increase of $10.7 million over the year compared to $6.9 million at June 30, 2009.

The net increase in the fourth quarter of fiscal year periods (inaudible) were primarily due to the Alimera [note] payment.

We will continue to manage our cash resources carefully.

Excluding the $25 million milestone payment that would be due us from Alimera on FDA approval for Iluvien, we believe we can maintain our current and planned operations at least into calendar 2012.

So to conclude, we find a very good year and I couldn't ask for much more as we have achieved the objectives we outlined earlier to you.

We had positive top line data from the Iluvien study, the NDA for Iluvien was filed at the end of June and last month received priority review.

We're very optimistic about our new drug delivery systems.

Financially we've even made a small profit this year and ended the year with about $10.7 million more in cash than we started it.

As good as fiscal 2010 was, I believe fiscal 2011 will be even more interesting and exciting.

With Iluvien clinical trials, three of the serious eye diseases, our strides of over technologies including BioSilicon and our collaboration with Pfizer.

So we believe we are well positioned for a very exciting time ahead and I look forward to speaking with you again next quarter.

At this point, we would be happy to take your questions.

Operator, would you please initiate the Q&A portion of the call?

Thank you.

(Operator instructions) Your first question comes from the line of Juan Sanchez from Ladenburg, Thalmann & Co.

Good evening guys.

The only question is whether or not Alimera has any plans to give an update on Iluvien data -- 30 month data.

I know there is some data out there for some patients but if they want to share more data with additional patients as well.

At this point, I'm not aware that there's a plan to share 30 month data.

The 36 month data or three-year data will of course be collected and submitted to the agency and when that's available, one would imagine that will be material and will be made public.

Thank you.

(Operator instructions)

Okay.

Well, as we seemed to have answered all of our questions very well.

I'd like to thank you all for joining us today.

I look forward to speaking with you again next quarter.

In the meantime, if you have any additional questions, please feel free to contact us.

Oh, sorry.

We have two more questions.

One of your questions comes from the line of Yale Jen from Maxim Group.

Hi, Paul, how are you?

Thanks for the update.

Just quickly that -- what the milestones events you anticipate for remaining of the year, plus was maybe for the over the next one -- two or three quarters.

Well, the big milestone for us we hope will be approval of Iluvien just at the end of this year followed shortly thereafter by receiving $25 million.

We'd like also to see some sales of Iluvien .

There will be some -- we hope additional developments that we announce

Okay.

Great.

So basically that the approval certainly that as we know it will be the major event and maybe there's additional events that -- I mean the product development events you may be able to announce when times comes?

That's correct, Yes.

Okay.

Great.

Thanks a lot.

Appreciate it.

Thank you.

Your next question comes from the line of Morris Johnson from American Wealth Management.

Hi, Paul.

Yes, hi.

Yes, my question is already answered.

I'm sorry.

I didn't know how to drop out, so good work and look forward to the rest of the year.

Okay.

Thank you.

Thank you.

And there are no further questions on the line.

Okay.

Then once again, I shall say thank you very much for joining us and I look forward to speaking with you again next quarter.

Thanks very much.

Bye-bye.

Thank you for your participation in today's conference.

This concludes your presentation and you may now disconnect.

Have a great day.