EyePoint Pharmaceuticals Inc (EYPT) 2011 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second quarter 2011 pSivida Corp earnings conference call.

My name is Derek, and I'll be your operator for today.

(Operator instructions.)

As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to Ms.

Lori Freedman, VP of Corporate Affairs and General Counsel.

You may proceed.

Thank you, Derek.

Good afternoon, everyone, and thank you for joining us.

After the market closed today, we released our fiscal 2011 second quarter results.

A copy of the release is available in the Investor section of our website at www.psvidia.com.

On the call with me today is Paul Ashton, president and CEO, and Len Ross, VP, finance.

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 materially affect our future results and financial conditions, and other items expressed or implied in our forward-looking statements, I refer you to our filings with the SEC, including the 8-K filed on January 19th, 2011.

The Company undertakes no obligation to update any forward-looking statements 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 fiscal 2011 second quarter.

There are a couple of items I'd like to draw your attention to in our financial statements.

First, our cash position is solid.

We ended the quarter with $14.6 million in cash and, as you know, after the quarter, we substantially enhanced our cash position with a registered direct offering, which gave us net proceeds of approximately $10.1 million.

Second, our cash burn remains low.

The second quarter burn was a little under $700,000, unusually low for us, although this reflects the timing of received research [grants].

Through the first two quarters of fiscal 2011, our burn has averaged about $1.5 million per quarter.

While we expect to begin to increase these numbers somewhat as we accelerate our in-house research, and I'll touch on that in a moment, we believe we have sufficient cash to take us into calendar year 2013.

Len will take us through the more detailed breakdown of the quarterly numbers shortly.

On the product development front, I'm sure you have all seen our recent announcement on the positive 36-month data for Iluvien.

As you recall, our licensee, Alimera Sciences, submitted an NDS for Iluvien for the treatment of diabetic macular edema based on a two-year primary efficacy endpoint in two three-year phase III clinical trials.

In December, Alimera received a complete response letter from the FDA requesting, amongst other things, 36-month data on these phase III trials.

Fortunately, at the time of the FDA's request, the trials had been completed.

We're encouraged by the recently released three-year data, particularly in light of Alimera's statements on their call last week that the FDA had said they were looking for overall clinical benefit rather than statistical significance at month 36.

Both trials showed that the therapeutic effects seen at month 24, i.e.

that the sensitive patients gaining 15 or more letters compared to the control group, this effect was maintained through month 36.

Furthermore, the rate of development of side effects slowed significantly between month 24 and 36.

Interestingly, while the trials were designed to show statistical significance with a primary endpoint of 24 months, longer-term follow-up in both trials demonstrated statistically significant therapeutic effects at month 30 and 33 for Iluvien.

While this therapeutic effect was maintained at month 36, the trials lost statistical significance as a result of the improvements in the control group.

Details of the 36-month data are available in the Form 8-K we filed with the SEC last week, and we refer you to those details.

Since receiving the complete response letter, Alimera has reported expect to submit the 36-month data by March 31 of this year.

On FDA approval of Iluvien, we would be entitled to a $25 million milestone payment from Alimera.

We'll also be entitled to 20% of the net profits as defined from sales of Iluvien by Alimera.

So we obviously look forward to the FDA's response to Alimera's NDA.

Iluvien is being developed for diabetic macular edema, a very large potential market in terms of people, the disease affects approximately one million people in the US.

And in terms of dollars, the US DME market alone has been estimated to be between $1.5 billion and $4 billion annually.

In addition to DME, Iluvien is in phase II trials for wet age-related macular degeneration, dry age-related macular degeneration, and retinal vein occlusion under our agreement with Alimera.

Now, pSivida is an innovative company developing tiny sustained delivery products with a primary focus on the eye.

We are continuing the internal and collaborative developments of new products based on our proprietary drug delivery platforms.

These include fully bio-erodable systems for both small molecules and the antibody Avastin.

We'll be focusing on the big eye diseases, wet and dry age-related macular degeneration, glaucoma, and DME.

Now, typically, we advance products into clinical trials before we determine if and when to seek partnering agreements.

So as I mentioned earlier, our cash burn will increase somewhat as we advance these products into the clinic, but we'll still be very judicious about spending money.

With that thought, I'm now going to hand you over to Len.

Thank you, Paul, and good afternoon, everyone.

I will briefly review with you the results for the second quarter of fiscal 2011 that we reported earlier today.

For the quarter ended December 31, 2010, we reported revenues of $414,000 compared to $3.4 million in the second quarter of last year.

Revenues for this year's second quarter consisted primarily of royalties earned on sales of our Retisert product by Bausch & Lomb.

Retisert royalty income resumed in the quarter ended June 2010 following completion of a 2005 advance royalty agreement.

Substantially all of the revenues in the prior year's second quarter resulted from recognition of deferred revenue in connection with consideration received under the Company's collaboration agreement with Alimera.

The amortization of these deferred revenues was completed in last year's second quarter, which marked the endpoint of pSivida's performance obligations under the agreement.

Second quarter R&D expense this year totaled $1.5 million compared to $1.7 million in the prior year period, primarily due to the recognition of a federal grant in the current year.

General and administrative expense totaled $2 million in the second quarter this year compared to $1.8 million last year, and primarily reflected higher levels of professional fees and stock-based compensation.

Net loss for the second quarter was $2.7 million, or $0.15 per share compared to a net loss of $24,000, or $0.00 per share for the prior year quarter.

This change reflects the decrease in revenues that I just discussed, offset in part by a $382,000 year-over-year increase in non-operating income predominantly due to the change in the valuation of our outstanding investor warrants and have exercised prices denominated in Australian dollars.

716,000 of these warrants expired in December 2010, and approximately three million, or 94% of the then-remaining Australian dollar warrants, have expiration dates between February and April of 2011.

The derivative liabilities balance of $514,000 at December 31, 2010 will continue to be subject to quarterly revaluation through the expiration dates of these underlying warrants.

For the six months ended December 31, 2010, total revenues were $890,000 compared to $6.8 million in the prior year period.

The year-over-year decrease reflected the same offsetting factors I discussed for the current quarter.

Research and development expense of $3.3 million for the six months ended December 31, 2010 decreased by approximately $250,000 compared to $3.5 million in the prior year period, again primarily due to the federal grant noted above.

General and administrative expense increased by $660,000 to $4.2 million for the first six months of fiscal 2011 from $3.5 million in the comparable period of fiscal 201, primarily as a result of higher levels of professional fees and stock-based compensation.

Our net loss for the six months ended December 2010 was $5.8 million, or $0.31 per share compared to a net loss of $1.6 million, or $0.09 per share for the prior year period.

A $6.3 million year-over-year increase in the loss from operations was partially offset by a $2.2 million favorable net change in the fair value of derivatives.

This large swing was primarily due to a minimal change in the spread between the market price of our common shares and the US dollar equivalent weighted average exercise price of the outstanding Australian warrants in the current year period compared to a substantial decrease in that spread during the prior year period.

Moving on to our cash resources, at December 31, 2010, we reported cash, cash equivalents and marketable securities of $14.6 million, a net decrease of $676,000 from $15.3 million at September 30, 2010.

This compares to a net decrease of $2.3 million in the previous quarter and was primarily due to the timing of the receipt of $1 million of scheduled research funding payments in the current quarter.

In January 2010, as Paul alluded to, the Company completed a registered direct offering of 2,210,000 shares of common stock and warrants to purchase 552,500 shares of common stock.

The shares and warrants were sold in units at a negotiated price of $5.00 per unit.

Total proceeds net of share issue costs approximated $10.1 million.

As Paul mentioned earlier, we continue to carefully manage our cash resources.

Excluding a $25 million milestone payment that would be due us from Alimera upon an FDA approval of Iluvien, we believe that the combination of $14.6 million of capital resources at the end of this quarter and the $10.1 million net proceeds from our January 2011 share offering positions the Company to maintain its current and planned operations into at least calendar year 2013.

I will now turn the call back over to Paul.

Great.

Thanks, Len.

So to sum up, our cash position is solid, and we continue to manage our cash resources and our cash burn very carefully.

We're encouraged at the recently released top-line three-year data on Iluvien for DME, which Alimera intends to file this quarter, and look forward to the FDA's response to Alimera's NDA.

As was just said, FDA approval will trigger the $25 million milestone payment from Alimera, and as I described earlier, a profit [flow].

Our product development continues to advance, and our recent offering will help fund the acceleration of that development.

We believe we can maintain our current and planned operations at least into calendar year 2013.

So we're in a very good financial position and poised for the very interesting calendar 2011.

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

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

(Operator instructions.) Suraj Kalia from Rodman & Renshaw.

Good evening, guys.

Hi, Suraj.

Paul, forgive me, I jumped a little late on the call.

Have you talked about additional partnerships, or additional endeavors in the process and the status of any of -- any or -- if or any of those?

Yes.

Maybe I can just repeat what I said earlier in the call.

We're continuing development efforts on both internal and collaborative new products using proprietary drug delivery platforms.

These products include fully bio-erodable systems for both small molecules and the antibody Avastin.

We're going to be focused with these new products on some big eye diseases, specifically the big back-of-the-eye diseases, wet and dry AMD, glaucoma, and DME.

As those products advance into the clinic, we'll see a increase in our burn rate, but we're going to be very judicious about that, and we believe we have certainly enough cash on hand to take us into calendar 2013.

But it's not like you're -- is there any -- can we expect any imminent, or within, let's say, calendar 2011, any partnership agreements whether for ophthalmology, whether for oncology?

Any color on that?

Well, I think my own view on those things is that an imminent deal is -- imminent refers to that brief section between signing the deal and the check clearing, because these -- you can think that you're very close to a deal, and it can blow up at any time.

So I can't really comment on how close we may be to a deal or anything actually happening.

But obviously, we're talking to people.

Okay.

And Paul, just out of curiosity, I think so -- we would know the answer to this, but for Alimera's submission, are you all also being solicited in terms of the final -- the type two response and everything that is going in, or is Alimera pretty much running with it and you guys are totally out of the picture and just kind of waiting on the sidelines seeing how this thing goes with the FDA?

In other words, harnessing collaboratively in terms of your experience, what you have seen in the past, especially with the experience with pSivida and harnessing that in the NDA -- in the type two response, or you all are pretty much on the sidelines right now?

I think, to be honest, it depends on the particular questions raised in the CRL.

And (inaudible) we are able to give a lot of assistance, and in others perhaps much less.

Okay.

Okay.

Fair enough, guys.

Thanks for taking my questions.

Okay.

Thanks, Suraj.

Juan Sanchez from [Ladelburg].

Good evening, guys.

Just one question on the BioSilicon project.

If you could be more specific of what kind of work are you doing with Avastin and what special development, and what are the kinetics of release that you may have at this point.

We're in the preclinical stage looking at a a-bio-erodable system for Avastin.

I'm not sure I want to allude at this moment to what particular technology may be being used, and that's basically all I can say.

Thank you.

(Operator instructions.)

[Desh Govender] from Kingsbrook Partners.

Hi, Paul.

Just had a question on the upcoming data presentation at the Angiogenesis conference.

Do you expect any additional detail on the Iluvien data?

Do you know what's being presented?

I haven't seen the presentation.

That's being done by, I believe, Peter Campochiaro at Johns Hopkins.

So I haven't seen his presentation.

I would imagine, it being a scientific conference, it will be somewhat more detailed than the presentation that was given most recently, although I gather it's a relatively brief presentation, so I guess he'll have to talk quickly.

All right, great.

Thank you.

Morris Johnson from American Wealth Management.

Hi, guys.

Hi, Paul.

I'm just wondering if you've had any discussion or talked about the project that you're working on with peptides and proteins.

Yes.

That would be -- the lead in there right now is the antibody, Avastin, that we've alluded to.

Okay.

Thank you.

At this time, I'm showing no further questions in queue.

I would like to turn it back to management for any closing remarks.

Okay.

So if there are no further questions, I thank you all for joining us today, and I look forward to speaking with you again next quarter.

Ladies and gentlemen, that concludes today's conference.

Thank you for your participation.

You may now disconnect.

Everyone have a great day.