EyePoint Pharmaceuticals Inc (EYPT) 2011 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth-quarter 2011 pSivida Corporation earnings conference call.

My name is Stacey, and I'm going to be your conference moderator for today.

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

We will conduct a question and answer session towards the end of the conference.

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

I would now like to turn the presentation over to your host for today to Ms.

Lori Freedman, Vice President Corporate Affairs; please proceed.

Thank you, Stacey.

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

After the market closed today, we released our fourth quarter and fiscal 2011 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 condition, I refer you to our filings with the SEC, including our quarterly report on Form 10-Q for the fiscal 2011 third quarter filed on May 11, 2011.

The Company undertakes no obligation to update any forward-looking statement 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, and good afternoon, everybody, and welcome as we discuss the results of fiscal 2011 and our fourth quarter.

Then we'll take you through the detailed breakdown of the yearly and quarterly financials, but first I wanted to touch on some highlight developments of our Company.

We feel good about our cash position, having ended fiscal 2011 with $24.1 million in cash, approximately $6.5 million higher than at the end of last year.

This reflects our registered direct offering, and a $2.3 million payment from Pfizer, which I'll get into shortly.

Our quarterly cash burn has averaged about $1.5 million for the last few years, although we anticipate that this will increase somewhat if we proceed with the clinical trials I'll discuss later.

However, as you've seen, our cash flow can be lumpy, depending on the timing of payments we receive.

Moving to our product development, we believe we've made a great deal of progress over the last year in developing our clinical stage product pipeline.

It now includes, in addition to Iluvien for diabetic macular edema, a product candidate for ocular hypertension and glaucoma, and most recently a product candidate for uveitis.

As you know, we have a very significant event coming up for Iluvien for DME partnered with Alimera Sciences.

The new drug application, or NDA, was submitted by Alimera in May of this year to respond to the FDA's complete response letter, and we expect a decision from the FDA by mid November.

The NDA included 3-year data, as well as the additional subgroup analysis for chronic DME patients in the study, which provided promising data.

Details of the regulatory process are included in our SEC filings.

We're very optimistic about this product.

If Iluvien for DME is approved, we will be entitled to a $25 million milestone payment from Alimera, and a 20% share of the profit from this product, profit being a defined term.

Iluvien for DME would address a very large market, both in terms of the number of people, and dollars.

DME affects approximately a million people in the US.

The DME market is estimated to be anywhere from $1.5 billion to $4 billion annually.

As significant as DME is, there's also a lot of other opportunities in ophthalmology.

These include, for example, glaucoma and AMD, leading causes of blindness, which affect each about 2 million people in the US, as well as uveitis, which is the third largest cause of blindness in the US.

We were very happy, therefore, to announce in June of this year that we've amended our license agreement with Pfizer, that's 1 of our biggest shareholders, to focus our collaboration solely on the development of a bioerodible subconjunctival insert delivering latanoprost.

We're targeting the treatment of glaucoma and ocular hypertension with this insert.

Under the revised agreement, Pfizer, which had previously provided us with over $7 million in research funding -- under the revised agreement, Pfizer made an additional payment of $2.3 million.

We will, with technical assistance from Pfizer, develop this candidate through Phase II clinical trials.

At that point, Pfizer has an option to take an exclusive worldwide license to develop and commercialize the product candidate in return for a $20 million option exercise payment, double digit royalty payments on sales of the product, and additional development, regulatory, and sales performance milestone payments of up to $146.5 million.

If Pfizer does not exercise this option, we will have the right to develop and commercialize the product on our own or with a partner.

As we announced earlier this year, an initial dose escalation trial in patients with elevated [IAP] is already under way, and I look forward to providing more information as this clinical study progresses.

Now, as part of the amended agreement, other than those rights related to the latanoprost product, Pfizer regains the rights to its intellectual property in ophthalmic applications previously included in the original Pfizer collaboration agreement.

This gives us far greater freedom, both to enter into additional collaboration agreements with partners, and importantly, to use the technology to develop our own products.

This has allowed us to push forward with the developments of our own product for uveitis.

Under our agreement with Alimera, we've retained the rights to our injectable insert used in Iluvien for the treatment of uveitis.

We were very pleased to announce earlier today that an investigator-sponsored investigational new drug, or IND, has opened for a Phase I/II Study of the [sense set] for uveitis affecting the posterior segments of the eye.

This insert is the same design as Iluvien, delivering the same high and low dose of fluocinolone acetonide used in Alimera's main study for DME, but now we're looking at it for the treatments of posterior uveitis.

If successful, we plan to advance this product into pivotal multi-center Phase III trials, and use a different inserter system with a slightly smaller gauge needle than that used for DME.

Now, here is why we are so pleased about this.

Retisert, 1 of our FDA-approved products partnered with Bausch and Lomb, treats posterior and intermediate uveitis.

It's an earlier generation of the Durasert product, which, like Iluvien for DME, provides sustained release of fluocinolone acetonide.

Although Retisert is effective, its use is associated with some significant side effects, including elevated intraocular pressure in some patients, and hypotony in others.

Alimera's same studies with Iluvien in DME, which you'll remember delivers the same drug as Retisert, showed far fewer side effects than Retisert showed in its clinical trials via the posterior uveitis or DME, so we're optimistic that using the new insert for uveitis will achieve the effectiveness of Retisert, but with much better side effect profile.

Furthermore, under our collaboration agreement with Alimera, we can reference the recent NDA filing of Iluvien in DME, including all of the almost 1,000 patient clinical data, safety data, and drug stability data.

We can reference that in regulatory filings in uveitis.

This may permit us to significantly accelerate our program in uveitis, although this is obviously dependent on, among other things, interactions with the FDA.

Now, moving on to some of our pre-clinical programs.

We recently signed a collaboration with Hospital for Special Surgery in New York to study intraocular sustained, sorry, intra-articular sustained release systems in orthopaedics.

Here, we'll be using our Durasert delivery technology, proven effective in ophthalmology, to go after a new market with diseases such as osteoarthritis.

We've long thought that joints represents an attractive use of our technology systems, [it's been slightly high], they have values which challenge the effectiveness of systemic delivery and the self-contained service to enhance the effectiveness of localized sustained delivery.

We're also very excited to team up with HSS, which is the top ranked hospital for orthopaedics in the US.

And we're continuing to make progress with BioSilicon.

We're focused on our bioerodible Tethadur system to provide sustained release of proteins, large peptides, and even antibodies from a single injection.

So, to summarize, this has been a good year for us.

We continue to advance our product pipeline, our financial position is relatively strong, we have adequate cash to execute on our product development plans at least until calendar 2013, and we're very optimistic that we will have another FDA-approved product before the end of the year.

This would obviously be a huge step forward for us, and so too would the progress in clinical trials of the latanoprost insert for ocular hypertension, and our own product in uveitis.

The non-ophthalmic applications of Durasert and the ophthalmic and non-ophthalmic applications of the Tethadur protein delivery system offer potentially huge blue sky opportunities for the Company.

Now, with that thought, I'm going to hand you over to Len.

Thank you, Paul, and good afternoon, everyone.

I will briefly review with you the fourth quarter and fiscal-year 2011 results, which we reported earlier today, starting with our financial position.

As Paul mentioned, at June 30, 2011, we reported cash, cash equivalents, and marketable securities of $24.1 million, a net increase of $6.5 million from $17.6 million at June 30, 2010.

The net increase reflects the $10 million of net proceeds from our January 2011 registered direct offering of common shares and warrants.

In addition, during fiscal 2011, we received a total of $4.3 million from Pfizer, which consisted of $2 million of research funding under the original Pfizer agreement, and $2.3 million upfront payment that Paul noted earlier.

A number of items will affect our cash flows going forward.

As a result of our restated Pfizer agreement, we will no longer receive the $500,000 per quarter research and development funding.

Additionally, we anticipate that we may somewhat increase our research and development expenditures in fiscal 2012, particularly to advance clinical trials for latanoprost and the just-announced posterior uveitis product candidate.

Our cash position will be substantially enhanced if Iluvien is approved, as a result of the $25 million milestone payment that would be due from Alimera.

Nonetheless, excluding this payment, we believe that our $24.1 million of cash resources at June 30, 2011, positions us to continue our current and planned operations into at least calendar-year 2013.

Turning to our fiscal-year 2011 results, total revenue for fiscal 2011 were $5 million compared to $23.1 million for the prior year.

Fiscal 2011 revenues reflected $3.3 million associated with the June 2011 material modification of our Pfizer collaboration agreement, and $1.2 million of Retisert royalty income, which resumed in the fourth quarter of fiscal 2010.

The remaining $6.7 million of Pfizer deferred revenue on our balance sheet at June 30, 2011, is expected to be recognized over the estimated 3-year period of our performance obligations under the restated agreement.

Fiscal 2010 revenues were predominantly related to our Alimera agreement.

They consisted of $7.1 million of revenue recognized through the December 2009 end date of our performance obligations, and the April 2010 payment by Alimera of its $15 million conditional note.

Research and development was $6.9 million in fiscal 2011, compared to $7 million in the prior year.

Although our personnel and pre-clinical study costs increased somewhat, we also had the benefit of a $208,000 federal research grant.

General and administrative expense was $8 million for fiscal 2011, compared to $7 million in fiscal 2010, primarily as a result of increased stock based compensation expense, and professional fees.

Non-operating income of $1.2 million for fiscal 2011 compares to non-operating income of $315,000 for the prior year.

This predominantly relates to a change in fair value of derivatives resulting from outstanding investor warrants that have exercise prices denominated in Australian dollars.

During fiscal 2011, approximately 3.7 million of these warrants expired unexercised, leaving 205,000 warrants outstanding with an expiration date in July 2012.

The derivative liabilities balance of 170,000 at June 30, 2011, will continue to be subject to quarterly revaluation through the expiration or exercise of these warrants.

Net loss for fiscal 2011 was $8.6 million, or $0.44 per share, compared to net income of $8.8 million, or $0.46 per diluted share for fiscal 2010.

For the quarter ended June 30, 2011, we reported revenues of $3.7 million, compared to $15.7 million in the fourth quarter of last year.

Revenues for this year's fourth quarter were primarily the result of the restated Pfizer collaboration agreement.

Revenues in the prior year fourth quarter consisted primarily of the payment by Alimera of the conditional note and accrued interest that I noted earlier.

Research and development expense totaled $1.9 million for the 3-month period ended June 2011, compared to $1.8 million in the prior year quarter.

General and administrative expense totaled $2.2 million in the fourth quarter this year, compared to $1.8 million last year, and primarily reflected higher stock based compensation expense and professional fees.

Non-operating income was $19,000 for the quarter ended June 2011, compared to $884,000 in the prior-year quarter.

Once again, this non-cash income in the prior-year period was predominantly attributable to the change in the fair value of derivatives related to the Australian dollar warrants.

Net loss for the fourth quarter of fiscal 2011 was $140,000, or $0.01 per share, compared to net income of $13.1 million, or $0.68 per diluted share for the prior-year quarter.

Weighted average outstanding shares increased due to the January 2011 issuance of 2.2 million shares in the registered direct offering.

I will now turn the call back over to Paul.

Thanks, Len.

So to sum up, we have year-end cash of approximately $24 million, an increase of approximately $6.6 million over the prior year; we believe our financial resources are healthy.

We'll continue to manage our cash resources carefully though.

Excluding the $25 million milestone payment that would be due to us from Alimera upon an FDA approval of Iluvien for DME, we believe we can maintain our current and planned operations at least into calendar-year 2013.

We're making strong progress in the developments of our product pipeline, and now have 3 clinical stage product candidates -- Iluvien for DME, our latanoprost product for glaucoma partnered with Pfizer, and our own product for posterior uveitis.

We expect to hear from the FDA on Iluvien's approval in November, and hope to see the first sales by Alimera in early calendar 2012.

We're also very optimistic for our sustained release products for glaucoma and uveitis.

So we believe that we're 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 Instructions) Your first question comes from the line of Juan Sanchez with Ladenburg.

Please proceed

The first question, the two questions I have are on uveitis.

How would you position this concept against Ozurdex, the Allergan product?

The second question is whether or not Bosch and Lomb or Alimera has been interested in restoring the uveitis indication with you?

Okay, so I think the Allergan Ozurdex product, as I recall, while I think the clinical trials went out for as I recall six months, the product itself provides relatively limited sustained delivery of dexamethasone as I recall, I may be wrong on this.

I think it's only about 30 days.

So really, I tend to view Ozurdex as more akin to an injection of kenalog, perhaps doesn't last quite as long, whereas the Iluvien product for DME and our product for uveitis is really designed to provide sustained release for up to three years, so quite different profiles.

We would hope to see similar efficacy as the Retisert device with our product for uveitis, albeit with we hope a fairly significantly improved side effect profile.

With respect to interest shown by other people, I think I've said on multiple occasions that you really can't talk about any of these things until you have an agreement signed.

So, I can't comment on any interest anyone may or may not have shown with that particular program.

Thank you, Paul.

(Operator Instructions) At this time I'd like to turn the call back over to management for closing remarks.

Okay, then, 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.

Thank you.

We thank you for your participation in today's conference.

This does conclude your presentation.

You may now disconnect and have a great day.