EyePoint Pharmaceuticals Inc (EYPT) 2012 Q3 法說會逐字稿

Good day, ladies and gentlemen.

And welcome to the Q3 2012 pSivida Corp.

earnings conference call.

My name is Sonia and I will be your operator for today.

At this time all participants are in listen only mode.

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

(Operator Instructions).

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

I would like to turn the call over to Lori Freedman, Vice President Corporate Affairs.

Please proceed, ma'am.

Thank you, Sonia.

Good morning everyone and thank you for joining us.

Before the market opened today we released our third-quarter financial results for fiscal 2012.

A copy of the release is available in the Investors section of our website at www.psivida.com.

On the call with me today is Dr.

Paul Ashton, President and Chief Executive Officer, and Len Ross, our Vice President of Finance.

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

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 quarterly period ending December 31, 2011.

We undertake 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 would like to turn the call over to Paul.

Thank you, Lori, and welcome everyone as we discuss the results of the third quarter of fiscal 2012.

This was an excellent quarter for us.

ILUVIEN, our lead development product, received a positive outcome from the European regulators in their Decentralized Procedure, and as we announced on Monday, this product has now received marketing authorization in Austria and the UK, with additional approvals anticipated in the coming months in five other EU countries.

We have also made good progress in our development stage products, and we ended the third quarter with $16.5 million in cash.

Len will discuss this with us and take us through the detailed breakdown of our cash position on the quarterly financials in a moment.

First, I would like to give some more details about our development program.

With respect to ILUVIEN, the approval process in the EU is different from that in the US, so I shall summarize it for you.

In the EU, Alimera, our development and commercialization partner in this program, applied for marketing approval for ILUVIEN for DME in seven EU countries under the Decentralized Procedure or DCP.

This review process was, as we announced in February, completed with a positive outcome, and the final assessment report was issued by the reference member states, which in this case was the UK, with agreements of the six other concerned member states.

And that report said that ILUVIEN is approvable for the treatment of vision impairment associated with chronic diabetic macular edema considered insufficiently responsive to the available therapies.

So the process is now in the national phase during which the seven participating countries separately issue their marketing authorizations.

First to come in was Austria, and as we announced on Monday, approval in the UK was next.

The timing varies country by country, but Alimera has reported that approvals in the remaining countries -- France, Germany, Italy, Spain and Portugal -- will likely be issued in the second and third quarters of 2012, although a few countries could take longer.

Alimera has reported it plans to commercialize ILUVIEN for DME in the EU, either directly or with a partner, and expects the product to be available in the EU by the end of 2012.

The International Diabetes Federation estimates that there are over 20 million people in these seven countries currently living with diabetes.

And Alimera estimates that over 1 million of these people have DME.

So we are looking forward to the commercialization of ILUVIEN in Europe.

Apart from the potential revenue stream to us under our collaboration agreement with Alimera, EU approval again validates our technology platform.

Currently there are four sustained-release products that have been approved by either the FDA or the EU for back-of-the-eye diseases.

[Users of] pSivida always, always would use different generations of our Durasert technology.

We are continuing to work with other preclinical and clinical stage programs and remain very optimistic.

In March we announced a technology evaluation agreement with Neuron Systems.

That is a private company funded by J&J and Domain.

This is to evaluate the use of pSivida's technology to develop a sustained-release system to treat Dry AMD.

That is a serious retinal condition.

It affects millions of people worldwide, and currently there are no approved treatments for this disease.

Also, in collaboration with Pfizer, we are continuing our clinical stage development of a sustained-release implant to treat glaucoma and ocular hypertension.

This product is a fourth curation of our Durasert technology, which as you recall, was used in the recently approved ILUVIEN.

Well, this version is bioerodible.

The insert delivers latanoprost.

It is a highly effective glaucoma drug, currently administered as an eye drop, and until recently sold under the brand name XALATAN by Pfizer.

This is in Phase I/II clinical trials.

Under our agreement with Pfizer, we can develop the product through to the end of Phase II clinical trials at our expense, at which time Pfizer has the option on payment of $20 million to obtain an exclusive worldwide license to develop and commercialize the product.

Under this scenario Pfizer would then be responsible for all future development costs, and we would be entitled to additional development regulatory and sales performance milestones totaling $145 million, and a double-digit royalty on net sales.

As you may recall, Pfizer previously paid us a little over $9 million beyond the cost of this work thus far.

We are currently independently continuing to develop our own insert to treat uveitis affecting the posterior segments of the eye.

Posterior uveitis is an inflammatory condition that can be extremely serious.

In the United States this disease has been estimated to affect approximately 175,000 people and is responsible for approximately 30,000 cases of blindness.

Our products to treat this disease uses the same injectable micro-insert as was recently approved in the EU for DME under the name ILUVIEN.

Our collaboration agreement with Alimera allows us to reference the ILUVIEN for DME regulatory filings.

This provides the potential for a shortened development program for the posterior uveitis application, and could result in a shortened time to approval and market.

Following our pre-IND meeting with the FDA, requiring two pivotal trials required as the basis for a NDA, and to provide a little bit more background on this, it is important to think about Retisert.

Now Retisert was our FDA approved product for the treatment of posterior uveitis.

And it, like ILUVIEN, delivers fluocinolone acetonide, or FA.

And it delivers it on a sustained basis to the back-of-the-eye at the duration of approximately 30 months, very similar in fact to the ILUVIEN device.

However, ILUVIEN uses a later-stage generation of our Durasert technology to deliver the drug.

Based on the data obtained in Alimera's DME studies, we would expect our new uveitis product have a very similar efficacy to the Retisert but with a much better side effect profile, rather like ILUVIEN.

Also, the new product, like ILUVIEN, would be injected in an office visit, rather than being surgically implanted as the Retisert device currently is.

I look forward to providing further information as our plans progress.

We are continuing to work on BioSilicon.

We remain focused on advancing Tethadur, our BioSilicon system designed to deliver large biological molecules, including peptide and proteins, on a sustained basis.

So we have several clinical stage products ongoing, some very interesting technologies, and a record of successfully developing products.

We also have licensing opportunities.

As I said before, our view is that the optimal timing for partnering varys and is based on many factors, such as the cost of developing the product, cost and availability of capital, the complexity, timing and cost of clinical trials and regulatory process, and the cost and complexity of the sales and marketing, and of course a product's overall strategic fit.

Availability of capital resources is a key item in our decision process, at least until a financial impact of our approval -- of the approval of ILUVIEN and the commercialization of this product -- until the financial impact of that can be reasonably projected.

Depending on the timing, terms and success of Alimera's commercialization of ILUVIEN in the EU, and the resulting estimated time and amount of revenues that might be earned by us, we may look to more aggressively collaborate with programs at earlier stages of certain of our product technologies -- product candidates and technologies.

Looking to the future, commercialization of ILUVIEN in the EU will be a significant step forward for us, as will developments in clinical programs of our product candidates designed to treat glaucoma and uveitis, could also be important.

And down the line, potential non-ophthalmic applications of our Durasert system, as well as the potential ophthalmic and non-ophthalmic applications of BioSilicon's Tethadur protein delivery systems, these offer tremendous upside for our Company.

Now I'm going to hand you over to Len.

Thank you, Paul, and good morning everyone.

I will briefly review our fiscal year 2012 third-quarter results reported earlier today, starting with our financial position.

As Paul mentioned, at March 31, 2012 we had cash, cash equivalents and marketable securities of $16.5 million, a net decrease of $2.2 million from $18.7 million at December 31, 2011.

We anticipate that these capital resources, together with expected royalty income from Bausch & Lomb, should enable us to maintain our current operations into fiscal year 2014.

Our resources could be enhanced if Alimera successfully commercializes or sublicenses commercialization of ILUVIEN for DME in the EU.

However, the timeframe and amounts that we would be entitled to receive from Alimera from such activities under the terms of our collaboration agreement are uncertain.

We expect to seek additional capital resources through possible new collaborative or licensing arrangements, in that possible other agreements and transactions may include sales of assets or securities, and/or to reduce our capital requirements through possible adjustments to our operating plan.

We currently do not intend to initiate pivotal multi-center clinical trials for our injectable insert designed to treat posterior uveitis without appropriate additional funding.

Turning to our results for the fiscal third quarter ended March 31, 2012, we reported revenues of $538,000 compared to $360,000 in the third quarter last year.

The year-over-year revenue increase was primarily the result of the recognition of previously deferred collaborative research and development revenues from our June 2011 restated Pfizer agreement, as well as increased Retisert royalty income.

Research and development expense totaled $1.5 million for the three-month period ended March 2012 compared to a $1.7 million in the prior-year quarter, primarily attributable to lower amortization of intangible assets that resulted from the $14.8 million impairment charge in the second quarter.

This was partially offset by increased levels of personnel expense.

General and administrative expense totaled $1.8 million for each of the three-month periods ended March 2012 and 2011.

Reduced stock-based compensation expense was substantially offset by higher professional fees.

Nonoperating income was $11,000 for the quarter ended March 2012 compared to $341,000 in the prior-year quarter.

The decrease was attributable to lower non-cash income in the current-year period from the change in the fair value of derivatives related to outstanding Australian dollar investor warrants.

As I have noted previously, the remainder of these warrants will expire in July 2012, unless earlier exercised.

As a result of the significant spread between our share price and the exercise price of the associated warrants, the derivative liability balance was zero at both March 31 and December 31.

Net loss for each of the third quarter of fiscal 2012 and fiscal 2011 was $2.7 million or $0.13 per share.

I will now turn briefly to our nine-month year-to-date results.

For the nine months ended March 2012 we reported revenues of $2.8 million compared to $1.3 million for the same period last year.

The year-over-year increase was primarily the result of the recognition of previously deferred collaborative research and development revenues from the intrinsic field of use license which terminated in July 2011 and from the restated Pfizer agreement.

Research and development expense totaled $5.6 million for the nine-month period ended March 2012 compared to $5 million in the prior-year period, primarily attributable to higher levels of personnel and personnel expense and professional fees, and the absence in the current year of a federal grant award that we received in the prior year, partially offset by lower amortization of tangible assets.

General and administrative expense totaled $5.3 million in fiscal 2012's year-to-date period compared to $5.9 million last year, primarily attributable to reduced stock-based compensation expense, including reversal of amounts resulting from performance-based option forfeitures and lower professional fees.

The fiscal 2012 year-to-date period also included the $14.8 million intangible asset impairment charge that was recorded in the previous quarter.

Nonoperating income was $199,000 for the nine months ended March 2012 compared to $1.1 million in the prior-year period.

The decrease was attributable to the change in the fair value of derivatives related to the outstanding Australian dollar investor warrants, as previously discussed.

Net loss for the nine months of fiscal 2012 was $22.6 million or $1.09 per share compared to a net loss of $8.5 million or $0.45 per share for the prior fiscal year period.

With that I will now turn the call back over to Paul.

Great, thanks, Len.

To sum up, the positive outcome of the review of ILUVIEN in the EU, obviously very welcome news.

Marketing authorizations have already been issued in Austria and the UK, and we expect marketing authorizations from the remaining countries in the coming months.

We are very pleased that our partner Alimera has stated that it anticipates commercialization in the EU by the end of this calendar year.

We continue to progress our plans for the Phase III program in the US for our insert for posterior uveitis, which is the same insert approved in the EU for DME.

With respect to our earlier state programs, we believe we are continuing to make progress with our clinical stage product for glaucoma, and the protein delivery system continues to advance.

So 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, Rodman & Renshaw.

Paul, first and foremost, congratulations on UK and Austria.

A long time due, but it is finally here.

Having said that, Paul, one of the things -- I was wondering if you could shed some color, maybe unfairly so on Alimera's part, what is the status of the FDA discussions on ILUVIEN?

Is there some -- is it -- any wiggle room there?

I would have to defer to Alimera on that.

My understanding is that Alimera would be planning to have a follow-up meeting to discuss the CRL with the FDA, and I believe they've announced that.

Okay, so we won't have some additional color for at lease maybe a few more months?

I couldn't comment.

And, Paul, specifically, in terms of posterior uveitis, you mentioned, a shorter timeline -- a shorter pathway, should I say, for a Phase III.

Could you remind us again in terms of how many patients are you looking at in the study, duration of follow-up, assuming the funding is eventually at a place where you're comfortable moving ahead?

Unfortunately, I can't provide a great deal of color on that because we are still in discussions with the FDA.

So at some point when we finish those negotiations, I will be able to give you much more detail.

And I am expecting that those negotiations will be concluded relatively shortly.

Okay.

And, Paul, are we looking at any new technologies on the horizon that potentially you will view as interesting, maybe from an acquisition perspective, maybe from a competition perspective that we should keep an eye open for?

Thanks.

I have just come back from the [ULVA] conference.

There is a couple of interesting technologies on display there, but they all seem to be at the preclinical stage in terms of drug delivery.

So preclinical things, while they often look great, and some of them no doubt will be great, it is the timeline that is sometimes open to question.

But there is obviously a great deal of focus now in drug delivery to the back-of-the-eye, especially if you look at the great advance that Regeneron -- the success that Regeneron is having with the EYLEA product.

Just for people who do not know, EYLEA is a newly approved fusion protein that is kind of like an antibody for Wet AMD.

It is injected into the eye about every two months.

And as I recall, but please go and check the press releases, my understanding is that they expect to take 50% marketshare away from Regeneron's product, which is injected -- sorry, Genentech's product, I do apologize.

They are expecting to take 50% marketshare from Roche Genentech's product, which is injected every six weeks.

So that is only a two- or three-week difference in injection, and it is having a huge impact on the clinical practice.

So one would presume that a much longer-term delivery system of the type that we are developing would be quite interesting.

So there is clearly a lot of industry focus, I think, on long-term delivery for the back-of-the-eye.

It is just that currently I think we are one of the few people who have been able to get it to work.

Thanks, guys.

Juan Sanchez, Ladenburg.

One question about the Pfizer program for glaucoma.

When do you think you finish this study?

And what are you looking for in your dose ranging study?

How often is the injection and what is the efficacy criteria for you to know you are within the therapeutic margin?

And the second question is, you said that you are not planning on moving the uveitis program before you raise some money or you find a partner, so how much is the cost of the pivotal program in uveitis?

Well, so there is two questions, I think.

To address the first one, which is with respect to glaucoma, we are expecting that we will finish towards the end of this year.

That is the current Phase I/II dose ranging study.

That is primarily a safety study.

What we are hoping to see -- we would expect certainly to see some evidence of an efficacy based on reduction in overall IOP.

Probably that is not going to be statistically significant, because it is not going to be powered to be statistic.

This is a very small study.

But based on that, that will allow us to pick two doses to go into the Phase II study that we would expect to obviously start sometime later.

To get back to the question on uveitis, I am sorry, could you repeat your question?

Yes, well, how much it will be the cost of the pivotal program in uveitis?

Well, that is still -- that is largely a function of the number of patients we are going to be required to enroll, which will also affect the potential timing, so that is still subject to discussion with the FDA.

And back to the glaucoma program, how much time does Pfizer have after this trial is done to take the option or not -- you know what I mean?

So the trial that we are currently doing is a Phase I/II study.

After that we would do a --.

So it is after the next trial, not after this trial.

Okay.

That is correct.

Perfect.

Got it.

Thank you.

Thank you.

There are no further questions at this stage.

(Operator Instructions).

There are no questions coming through.

I would now like to turn the call over to Paul Ashton for closing remarks.

Great.

Well, I would like to thank you all for joining us today, and I will look forward to speaking to you again next quarter.

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

And good morning.

Thank you.

Thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect.

Good day.