EyePoint Pharmaceuticals Inc (EYPT) 2014 Q4 法說會逐字稿

Good day, ladies and gentlemen.

Welcome to the fourth-quarter 2014 pSivida earnings conference call.

(Operator Instructions)

As a reminder, today's conference is being recorded.

I would now like to turn the call over to Lori Freedman.

Thank you, Jamie.

Good afternoon everyone, and thank you for joining us.

After the market close today we released our fourth-quarter financial results for FY14.

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, and Len Ross, Vice President 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 statement 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 risk factors that could impact our future results and financial conditions, I refer you to our filings with the SEC, including our annual report on form 10K for the fiscal year ended June 30, 2013.

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'd like to turn the call over to Paul.

Great.

Thank you, Lori.

And welcome, everyone, as we discuss the results of FY14 and the FY14 fourth quarter.

This was a very good quarter for us as we continue our transition to a product-based specialty pharma company, albeit one still capitalizing on collaborations and licenses where appropriate.

Here are some of the highlights.

One, our pivotal Phase III for our lead development product, Medidur for posterior uveitis, is progressing well and we anticipate enrollment will be completed in calendar Q1 next year.

Two, we are very optimistic for our lead partner product, ILUVIEN for diabetic macular edema.

The New Drug Application was refiled with the FDA earlier this year.

Our licensee, Alimera Sciences entered into labeling discussions with the FDA, and the FDA review is expected to be completed by September 26, just a few weeks away.

Three.

In Europe ILUVIEN continues to expand its approval footprint.

It has now been approved in 10 EU countries for patients with chronic DME considered insufficiently responsive to available therapies, and approval is pending in seven more EU countries.

Our partner Alimera is selling ILUVIEN in the UK and Germany, and expects to launch in France and Portugal in late 2014.

Number four.

We're continuing to make progress with our delivery systems for peptides and proteins, and anticipate selecting a product candidate and being in clinical trials within the year.

Five.

During the year we also enhanced our liquidity with the sales of common stock, ending the year with $18.3 million.

I'll get into some of the details shortly and then turn this call over to Len, who will take us through the financials.

First, I want to review the Company's strategic direction.

In the recent industry review, we were described as the leading technology provider in ophthalmology, and with good reasons.

We've invented, and with partners developed, three of the four FDA- or EU-approved sustained-release products for the back of the eye.

Gratifying as this is, our goal going forward is to become one of the leading product providers.

Now, we've done a great job working with partners such as Alimera, Bausch & Lomb, and Pfizer.

We've developed products, and cash received from our partners has help propel us forward.

Over the last six years we have received approximately $55 million from partners, and if we get a favorable review from the FDA we expect that figure will probably increase to $80 million, and hopefully beyond.

So partnerships are important.

And we still plan to partner some technologies and products.

We expect to look for partners in fields that are outside our areas of expertise or where the cost and complexities of developing a product or multiple products are too much for a company of our size.

But we will increasingly look to develop our own products, ideally where there's a high probability of success and where the cost of developing the product is manageable.

Medidur for posterior uveitis is a great example of one such product.

We expect Medidur will be effective in treating posterior uveitis.

Because Medidur uses the same micro-insert used in ILUVIEN, that is the same drug, same [polymers], same dose, same design.

Because of this, the FDA has confirmed that we can reference data in Alameda's NDA filing of ILUVIEN for DME in support of our own application of Medidur for posterior uveitis.

That's a big saving of time and money.

Because we can reference this data, we are now planning to seek FDA approval on the basis of a single Phase III trial.

A similar strategy has been used previously to gain FDA approval for another product for uveitis.

We have redesigned the applicator used to insert Medidur into the eye, using a smaller 27-gauge needle of a type more commonly used for standard intravitreal injections.

So in addition to the safety and efficacy data from the Phase III, we will need a study to provide data on the new (inaudible).

We plan to meet with the FDA to confirm our strategy.

Obviously if we're able to get US approval with one Phase III trial, it will reduce our development costs and reduce the time to approval.

We're also optimistic about the likelihood that Medidur will be efficacious and safe.

It delivers fluocinolone acetonide, a corticosteroid, which is the same drug delivered by Retisert, our FDA-approved implant for posterior uveitis.

So we know the drug can be effective.

And although Medidur delivers a lower dose we expect to see similar efficacy from Medidur as we've seen for Retisert.

However due to the lower dose and based on the clinical trial results for ILUVIEN in DME, we expect side effects from Medidur in posterior uveitis will be comparable to, and potentially fewer than those seen in the ILUVIEN trials.

They were far fewer than those in the Retisert trials.

Now, interim data from an investigator-sponsored Phase I-II study reported last year was consistent with this hypothesis.

Those data showed that none of the eyes receiving Medidur had a recurrence of the disease, and increases in intraocular pressure were limited.

We expect the Phase III trial for Medidur to complete enrollment sometime in the first quarter of next calendar year.

As the trial as a primary endpoint of recurrence of disease at 12 months, the first data readout is expected in 2016.

A quick word about posterior uveitis.

It's a very unpleasant disease characterized by chronic inflammation of the uvea.

That's one of the inner layers of the back of the eye, and it affects approximately 175,000 people in the US, but is responsible for blindness in about 30,000.

Now let's move onto our partner product, ILUVIEN.

If you follow pSivida or our partner in this program, Alimera Sciences, you will know that ILUVIEN is now approved for the treatment in vision loss associated with chronic DME deemed insufficiently responsive to available therapies.

It's approved in 10 EU countries, with approval in another seven expected.

Alimera is selling the product in Germany and the UK, and they expect to commence sales in France and Portugal by the end of 2014.

In the US, Alimera resubmitted the NDA for ILUVIEN and received a PDUFA date of September 26.

Alimera reported labeling discussions with the FDA.

So we're optimistic for an approval.

FDA approval importantly will entitle us to a $25 million milestone payment from Alimera.

We will also be entitled to 20% of net profits from Alimera sales of ILUVIEN on a quarter-by-quarter, country-by-country basis.

Now moving on to Tethadur, this is our platform technology designed to deliver peptides and proteins, including by the way, antibodies.

We're continuing our preclinical testing of Tethadur, and are optimistic that we will select a product candidate and be in clinical trials within the next year.

We're also continuing our work with a global biopharmaceutical company using Tethadur in ophthalmology, and that works also progressing well.

We believe there's a huge and unmet need for a sustained delivery system for peptides and proteins.

I'll just give you an idea of the scale of the opportunity.

The two biggest drugs in ophthalmology right now are proteins that need to be injected directly into the eye, typically every four to eight weeks.

If these injections could be administered less frequently, for example every six months, it would potentially be a big clinical advance, as well as a competitive advantage.

Going beyond ophthalmology and applied to [Tethadur], there are very few lifecycle management tools available.

We think that Tethadur, if you could provide a convenient and sustained-release option resulting in fewer injections while maintaining steady drug (inaudible) levels, we believe Tethadur could be extremely valuable in the bio-similar and bio-(inaudible) space, either to extend patent life or to provide product differentiation for bio-similar.

Finally, turning to our financial results we ended the year with $18.3 million in cash and no debt.

I'll turn the call over to Len to take us through the financials.

Thank you Paul, and good afternoon everyone.

I will briefly review our fourth-quarter and FY14 results reported earlier today, starting with our financial position.

As Paul noted, at June 30, 2014 we had cash, cash equivalents, and marketable securities of $18.3 million, an increase of $8 million compared to $10.3 million at June 30, 2013.

The most immediate variable in our liquidity picture is the potential $25 million milestone from Alimera.

Without this payment or any net profit payments from Alimera, we anticipate that our existing capital resources and expected cash [and close] under existing collaboration agreements will enable us to fund our current and planned operations through the third quarter of calendar year 2015.

This estimate includes our expected cost of the clinical development of Medidur.

If we received the $25 million Alimera milestone payment, we believe it would extend our capital resources into calendar 2017.

Alimera has not yet reported quarterly net profits as defined from its sales of ILUVIEN in either the UK or Germany that would result in payments to us.

We do not yet know when or if we will receive any such net profit payments.

Turning now to our full-year FY14 results, revenues increased by $1.3 million to $3.5 million for the year ended June 30, 2014 compared to approximately $2.1 million for the same period last year.

This increase primarily reflected $1.5 million of consideration that was recognized in our fiscal third quarter upon resolution of a contingency associated with completion of a feasibility study agreement.

Research and development totaled $9.6 million for FY14, an increase of $2.6 million or, 37% compared to $7 million in the prior fiscal year.

This change was primarily attributable to a $3.3 million increase in contract research organization, or CRO, costs for our Medidur Phase III clinical trial, partially offset by a $665,000 decrease in personnel costs, including stock-based compensation.

General and administrative expense increased by $300,000, or 4%, to $7.5 million for FY14 from $7.2 million in the prior year, primarily due to increased stock-based compensation and professional fees.

Net loss for the year ended June 2014 was $13.4 million, or $0.49 per share, compared to a net loss of $11.9 million, or $0.52 per share, for the year ended June 2013.

Turning to our fourth-quarter results.

We reported revenues of $292,000 compared to $492,000 for the same period last year.

The decrease predominately related to collaborative research and development revenue largely resulted from lower amortization of deferred revenue balances.

Research and development totaled $2.3 million in each of FY14 and FY13 fourth quarters.

Increased CRO costs related to the Medidur trial in the FY14 fourth quarter were substantially offset by lower levels of personnel costs and professional fees.

General and administrative expense decreased by $153,000 to $2 million for the three months ended June 2014 from approximately $2.2 million in the prior-year quarter, primarily attributable to lower professional fees, partially offset by increased stock-based compensation.

Net loss for the fourth quarter of FY14 was $4 million, or $0.14 per share, compared to a net loss of $3.9 million, or $0.17 per share, for the prior-year period.

I will now turn the call back over to Paul.

Great.

Thank you, Len.

To sum up, it's been an excellent year and quarter for us.

Key points are, one, the continuing enrollments of our Phase III trial for Medidur for the treatment of posterior uveitis, which we plan to complete in Q1 calendar 2015.

Two, our revised regulated plans for Medidur for posterior uveitis to seek FDA approval based on a single Phase III trial with additional data on the new inserter.

Three, ILUVIEN now approved in 10 EU countries and market in 2. Four, the FDA's PDUFA date for ILUVIEN in the US is just two weeks away.

And five, continued optimism for Tethadur based on our own preclinical research and our work with a global biopharmaceutical company.

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

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

(Operator Instructions)

Matt Kaplan from Ladenburg Thalmann.

Can you hear me?

Yes.

Hello, Matt.

How's it going?

Going well.

Thanks, Paul.

Just a question, trying to get a little bit more detail on the Medidur program.

Congrats on your new strategy there.

In terms of the timing of your planned meeting with the FDA to confirm your revised regulatory strategy for one study, could you give us a sense of when we'd have that locked in?

We'll request a meeting with them after the PDUFA date for ILUVIEN NDA.

Okay, very good.

In terms of the redesigned applicator, what type of study or type of data would you need for the new applicators?

Is it just user and usability type of study, or what would you need?

Usability.

Usability?

Yes.

So that something that you could do rather quickly and straight-forward?

Exactly, yes.

Good.

And then in terms of just going back to ILUVIEN.

In your prepared remarks, you mentioned Alimera has started on some labeling discussions with the FDA.

At this point, have they gotten a draft label from the FDA?

Can you comment on that?

I cannot comment on that.

Fair enough.

And then in terms of Tethadur, what are you thinking right now in terms of some of the leading potential product candidates that you'll bring into the clinic in the next year?

Well, there are two separate applications here, I think.

One is an intraocular application where we would be looking to deliver an antibody or antibody-type molecule.

I'm sure you can guess which ones we might be thinking of.

Sure.

Trying to get an extended-release note.

The other is a subcutaneous administration.

If something can release a drug into the back of the eye for six months, then the same technology should be useful for subcutaneous administration.

And if you are looking at drugs that are a compound typically injected once a day and moving it to, say, once a week, that would be a big advance.

So we're looking at a couple of different possibilities.

Are you thinking about injection directly into joints perhaps or something like that as well?

Injection if possible into joints is intrinsically quite tricky.

Joints tend to react very unfavorably.

It's really easy to trigger an inflammatory reaction if you (inaudible) against the joint.

There are even reports that particles of (inaudible), which is a steroid -- those particles can actually trigger an inflammatory response.

So (inaudible) is a bit trickier.

Okay.

Very good.

Again, thanks for taking my questions.

Congratulations on the progress you've made.

Suraj Kalia from Northland Securities.

Can you hear me all right?

Yes.

My apologies if there is some background noise.

I want to go back to Medidur.

Now the new strategy is predicated only on a single Phase III study.

Maybe I didn't follow it, Paul.

Is this something that was decided on after some preliminary discussions with the FDA?

And I'm curious about this inserter.

What all transpired that made you all believe we can go down a single Phase III path now?

Without getting into too many specifics, we do think we can go down a path with a single Phase III.

The best example of this path I can point to is Ozurdex.

Ozurdex was initially approved for vein occlusion based on two Phase III clinical trials in vein occlusion and a total of approximately 1,000 patients in each trial.

And Alllergan subsequently was able to reference that data and file an SMDA in posterior uveitis on the basis of a single Phase III trial of, I believe, 170 patients.

So in our case, we have the ILUVIEN device (technical difficulties) Phase III clinical trials (inaudible) of about 1,000 patients.

Referencing that data and using that to support a single Phase III trial, using that sort of in conjunction with a single Phase III trial in uveitis, which (inaudible) with precedent.

Okay.

Paul, I mentioned your prepared remarks.

You had mentioned about Alimera getting into labeling discussions.

I know this might be a slightly unfair question, but I'll still ask.

How would you qualitatively, and possibly qualitatively, characterize the market for ILUVIEN if insufficiently responsive is included in the label?

And also if it is excluded from the label, how do you see that, at least in your own internal strategic analysis, how do you see inclusion/exclusion of these two words in the label?

Well, obviously you want it in the latest (inaudible).

But being more quantitative I think is difficult.

And frankly, I'd be much happier to have this conversation after September 22, one way or the other.

Fair enough, Paul.

Those are all the questions I have for now.

Thank you.

Thank you.

(Operator Instructions)

Arlinda Lee from MLV & Company.

Hello, thanks for taking the question.

Can you help us understand maybe some of the US versus EU markets for uveitis in particular?

I think it sounds very encouraging that you might be able to use only one Phase III trial.

Is that true in Europe as well?

It would work to be able to use a single Phase III trial in Europe in addition to the US.

We haven't had that conversation yet with the European regulators.

That's important.

I guess, do you plan to?

And if so what timing do you think we might hear about that?

We plan to have that discussion following the PDUFA here in the US.

And then the DME market in both the US and Europe.

Can you maybe help us understand some of the discussions that you've been having?

I know you can't say that much.

But is there something you can help us guide to from --

I'm sorry, Arlinda.

I can't hear you terribly well.

Sorry.

Is this better?

Yes, it is.

Thank you.

On the US and the European DME market, I know you can't talk about labeling discussions specifically.

But maybe can you help us understand what some of the differences or similarities might be between Europe and the US?

I can't comment about that.

I do apologize.

That's all right.

We'll ask you offline.

(Laughter) I still won't be able to comment.

Okay.

Thank you.

I am showing no further questions.

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

Very well.

Thank you all very much for joining us today.

I look forward to speaking to you again in the next quarter.

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

Thank you.

Ladies and gentlemen, that does conclude the conference for today.

Again, thank you for your participation.

You may all disconnect.

Have a good day.