EyePoint Pharmaceuticals, Inc.
Q1 2016 Earnings Call Transcript

Published: 6 Nov 2015

[Operator:]

Good afternoon, ladies and gentlemen, and welcome to the pSivida Corporation Q1 2016 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Lori Freedman, VP Corporate Affairs.

[Lori Freedman:]

Thank you, Sylvie. Good afternoon, everyone and thank you for joining us. Earlier today, we released our first quarter financial results for fiscal 2016. 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 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 maybe, forward-looking in nature. Forward-looking statements are inherently subject to risks and uncertainties. All statements other than statements of historical facts 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 condition, I refer you to our filings with the SEC, including our Annual Report on Form 10-K for the year ended June 30, 2015. We undertake 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.

[Paul Ashton:]

Thank you, Lori, and good morning everyone as we discuss the results for our fiscal 2016 first quarter. This was a very exciting quarter for us. Here are the highlights

[Len Ross:]

Thank you, Paul and good afternoon everyone. I'll briefly review our first quarter fiscal 2016 results we reported earlier today. Starting with our financial position, as Paul noted at September 30, 2015, we had cash, cash equivalents and marketable securities of $24 million, a net decrease of $4.5 million since June 30, 2015. The major cash outflows during the quarter included $1.8 million of costs related to the ongoing Medidur Phase III clinical trials and $1.7 million on personnel costs which included fiscal 2015 annual incentive compensation. Cash inflows included $353,000 of registered royalties and $157,000 representing our contractual share of non-royalty consideration from a sub-license agreement. We believe our capital resources in September 30 are sufficient to fund our current and planned operations into early calendar 2017. This estimate includes the expected cost of our Medidur clinical program but excludes any potential receipts of net profits or sub license consideration from the commercialization of Iluvien by Alimera. Turning now to our first quarter fiscal 2016 results. Revenues totaled $466,000 for the quarter compared to $25.3 million for last year's quarter which included recognition of a $25 million Iluvien FDA approval milestone. Research and development totaled $3.5 million in the current quarter, an increase of approximately $700,000 or 25% compared to $2.8 million in the prior year period. This increase was primarily attributable to higher CRO costs for the clinical development of Medidur. General and administrative expense increased by $234,000 or 13% to $2 million for the three months ended September 30, 2015 from $1.7 million in the prior year quarter, primarily due to higher professional fees and stock-based compensation. Income tax benefit of $41,000 for the three months ended September 2015 compares to an income tax expense of $226,000 in the prior year period. The prior year period included a $260,000 Federal alternative minimum tax accrual based on U.S. taxable income for the 2014 tax year, as a result of the $25 million milestone. In addition, both periods included foreign research and development tax credits. Net loss for the quarter ended September 2015 was $4.9 million or $0.17 per share compared to net income of $20.6 million or $0.67 per diluted share for the prior year quarter. I will now turn the call back over to Paul.

[Paul Ashton:]

Len, thanks a lot. So to sum up, it was a really good quarter. Key points are, one, our Medidur programs were posted continues to advance with top line data from our first Phase III just around the corner. The second Phase III trial on schedule to complete enrollment in mid-2016. And then NDA expected to be filed in the first half of 2017. We've also had very productive discussions with the NHLA on requirements for approval in Europe. Two, as you apply to the principal investigator of our collaboration with Hospital for Special Surgery, it filed an IMD and is awaiting further inputs from the FDA. Three, Tethadur programs are continuing to progress well. Four, preclinical using Durasert to deliver tyrosine kinase inhibitors which is a class of anticancer drug to treat AMD is very promising. Five and six, together, we look forward to profit sharing from Iluvien but we believe we have enough cash to fund our planned operations into 2017, including our Medidur trials without cash from Iluvien net profits. Now at this point, we'd be happy to take your questions. Sylvie, would you please initiate the Q&A portion of the call.

[Operator:]

[Operator Instructions] Your first question comes from the line from Matt Kaplan from Ladenburg Thalmann. Your line is open.

[Matt Kaplan:]

Paul, can your me hear me?

[Paul Ashton:]

Yes, I can. Thank you, Matt. How are you?

[Matt Kaplan:]

Doing well, thank you. So couple of questions. Congrats on getting the buy in from the FDA on the six month end point. Now I guess both, Phase III studies for Medidur. What do you think the MHRA will require for Medidur approval in Europe?

[Paul Ashton:]

I have a very good idea, but I'd prefer to wait until we get the official minutes of the meeting we’ve just had, just in case my very good idea is based on incorrect recollection.

[Matt Kaplan:]

Okay, fair enough.

[Paul Ashton:]

And those will be soon.

[Matt Kaplan:]

Okay, good. That was my follow-up. And in terms of HSS, they - I guess they have their IND filed, when do you expect them to be able to initiate a study and what do you think that study could look like?

[Paul Ashton:]

Let’s see what the FDA comes back to for any additional requirements. They filed for a Phase I/II study. And we’re anticipating patients to be those requiring a knee replacement surgery.

[Matt Kaplan:]

Okay. So patients - this will be prior to knee replacement and being able to take a look at what they're able to gain from…

[Paul Ashton:]

Ready studies - we have had this in ophthalmology always, it's really good to a group of patients where there is an element of risk benefit analysis. So an example would be the first, estrogen plan [ph] that we did many years ago within a patient population - patients with a rare disease called ocular histoplasmosis, which is categorized by very aggressive blood vessel growth in through the retina. It was treated by essentially, completely detaching the retina surgically and trying to scrape out the blood vessels and then trying to get the retina to stay back on afterwards, it was a special procedure. So for us to put a steroid into the patient to prevent condition wasn't such an unreasonable thing. So, generally one would - for this type of thing it's good to try to pick a fairly severely affected patient population.

[Matt Kaplan:]

Okay, it makes sense. And then in terms of the work that you're doing and dry IND that seems obviously tremendous on that need. What are - I guess kind of next steps in terms of corporate getting something to an IND, what it would be, sometime next year?

[Paul Ashton:]

We're looking at both, wet and dry AMD. Standard issues which are to generate sufficient preclinical data to demonstrate efficacy and to show safety, that was a long lasting impact you needed about six months or more safety data. And again it's going to be to some degree a function of what kind of patient population you choose to run the studies.

[Matt Kaplan:]

Okay. And then I guess with Tethadur, has your confidence changed at all with respect to being able to ultimate way deliver the antibodies as you would kind of anticipated when you started this program?

[Paul Ashton:]

No, we haven't. I'm actually - I was confident because we have more data now with supporting - it's just taking very long time to generate it. As always with the whole new technology, there is always a series of missteps that you go through when you're develop it. And I told that we are towards the end of those at this point.

[Len Ross:]

Then we'll see what the preclinical data shows.

[Matt Kaplan:]

Good. Thanks for taking my questions and congrats on the progress.

[Operator:]

Your next question comes from the line of Suraj Kalia from Northland Securities. Your line is open.

[Suraj Kalia:]

Good afternoon, everyone.

[Paul Ashton:]

Hi Suraj, how are you?

[Suraj Kalia:]

Good, sir. Yourself?

[Paul Ashton:]

Very good, thank you.

[Suraj Kalia:]

My apologies if this has already been mentioned, just juggling between two calls. Paul, remind us again for the second Phase III study, baseline, basic characteristics, and you'll be I just presume they've were the same right?

[Paul Ashton:]

Yes.

[Suraj Kalia:]

Okay. Paul, in terms of osteoarthritis product with HSS, assuming the IND is filed - I don't know if you gave a timeline. I guess I'm curious do we have the contours what kind of study or investigation would be needed?

[Paul Ashton:]

Well, the IND that's been filed is I believe a six patient study and patients with existing patients, and patients who are anticipating a total replacement. So these are fairly severely affected patients.

[Suraj Kalia:]

I guess what I'm trying to understand is, are you looking at pain reduction, are you're looking at certain other clinical outcomes? Are you're looking at alleviation from let's say total knee replacement.

[Paul Ashton:]

The primary endpoint for this study will be pain reduction but at this stage it's extremely appropriate to measure as many other things as you can.

[Suraj Kalia:]

Got it. And Paul, my apologies if this is an unfair question, but you know just given the trajectory of Iluvien so far, how would you all characterize what - are firing properly and what are not? Thank you for taking my questions.

[Paul Ashton:]

I can't really comment on Iluvien because it's being sold by our partners, Alimera Sciences. So they would be better placed on to those questions I believe.

[Operator:]

I am showing no further questions at this time. I would like to turn the conference back to Paul Ashton.

[Paul Ashton:]

Thank you very much indeed. Thank you for joining us today and I look forward to speaking with you again next quarter, possibly sooner when we have the results of our Phase III trials. In the meantime if you have any additional questions, please feel free to contact us. Thank you.

[Operator:]

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.