UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
COMMISSION FILE NUMBER
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
There were
EYEPOINT PHARMACEUTICALS, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
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Item 1. |
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Condensed Consolidated Balance Sheets – June 30, 2021 and December 31, 2020 |
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3 |
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4 |
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5 |
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Condensed Consolidated Statements of Cash Flows – Six months ended June 30, 2021 and 2020 |
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6 |
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7 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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27 |
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Item 3. |
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38 |
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Item 4. |
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38 |
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Item 1. |
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39 |
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Item 1A. |
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39 |
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Item 2. |
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39 |
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Item 3. |
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39 |
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Item 4. |
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39 |
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Item 5. |
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39 |
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Item 6. |
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40 |
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42 |
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Certifications |
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2
PART I. FINANCIAL INFORMATION
Item 1.Unaudited Financial Statements
EYEPOINT PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands except share amounts)
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June 30, |
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December 31, |
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2021 |
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2020 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts and other receivables, net |
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Prepaid expenses and other current assets |
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Inventory |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Intangible assets, net |
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Restricted cash |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders' equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Deferred revenue |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Deferred revenue - noncurrent |
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Operating lease liabilities - noncurrent |
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Other long-term liabilities |
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Total liabilities |
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Contingencies (Note 13) |
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Stockholders' equity: |
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Preferred stock, $ issued and outstanding |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive income |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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See notes to consolidated financial statements
3
EYEPOINT PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(In thousands except per share data)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2021 |
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2020 |
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2021 |
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2020 |
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Revenues: |
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Product sales, net |
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$ |
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$ |
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$ |
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$ |
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License and collaboration agreement |
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Royalty income |
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Total revenues |
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Operating expenses: |
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Cost of sales, excluding amortization of acquired intangible assets |
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Research and development |
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Sales and marketing |
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General and administrative |
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Amortization of acquired intangible assets |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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Other income (expense): |
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Interest and other income, net |
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Interest expense |
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( |
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( |
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( |
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( |
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Gain on extinguishment of debt |
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Total other income (expense), net |
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( |
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( |
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( |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per share - basic and diluted |
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$ |
( |
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$ |
( |
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$ |
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$ |
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Weighted average shares outstanding - basic and diluted |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
) |
See notes to consolidated financial statements
4
EYEPOINT PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands except share data)
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Common Stock |
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Additional |
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Accumulated Other |
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Total |
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Number of Shares |
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Par Value Amount |
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Paid-In Capital |
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Accumulated Deficit |
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Comprehensive Income |
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Stockholders’ Equity |
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Balance at March 31, 2020 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Vesting of stock units |
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— |
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( |
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— |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Balance at June 30, 2020 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Balance at March 31, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Vesting of stock units |
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— |
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( |
) |
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— |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Balance at June 30, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Common Stock |
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Additional |
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Accumulated Other |
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Total |
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Number of Shares |
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Par Value Amount |
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Paid-In Capital |
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Accumulated Deficit |
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Comprehensive Income |
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Stockholders’ Equity |
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Balance at January 1, 2020 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Issuance of stock, net of issue costs |
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— |
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— |
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Employee stock purchase plan |
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— |
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— |
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Vesting of stock units |
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— |
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( |
) |
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— |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Balance at June 30, 2020 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Balance at January 1, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Issuance of stock, net of issue costs |
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— |
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— |
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Employee stock purchase plan |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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Vesting of stock units |
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— |
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( |
) |
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— |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Balance at June 30, 2021 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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See notes to consolidated financial statements
5
EYEPOINT PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
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Six Months Ended |
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June 30, |
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2021 |
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2020 |
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Cash flows from operating activities: |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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Adjustments to reconcile net loss to cash flows used in operating activities: |
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Amortization of intangible assets |
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Depreciation of property and equipment |
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Amortization of debt discount |
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Non-cash interest expense |
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Gain on extinguishment of debt |
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( |
) |
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Stock-based compensation |
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Changes in operating assets and liabilities: |
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Accounts receivable and other current assets |
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( |
) |
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Inventory |
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( |
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( |
) |
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Accounts payable and accrued expenses |
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( |
) |
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Right-of-use assets and operating lease liabilities |
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( |
) |
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( |
) |
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Deferred revenue |
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( |
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( |
) |
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Net cash used in operating activities |
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( |
) |
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( |
) |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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( |
) |
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( |
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Net cash used in investing activities |
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( |
) |
|
|
( |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Proceeds from issuance of stock, net of issuance costs |
|
|
|
|
|
|
|
|
|
Proceeds under paycheck protection program loan |
|
|
|
|
|
|
|
|
|
Net settlement of stock units to satisfy statutory tax withholding |
|
|
( |
) |
|
|
( |
) |
|
Proceeds from exercise of stock options |
|
|
|
|
|
|
|
|
|
Principal payments on finance lease obligations |
|
|
( |
) |
|
|
( |
) |
|
Net cash provided by financing activities |
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at beginning of year |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at end of year |
|
$ |
|
|
|
$ |
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
|
Cash interest paid |
|
$ |
|
|
|
$ |
|
|
|
Supplemental disclosure of non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
|
Stock issuance costs |
|
|
|
|
|
|
|
|
|
Payments forgiven under paycheck protection program loan |
|
|
|
|
|
|
|
|
See notes to consolidated financial statements
6
EYEPOINT PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.Operations
The accompanying condensed consolidated financial statements of EyePoint Pharmaceuticals, Inc., a Delaware corporation (together with its subsidiaries, the “Company”), as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 are unaudited. Certain information in the footnote disclosures of these financial statements has been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, these statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2020, and include all adjustments, consisting only of normal recurring adjustments, that are necessary for the fair presentation of the Company’s financial position, results of operations, comprehensive loss and cash flows for the periods indicated. The preparation of financial statements in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) requires management to make assumptions and estimates that affect, among other things, (i) reported amounts of assets and liabilities; (ii) disclosure of contingent assets and liabilities at the date of the consolidated financial statements; and (iii) reported amounts of revenues and expenses during the reporting period. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the entire fiscal year or any future period.
The Company is a pharmaceutical company committed to developing and commercializing innovative therapeutics to help improve the lives of patients with serious eye disorders. The Company’s pipeline leverages its proprietary Durasert® technology for extended intraocular drug delivery including EYP-1901, a potential twice-yearly sustained delivery intravitreal anti-VEGF treatment initially targeting wet age-related macular degeneration (“wet AMD”), the leading cause of vision loss among people 50 years of age and older in the United States. The Company’s product candidate pipeline also includes YUTIQ® 50, a potential twice-yearly treatment for non-infectious uveitis affecting the posterior segment of the eye, one of the leading causes of blindness. The Company also has two commercial products: YUTIQ®, a once every three-year treatment for chronic non-infectious uveitis affecting the posterior segment of the eye, and DEXYCU®, a single dose treatment for postoperative inflammation following ocular surgery.
Local drug delivery for treating ocular diseases is a significant challenge due to the effectiveness of the blood-eye barrier. This barrier makes it difficult for systemically-administered drugs to reach the eye in sufficient quantities to have a beneficial effect without causing unacceptable adverse side effects to other organs. The Company’s validated Durasert technology, which has already been included in
The Company’s lead product candidate, EYP-1901, combines a bioerodible formulation of its proprietary Durasert sustained-release technology with vorolanib, a tyrosine kinase inhibitor (“TKI”). The Company is currently evaluating EYP-1901 in a Phase 1 clinical trial as a potential twice-yearly sustained delivery intravitreal treatment for wet AMD. Current approved treatments for wet AMD require monthly or bi-monthly eye injections in a physician’s office, which can cause inconvenience and discomfort and often lead to reduced compliance and poor outcomes. On May 25, 2021, the Company announced the completion of the enrollment of the Phase 1 DAVIO clinical trial of EYP-1901 and expects initial data from trial in the fourth quarter of 2021.
The Company is also developing YUTIQ 50 as a potential twice-yearly intravitreal treatment for chronic non-infectious uveitis affecting the posterior segment of the eye. The Company has consulted with the FDA and identified a clinical pathway for a supplemental new drug application (“sNDA”) filing that the Company expects will involve a clinical trial of a small population. The Company expects to initiate the Phase 3 clinical trial for YUTIQ 50 by the end of this year.
The Company also has
YUTIQ® (fluocinolone acetonide intravitreal implant) 0.18 mg for intravitreal injection, is a non-erodible intravitreal implant containing fluocinolone acetonide (“FA”) lasting for up to 36 months and is indicated for the treatment of chronic non-infectious uveitis affecting the posterior segment of the eye. This disease affects between
7
is the third leading cause of blindness. YUTIQ utilizes the Company’s proprietary Durasert® sustained-release drug delivery technology platform.
DEXYCU® (dexamethasone intraocular suspension) 9%, for intraocular administration, is indicated for the treatment of post-operative ocular inflammation, with the Company’s primary focus on its use immediately following cataract surgery as a single dose treatment. DEXYCU utilizes the Company’s proprietary Verisome® drug-delivery technology.
The Company is also seeking to enhance its long-term growth potential by expanding EYP-1901 beyond wet AMD into diabetic retinopathy (“DR”) and retinal vein occlusion (“RVO”), both large and growing ocular disease areas. The Company also expects to potentially identify and advance additional product pipeline candidates through clinical and regulatory development. This may be accomplished through internal discovery efforts, potential research collaborations and/or in-licensing arrangements with partner molecules and potential acquisitions of additional ophthalmic products, product candidates or technologies that complement the Company’s current product portfolio.
Effects of the COVID-19 Coronavirus Pandemic
The ongoing COVID-19 coronavirus pandemic (the “Pandemic”) has had a material and adverse impact on the Company’s business, including as a result of measures that the Company, other businesses, and governments have taken and will possibly continue to take. This includes a significant impact on cash flows from expected revenues due to the closure of ambulatory surgery centers for DEXYCU and a significant reduction in physician office visits impacting YUTIQ in 2020. The ongoing Pandemic continued to have an adverse impact on the Company’s revenues, financial condition and cash flows in the first quarter and second quarter of 2021. Further, the future progression of the Pandemic and its effects on the Company’s business and operations are uncertain at this time. Depending on the future developments that are uncertain and difficult to predict, including new information that may emerge concerning the Pandemic, the Company’s revenues, financial condition and cash flows may be adversely affected in the future as well. The Company is continuously monitoring the Pandemic and its potential effect on the Company’s financial position, results of operations and cash flows. This uncertainty could have an impact in future periods on certain estimates used in the preparation of the Company’s periodic financial results, including reserves for variable consideration related to product sales, realizability of certain receivables, assessment for excess or obsolete inventory, and impairment of long-lived assets. Uncertainty around the extent and duration of the Pandemic, and any future related financial impact cannot be reasonably estimated at this time.
Liquidity
The Company had cash and cash equivalents of $
Recently Adopted and Recently Issued Accounting Pronouncements
New accounting pronouncements are issued periodically by the Financial Accounting Standards Board (“FASB”) and are adopted by the Company as of the specified effective dates. Unless otherwise disclosed below, the
8
Company believes that recently issued and adopted pronouncements will not have a material impact on the Company’s financial position, results of operations and cash flows or do not apply to the Company’s operations.
In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2021-04”): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The amendments are designed to clarify an issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options that remain equity-classified after modification or exchange. The ASU provides guidance on how an issuer would measure and recognize the effects of these transactions. The standard provides a principles-based framework to determine whether an issuer should recognize the modification or exchange as an adjustment to equity or an expense. ASU 2021-04 is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. ASU 2021-04 will be effective for the Company in the first quarter of its fiscal year ending December 31, 2022. The Company is currently evaluating the impact the adoption of this update will have on its consolidated financial statements.
|
2. |
Summary of Significant Accounting Policies |
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, Revenue from Contracts with Customers (“ASC 606”), the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.
Product sales, net — The Company sells YUTIQ and DEXYCU to a limited number of specialty distributors and specialty pharmacies (collectively the “Distributors”) in the U.S., with whom the Company has entered into formal agreements, for delivery to physician practices for YUTIQ and to hospital outpatient departments and ambulatory surgical centers for DEXYCU. The Company recognizes revenue on sales of its products when Distributors obtain control of the products, which occurs at a point in time, typically upon delivery. In addition to agreements with Distributors, the Company also enters into arrangements with healthcare providers, ambulatory surgical centers, and payors that provide for government mandated and/or privately negotiated rebates, chargebacks, and discounts with respect to the purchase of the Company’s products from Distributors.
Reserves for variable consideration — Product sales are recorded at the wholesale acquisition costs, net of applicable reserves for variable consideration. Components of variable consideration include trade discounts and allowances, provider chargebacks and discounts, payor rebates, product returns, and other allowances that are offered within contracts between the Company and its Distributors, payors, and other contracted purchasers relating to the Company’s product sales. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified either as reductions of product revenue and accounts receivable or a current liability, depending on how the amount is to be settled. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the estimates, the Company adjusts these estimates, which would affect product revenue and earnings in the period such variances become known.
Distribution fees — The Company compensates its Distributors for services explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product sale is recognized.
9
Provider chargebacks and discounts — Chargebacks are discounts that represent the estimated obligations resulting from contractual commitments to sell products at prices lower than the list prices charged to the Company’s Distributors. These Distributors charge the Company for the difference between what they pay for the product and the Company’s contracted selling price. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability. Reserves for chargebacks consist of amounts that the Company expects to pay for units that remain in the distribution channel inventories at each reporting period-end that the Company expects will be sold under a contracted selling price, and chargebacks that Distributors have claimed, but for which the Company has not yet settled.
Government rebates — The Company is subject to discount obligations under state Medicaid programs and Medicare. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. The Company’s liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel inventories at the end of each reporting period.
Payor rebates — The Company contracts with certain private payor organizations, primarily insurance companies, for the payment of rebates with respect to utilization of its products. The Company estimates these rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability.
Co-Payment assistance — The Company offers co-payment assistance to commercially insured patients meeting certain eligibility requirements. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue.
Product returns — The Company generally offers a limited right of return based on its returned goods policy, which includes damaged product and remaining shelf life. The Company estimates the amount of its product sales that may be returned and records this estimate as a reduction of revenue in the period the related product revenue is recognized, as well as reductions to trade receivables, net on the condensed consolidated balance sheets.
License and collaboration agreement revenue — The Company analyzes each element of its license and collaboration arrangements to determine the appropriate revenue recognition. The terms of the license agreement may include payment to the Company of non-refundable up-front license fees, milestone payments if specified objectives are achieved, and/or royalties on product sales. The Company recognizes revenue from upfront payments at a point in time, typically upon fulfilling the delivery of the associated intellectual property to the customer.
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
The Company recognizes sales-based milestone payments as revenue upon the achievement of the cumulative sales amount specified in the contract in accordance with ASC 606-10-55-65. For those milestone payments which are contingent on the occurrence of particular future events, the Company determines that these need to be considered for inclusion in the calculation of total consideration from the contract as a component of variable consideration using the most-likely amount method. As such, the Company assesses each milestone to determine the probability and substance behind achieving each milestone. Given the inherent uncertainty associated with these future events, the Company will not recognize revenue from such milestones until there is a high probability of occurrence, which typically occurs near or upon achievement of the event.
When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component.
10
Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component as of June 30, 2021.
Royalties — The Company recognizes revenue from license arrangements with its commercial partners’ net sales of products. Such revenues are included as royalty income. In accordance with ASC 606-10-55-65, royalties are recognized when the subsequent sale of the commercial partner’s products occurs. The Company’s commercial partners are obligated to report their net product sales and the resulting royalty due to the Company typically within 60 days from the end of each quarter. Based on historical product sales, royalty receipts and other relevant information, the Company recognizes royalty income each quarter and subsequently determines a true-up when it receives royalty reports and payment from its commercial partners. Historically, these true-up adjustments have been immaterial.
Sale of Future Royalties — The Company has sold its rights to receive certain royalties on product sales. In the circumstance where the Company has sold its rights to future royalties under a royalty purchase agreement and also maintains limited continuing involvement in the arrangement (but not significant continuing involvement in the generation of the cash flows that are due to the purchaser), the Company defers recognition of the proceeds it receives for the sale of royalty streams and recognizes such unearned revenue as revenue under the units-of-revenue method over the life of the underlying license agreement. Under the units-of-revenue method, amortization for a reporting period is calculated by computing a ratio of the proceeds received from the purchaser to the total payments expected to be made to the purchaser over the term of the agreement, and then applying that ratio to the period’s cash payment.
Estimating the total payments expected to be received by the purchaser over the term of such arrangements requires management to use subjective estimates and assumptions. Changes to the Company’s estimate of the payments expected to be made to the purchaser over the term of such arrangements could have a material effect on the amount of revenues recognized in any particular period.
Research Collaborations — The Company recognizes revenue over the term of the statements of work under any funded research collaborations. Revenue recognition for consideration, if any, related to a license option right is assessed based on the terms of any such future license agreement or is otherwise recognized at the completion of the research collaborations.
Please refer to Note 3 for further details on the license and collaboration agreements into which the Company has entered and corresponding amounts of revenue recognized during the current and prior year periods.
Cost of sales, excluding amortization of acquired intangible assets — Cost of sales, excluding amortization of acquired intangible assets, consist of costs associated with the manufacture of YUTIQ and DEXYCU, certain period costs, product shipping and, as applicable, royalty expense. The inventory costs for YUTIQ include purchases of various components, the active pharmaceutical ingredient (“API”) and internal labor and overhead for the product manufactured in the Company’s Watertown, MA facility. The inventory costs for DEXYCU include purchased components, the API and third-party manufacturing and assembly.
For the three months ended June 30, 2021 and 2020, the Company accrued DEXYCU product revenue-based royalty expense of $
11
|
3. |
Revenue |
Product Revenue Reserves and Allowances
The Company’s product revenues have been primarily from sales of YUTIQ and DEXYCU in the U.S., which it began shipping to its customers in February 2019 and March 2019, respectively.
Net product revenues by product for the three and six months ended June 30, 2021 and 2020 were as follows (in thousands):
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
YUTIQ (A) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
DEXYCU (B) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total product sales, net |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
(A) |
Included approximately $ |
|
|
(B) |
|
The following table summarizes activity in each of the product revenue allowance and reserve categories for the six months ended June 30, 2021 and 2020, respectively (in thousands):
|
|
|
Chargebacks, Discounts |
|
|
Government and Other |
|
|
|
|
|
|
|
|
|
||
|
|
|
and Fees |
|
|
Rebates |
|
|
Returns |
|
|
Total |
|
||||
|
Beginning balance at January 1, 2021 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Provision related to sales in the current year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments related to prior period sales |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Deductions applied and payments made |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Ending balance at June 30, 2021 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chargebacks, Discounts |
|
|
Government and Other |
|
|
|
|
|
|
|
|
|
||
|
|
|
and Fees |
|
|
Rebates |
|
|
Returns |
|
|
Total |
|
||||
|
Beginning balance at January 1, 2020 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Provision related to sales in the current year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments related to prior period sales |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
( |
) |
|
Deductions applied and payments made |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Ending balance at June 30, 2020 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Returns are recorded as a reduction of accounts receivable on the condensed consolidated balance sheets. Chargebacks, discounts and fees and rebates are recorded as a component of accrued expenses on the condensed consolidated balance sheets (See Note 6).
12
License and Collaboration Agreements and Royalty Income
Alimera
Pursuant to a licensing and development agreement, as amended (the “Amended Alimera Agreement”), Alimera Sciences, Inc. (“Alimera”) has a worldwide exclusive license to develop, make, market and sell ILUVIEN in return for royalties based on sales and patent fee reimbursements. Royalties income was $
SWK Royalty Purchase Agreement
On December 17, 2020, the Company entered into a royalty purchase agreement (the “RPA”) with SWK Funding LLC (“SWK”). Under the RPA, the Company sold its right to receive royalty payments on future sales of products subject to the Amended Alimera Agreement for an upfront cash payment of $
The Company’s ongoing efforts under the Amended Alimera Agreement will consist of continuing to maintain and enforce its patents as well as providing safety data and regulatory support as necessary. None of these obligations require significant efforts on the part of the Company with respect to the generation of sales in the market. The Company will only be required to expend more extensive efforts if litigation were to arise that requires the Company to protect its patents rights pursuant to the terms of the Amended Alimera Agreement. Historically, such a defense has not been required. Similarly, regulatory support and safety data is only provided on an ad-hoc basis depending on the regulatory requests, which has been minimal historically. It remains Alimera’s sole responsibility to manufacture, actively market and promote the products under the Amended Alimera Agreement to generate the sales, which ultimately generate the royalties to be paid to SWK.
The Company classified the proceeds received from SWK as deferred revenue, to be recognized as revenue under the units-of-revenue method over the life of the RPA because of the Company’s limited continuing involvement in the Amended Alimera Agreement. SWK has no recourse and the Company assumes no credit risk in event that Alimera fails to make a royalty payment. The Company must only forward all material correspondence from Alimera to SWK, including royalty reports, notices and any other correspondence with respect to royalties to SWK. SWK has the right to audit and inspect the books and records pertaining to net sales and royalties under the Amended Alimera Agreement. Neither the Company nor SWK has the unilateral ability to cancel the transaction. There is no cap or limitation on the royalties to be received by SWK in the future and its return will reflect all royalties paid by Alimera. Because the transaction was structured as a non-cancellable sale, the Company does not have significant continuing involvement in the generation of the cash flows due to SWK and there is no limitation on the rates of return to SWK, the Company recorded the total proceeds of $
The Company recognized $
13
Ocumension Therapeutics
In November 2018, the Company entered into an exclusive license agreement with Ocumension Therapeutics (“Ocumension”) for the development and commercialization of its three-year micro insert using the Durasert technology for the treatment of chronic non-infectious uveitis affecting the posterior segment of the eye (YUTIQ in the U.S.) in Mainland China, Hong Kong, Macau and Taiwan. The Company received a one-time upfront payment of $
The Company was required to provide a fixed number of hours of technical assistance support to Ocumension at no cost, which support has been completed and no future performance obligation exists. Ocumension is responsible for all development, regulatory and commercial costs, including any additional technical assistance requested. Ocumension has a first right of negotiation for an additional exclusive license to the Company’s shorter-duration line extension candidate for this indication.
In August 2019, the Company received a $
In January 2020, the Company entered into an exclusive license agreement with Ocumension for the development and commercialization in Mainland China, Hong Kong, Macau and Taiwan of DEXYCU for the treatment of post-operative inflammation following ocular surgery. Pursuant to the terms of the license agreement, the Company received upfront payments of $
In August 2020, the Company entered into a Memorandum of Understanding (“2020 MOU”), pursuant to which, the Company received a one-time non-refundable payment of $
14
(“NDA”) for YUTIQ under Ocumension’s distinct name to Chinese regulatory authorities and it is under review. Ocumension has been granted approval to have its NDA submission reviewed based on the U.S. NDA data and the real world data Ocumension has collected from marketing the product in Hainan Pilot Zone.
Other than a fixed number of hours of technical assistance support to be provided at no cost by the Company, Ocumension is responsible for all development, regulatory and commercial costs, including any additional technical assistance requested. All technical assistance was provided during 2020. The Chief Executive Officer of Ocumension became a director of the Company starting December 31, 2020, pursuant to a Share Purchase Agreement pursuant to which the Company sold to Ocumension
During the three months ended June 30, 2021 and 2020, the Company recognized $
The Company recognized
Research Collaborations
The Company from time to time enters into funded agreements to evaluate the potential use of its technology systems for sustained release of third-party partner drug candidates. Consideration received is generally recognized as revenue over the term of the research collaborations. Revenue recognition for consideration, if any, related to a license option right is assessed based on the terms of any such future license agreement or is otherwise recognized at the completion of the research collaborations.
|
4. |
Inventory |
|
|
|
|
|
June 30, 2021 |
|
|
December 31, 2020 |
|
||
|
Raw materials |
|
$ |
|
|
|
$ |
|
|
|
Work in process |
|
|
|
|
|
|
|
|
|
Finished goods |
|
|
|
|
|
|
|
|
|
Total inventory |
|
$ |
|
|
|
$ |
|
|
15
|
5. |
Intangible Assets |
The reconciliation of intangible assets for the six months ended June 30, 2021 and 2020 was as follows (in thousands):
|
|
|
June 30, |
|
|
June 30, |
|
||
|
|
|
2021 |
|
|
2020 |
|
||
|
Patented technologies |
|
|
|
|
|
|
|
|
|
Gross carrying amount at beginning of period |
|
$ |
|
|
|
$ |
|
|
|
Gross carrying amount at end of period |
|
|
|
|
|
|
|
|
|
Accumulated amortization at beginning of period |
|
|
( |
) |
|
|
( |
) |
|
Amortization expense |
|
|
( |
) |
|
|
( |
) |
|
Accumulated amortization at end of period |
|
|
( |
) |
|
|
( |
) |
|
Net book value at end of period |
|
$ |
|
|
|
$ |
|
|
The Company amortizes intangible assets with finite lives on a straight-line basis over their respective estimated useful lives. Amortization of intangible assets totaled $
In connection with the Icon Acquisition, the initial purchase price was attributed to the DEXYCU product intangible asset. This finite-lived intangible asset is being amortized on a straight-line basis over its expected remaining useful life of
|
6. |
Accrued Expenses |
Accrued expenses consisted of the following at June 30, 2021 and December 31, 2020 (in thousands):
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2021 |
|
|
2020 |
|
||
|
|
|
|
|
|
|
|
|
|
|
Personnel costs |
|
$ |
|
|
|
$ |
|
|
|
Clinical trial costs |
|
|
|
|
|
|
|
|
|
Professional fees |
|
|
|
|
|
|
|
|
|
Sales chargebacks, rebates and other revenue reserves |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
7. |
Leases |
On May 17, 2018, the Company amended the lease for its headquarters in Watertown, Massachusetts. The original lease for approximately
16
In
The Company identified and assessed the following significant assumptions in recognizing its right-of-use (“ROU”) assets and corresponding lease liabilities:
|
|
• |
As the Company’s leases do not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments. The Company utilized the borrowing rate under its existing |
|
|
• |
Since the Company elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the combined lease component. |
|
|
• |
The expected lease terms include noncancelable lease periods. Renewal option periods have not been included in the determination of the lease terms as they are not deemed reasonably certain of exercise. |
|
|
• |
Variable lease payments, such as common area maintenance, real estate taxes and property insurance are not included in the determination of the lease’s ROU asset or lease liability. |
As of June 30, 2021, the weighted average remaining term of the Company’s operating leases was
Supplemental balance sheet information related to operating leases as of June 30, 2021 and December 31, 2020 are as follows (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2021 |
|
|
2020 |
|
||
|
Other current liabilities - operating lease current portion |
$ |
|
|
|
$ |
|
|
|
Operating lease liabilities – noncurrent portion |
|
|
|
|
|
|
|
|
Total operating lease liabilities |
$ |
|
|
|
$ |
|
|
Operating lease expense recognized related to ROU assets was $
The Company is a party to
17
Supplemental balance sheet information related to the finance lease as of June 30, 2021 and December 31, 2020 are as follows (in thousands):
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2021 |
|
|
2020 |
|
||
|
Property and equipment, at cost |
$ |
|
|
|
$ |
|
|
|
Accumulated amortization |
|
( |
) |
|
|
( |
) |
|
Property and equipment, net |
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities – finance lease current portion |
$ |
|
|
|
$ |
|
|
|
Other long-term liabilities |
|
|
|
|
|
|
|
|
Total finance lease liabilities |
$ |
|
|
|
$ |
|
|
The components of finance lease expense recognized during the three and six months ended June 30, 2021 related to ROU assets was $
As of June 30, 2021, the weighted average remaining term of the Company’s finance lease was
The Company’s total future minimum lease payments under non-cancellable leases at June 30, 2021 were as follows (in thousands):
|
|
Operating Leases |
|
|
Finance Leases |
|
||
|
Remainder of 2021 |
$ |
|
|
|
$ |
|
|
|
2022 |
|
|
|
|
|
|
|
|
2023 |
|
|
|
|
|
|
|
|
2024 |
|
|
|
|
|
|
|
|
2025 |
|
|
|
|
|
|
|
|
Total lease payments |
$ |
|
|
|
$ |
|
|
|
Less imputed interest |
|
( |
) |
|
|
( |
) |
|
Total |
$ |
|
|
|
$ |
|
|
|
8. |
Loan Agreements |
Paycheck Protection Program Loan
On April 8, 2020, the Company applied to Silicon Valley Bank (the “SVB”) for a Paycheck Protection Program Loan (the “PPP Loan”) of $
The PPP Loan bears interest at a fixed rate of
18
or full forgiveness and principal and interest payments can be deferred as described below, if the PPP Loan proceeds are used for covered payroll costs, rent and utility costs and the maintenance of employee and compensation levels.
The Company used all of the loan proceeds from the PPP Loan to pay expenses during the covered period that the Company believes were for eligible purposes. On September 25, 2020, the Company submitted an application to the SBA through SVB for full loan forgiveness. On June 19, 2021, the Company received notification from SVB that the PPP Loan of $
CRG Term Loan Agreement
On
The CRG Loan is due and payable on
Upon the occurrence of a bankruptcy-related event of default, all amounts outstanding with respect to the CRG Loan become due and payable immediately, and upon the occurrence of any other Event of Default (as defined in the CRG Loan Agreement), all or any amounts outstanding with respect to the CRG Loan may become due and payable upon request of the Agent or majority Lenders. Subject to certain exceptions, the Company is required to make mandatory prepayments of the CRG Loan with the proceeds of assets sales and in the event of a change of control of the Company. In addition, the Company may make a voluntary prepayment of the CRG Loan, in whole or in part, at any time. All mandatory and voluntary prepayments of the CRG Loan are subject to the payment of prepayment premiums as follows: (i) if prepayment occurs on or prior to December 31, 2019, an amount equal to
19
The CRG Loan Agreement contains affirmative and negative covenants customary for financings of this type, including limitations on our and our subsidiaries’ abilities, among other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions and enter into affiliate transactions, in each case, subject to certain exceptions. In addition, the CRG Loan Agreement contains the following financial covenants requiring the Company and the Guarantors to maintain:
|
|
• |
liquidity in an amount which shall exceed the greater of (i) $ |
|
|
• |
annual minimum product revenue from YUTIQ and DEXYCU: (i) for the twelve-month period beginning |
In November 2019, CRG waived the financial covenant associated with the Company’s revenue derived from sales of its products, DEXYCU and YUTIQ, for the twelve-month period ending December 31, 2019. In October 2020, CRG (i) waived the financial covenant associated with the Company’s revenue derived from sales of its products, DEXYCU and YUTIQ, for the twelve-month period ending December 31, 2020 and (ii) amended the financial covenant associated with the Company’s minimum product revenue to $
The total debt discount related to the CRG Initial Advance was approximately $
The total debt discount related to the CRG Second Advance was approximately $
On December 17, 2020, the Company paid $
Amortization of debt discount under the CRG Loan totaled $
20
|
9. |
Stockholders’ Equity |
2021 Equity Financings
Common Stock Offering
In February 2021, the Company sold
ATM Facility
In August 2020, the Company entered into an at-the-market facility (the “ATM Facility”) with Cantor Fitzgerald & Co (“Cantor”). Pursuant to the ATM Facility, the Company may, at its option, offer and sell shares of its common stock from time to time for an aggregate offering price of up to $
During the three months ended June 30, 2021, the Company sold
2020 Equity Financing
In February 2020, the Company sold
At the Annual Meeting of Stockholders held on June 23, 2020, the Company’s stockholders approved the adoption of an amendment to the Company’s Certificate of Incorporation, to increase the number of authorized shares of its common stock from
Warrants to Purchase Common Shares
The following table provides a reconciliation of fixed price warrants to purchase shares of the Company’s common stock for the six months ended June 30, 2021 and 2020:
|
|
|
Six Months Ended June 30, |
|
|||||||||||||
|
|
|
2021 |
|
|
2020 |
|
||||||||||
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
Weighted |
|
||
|
|
|
|
|
|
|
Average |
|
|
|
|
|
|
Average |
|
||
|
|
|
Number of |
|
|
Exercise |
|
|
Number of |
|
|
Exercise |
|
||||
|
|
|
Warrants |
|
|
Price |
|
|
Warrants |
|
|
Price |
|
||||
|
Balance at beginning of period |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
Balance and exercisable at end of period |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
Pursuant to a credit agreement, the Company issued a warrant to SWK Funding LLC to purchase (i)
21
|
10. |
Share-Based Payment Awards |
Equity Incentive Plan
The 2016 Long-Term Incentive Plan (the “2016 Plan”), approved by the Company’s stockholders on December 12, 2016 (the “Adoption Date”), provides for the issuance of up to
Certain inducement awards, although not awarded under the 2016 Plan or the 2008 Plan, are subject to and governed by the terms and conditions of the 2016 Plan or 2008 Plan, as applicable.
Stock Options
The following table provides a reconciliation of stock option activity under the Company’s equity incentive plans and for inducement awards for the six months ended June 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
Average |
|
|
|
|
|
||
|
|
|
|
|
|
|
Average |
|
|
Remaining |
|
|
Aggregate |
|
|||
|
|
|
Number |
|
|
Exercise |
|
|
Contractual |
|
|
Intrinsic |
|
||||
|
|
|
of Options |
|
|
Price |
|
|
Life |
|
|
Value |
|
||||
|
|
|
|
|
|
|
|
|
|
|
(in years) |
|
|
(in thousands) |
|
||
|
Outstanding at January 1, 2021 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2021 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
Exercisable at June 30, 2021 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
In January 2019, the Company expanded the terms of its annual stock option grants to include vesting ratable monthly over
In determining the grant date fair value of option awards during the six months ended June 30, 2021, the Company applied the Black-Scholes option pricing model based on the following key assumptions:
|
Option life (in years) |
|
|
|
|
Stock volatility |
|
|
|
|
Risk-free interest rate |
|
|
|
|
Expected dividends |
|
|
|
22
The following table summarizes information about employee, non-executive director and external consultant stock options for the six months ended June 30, 2021 (in thousands):
|
|
|
Six Months |
|
|
|
|
|
Ended |
|
|
|
|
|
June 30, 2021 |
|
|
|
Weighted-average grant date fair value per share |
|
$ |
|
|
|
Total cash received from exercise of stock options |
|
|
|
|
|
Total intrinsic value of stock options exercised |
|
|
|
|
Time-Vested Restricted Stock Units
Time-vested restricted stock unit awards (“RSUs”) issued to date under the 2016 Plan generally vest on a ratable annual basis over
The following table provides a reconciliation of RSU activity under the 2016 Plan for the six months ended June 30, 2021:
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
Number of |
|
|
Average |
|
||
|
|
|
Restricted |
|
|
Grant Date |
|
||
|
|
|
Stock Units |
|
|
Fair Value |
|
||
|
Nonvested at January 1, 2021 |
|
|
|
|
|
$ |
|
|
|
Granted |
|
|
|
|
|
|
|
|
|
Vested |
|
|
( |
) |
|
|
|
|
|
Forfeited |
|
|
( |
) |
|
|
|
|
|
Nonvested at June 30, 2021 |
|
|
|
|
|
$ |
|
|
At June 30, 2021, the weighted average remaining vesting term of the RSUs was
Deferred Stock Units
There were
Employee Stock Purchase Plan
On June 25, 2019, the Company’s stockholders approved the adoption of the EyePoint Pharmaceuticals, Inc. 2019 Employee Stock Purchase Plan (the “ESPP”) and authorized up to
23
The Company estimated the fair value of the option component of the ESPP shares at the date of grant using a Black-Scholes valuation model. During the three and six months ended June 30, 2021, the compensation expense from ESPP shares was immaterial.
Stock-Based Compensation Expense
The Company’s consolidated statements of comprehensive loss included total compensation expense from stock-based payment awards for the three and six months ended June 30, 2021 and 2020, respectively, as follows (in thousands):
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Compensation expense included in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
At June 30, 2021, there was approximately $
11.License Agreement
Equinox Science, LLC
In February 2020, the Company entered into an Exclusive License Agreement with Equinox Science, LLC (“Equinox”), pursuant to which Equinox granted the Company an exclusive, sublicensable, royalty-bearing right and license to certain patents and other Equinox intellectual property to research, develop, make, have made, use, sell, offer for sale and import the compound vorolanib and any pharmaceutical products comprising the compound for the prevention or treatment of age-related macular degeneration, diabetic retinopathy and retinal vein occlusion using our proprietary localized delivery technologies, in each case, throughout the world except China, Hong Kong, Taiwan and Macau.
In consideration for the rights granted by Equinox, the Company (i) made a one time, non-refundable, non-creditable upfront cash payment of $
The Company also agreed to pay Equinox tiered royalties based upon annual net sales of licensed products in the specified territory. The royalties are payable with respect to a licensed product in a particular country in the specified territory on a country-by-country and licensed product-by-licensed product basis until the later of (i) twelve years after the first commercial sale of such licensed product in such country and (ii) the first day of the month following the month in which a generic product corresponding to such licensed product is launched in such country. The royalty rates range from the high-single digits to low-double digits depending on the level of annual net sales. The royalty rates are subject to reduction during certain periods when there is no valid patent claim that covers a licensed product in a particular country.
The Company recorded $
24
12.Fair Value Measurements
The following tables summarize the Company’s assets carried at fair value measured on a recurring basis at June 30, 2021 and December 31, 2020 by valuation hierarchy (in thousands):
|
|
|
June 30, 2021 |
|
|||||||||||||
|
|
|
|
|
|
|
Quoted prices in |
|
|
Significant other |
|
|
Significant |
|
|||
|
|
|
Total Carrying |
|
|
active markets |
|
|
observable inputs |
|
|
unobservable inputs |
|
||||
|
Description |
|
Value |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
||||
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
December 31, 2020 |
|
|||||||||||||
|
|
|
|
|
|
|
Quoted prices in |
|
|
Significant other |
|
|
Significant |
|
|||
|
|
|
Total Carrying |
|
|
active markets |
|
|
observable inputs |
|
|
unobservable inputs |
|
||||
|
Description |
|
Value |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
||||
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Financial instruments that potentially subject the Company to concentrations of credit risk have historically consisted principally of cash and cash equivalents. At June 30, 2021 and December 31, 2020, substantially all of the Company’s interest-bearing cash equivalent balances were concentrated in one U.S. Government institutional money market fund that has investments consisting primarily of U.S. Government Agency debt, U.S. Treasury Repurchase Agreements and U.S. Government Agency Repurchase Agreements. These deposits may be redeemed upon demand and, therefore, generally have minimal risk. The Company’s cash equivalents are classified within Level 1 on the basis of valuations using quoted market prices.
The carrying amounts of accounts receivable, accounts payable and accrued expenses approximate fair value because of their short-term maturity.
The fair value of the Company’s CRG Loan is determined using a discounted cash flow analysis based on market rates for observable similar instruments as of the condensed consolidated balance sheet dates. Accordingly, the fair value of the CRG Loan is categorized as Level 2 within the fair value hierarchy. At June 30 2021, the fair value of the CRG Loan was approximately $
|
13. |
Contingencies |
Legal Proceedings
The Company is subject to various other routine legal proceedings and claims incidental to its business, which management believes will not have a material effect on the Company’s financial position, results of operations or cash flows.
25
U.S. Securities and Exchange Commission Subpoena
The Company previously disclosed that on May 14, 2020 it had received a subpoena from the Division of Enforcement of the SEC seeking production of certain documents and information on topics including product sales and demand, revenue recognition and accounting in relation to product sales, product sales and cash projections, and related financial reporting, disclosure and compliance matters. On May 4, 2021, the Company was advised by the SEC Division of Enforcement that it has concluded its investigation of the Company and that, based on the information it has to date, the Enforcement Division does not intend to recommend an enforcement action against the Company.
|
14. |
Net Loss per Share |
Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. For periods in which the Company reports net income, diluted net income per share is determined by adding to the basic weighted average number of common shares outstanding the total number of dilutive common equivalent shares using the treasury stock method, unless the effect is anti-dilutive. Potentially dilutive shares were not included in the calculation of diluted net loss per share for each of the three and six months ended June 30, 2021 and 2020 as their inclusion would be anti-dilutive.
Potential common stock equivalents excluded from the calculation of diluted earnings per share because the effect would have been anti-dilutive were as follows:
|
|
|
Six Months Ended June 30, |
|
|||||
|
|
|
2021 |
|
|
2020 |
|
||
|
Stock options |
|
|
|
|
|
|
|
|
|
ESPP |
|
|
|
|
|
|
|
|
|
Warrants |
|
|
|
|
|
|
|
|
|
Restricted stock units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Note Regarding Forward-Looking Statements
Various statements made in this Quarterly Report on Form 10-Q are forward-looking and involve risks and uncertainties. All statements that address activities, events or developments that we intend, expect or believe may occur in the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements give our current expectations or forecasts of future events and are not statements of historical or current facts. These statements include, among others, statements about:
|
|
• |
the potential for EYP-1901, as a twice-yearly sustained delivery intravitreal anti-VEGF treatment targeting wet age-related macular degeneration (“wet AMD”), with potential in diabetic retinopathy (“DR”) and retinal vein occlusion (“RVO”); |
|
|
• |
our expectations regarding the timing and outcome of our Phase 1 DAVIO clinical trial for EYP-1901 for the treatment of wet AMD; |
|
|
• |
our expectations to avoid the toxicity seen in the prior clinical trials of orally delivered vorolanib, a tyrosine kinase inhibitor (“TKI”) by delivering vorolanib locally using a bioerodible formulation of our Durasert® technology as EYP-1901 at a significantly lower total dose; |
|
|
• |
our expectations regarding the timing and clinical development of our product candidates, including EYP-1901 and YUTIQ 50; |
|
|
• |
the potential advantages of YUTIQ® and DEXYCU® for the treatment of eye diseases; |
|
|
• |
the extent to which our business, the medical community and the global economy will continue to be materially and adversely impacted by the effects of the COVID-19 pandemic (the “Pandemic”), or by other pandemics, epidemics or outbreaks; |
|
|
• |
our cash flow expectations from commercial sales of YUTIQ and DEXYCU; |
|
|
• |
the scheduled March 31, 2022 expiration of pass-through coverage under which DEXYCU is reimbursed for Medicare Part B patients, and our expectations regarding any potential extensions thereof; |
|
|
• |
our expectations regarding our new Category III CPT code that was approved by the American Medical Association, and its potential to provide an opportunity for a reimbursement pathway for the administration of DEXYCU; |
|
|
• |
our ability to manufacture YUTIQ and DEXYCU, or any future products or product candidates, in sufficient quantities and quality; |
|
|
• |
our belief that our cash and cash equivalents of $127.6 million at June 30, 2021, combined with anticipated net cash inflows from product sales will fund our operating plan through December 31, 2022, under current expectations regarding (i) the timing and outcomes of our Phase 1 clinical trial for EYP-1901 for the treatment of wet AMD, and (ii) initiation of our Phase 2 clinical trials for EYP-1901 for the treatment of wet AMD; |
|
|
• |
our expectations regarding the timing of initiating clinical trials for YUTIQ 50; |
|
|
• |
our ability to obtain additional capital in sufficient amounts and on terms acceptable to us, and the consequences of failing to do so; |
|
|
• |
our future expenses and capital expenditures; |
|
|
• |
our expectations regarding our ability to obtain and adequately maintain sufficient intellectual property protection for EYP-1901, YUTIQ, DEXYCU and YUTIQ 50 and any future products or product candidates, and to avoid claims of infringement of third-party intellectual property rights; |
|
|
• |
our ability to identify and in-license pipeline product candidates; |
|
|
• |
our expectation that we will continue to incur significant expenses and that our operating losses and our net cash outflows to fund operations will continue for the foreseeable future; |
|
|
• |
our expectations regarding our partnership with ImprimisRx; and |
|
|
• |
the effect of legal and regulatory developments. |
Forward-looking statements also include statements other than statements of current or historical fact, including, without limitation, all statements related to any expectations of revenues, expenses, cash flows, earnings or losses from operations, cash required to maintain current and planned operations, capital or other financial items; any statements of the plans, strategies and objectives of management for future operations; any plans or expectations with respect to product research, development and commercialization, including regulatory approvals; any other statements of expectations, plans, intentions or beliefs; and any statements of assumptions underlying any of the
27
foregoing. We often, although not always, identify forward-looking statements by using words or phrases such as “likely”, “expect”, “intend”, “anticipate”, “believe”, “estimate”, “plan”, “project”, “forecast” and “outlook”.
The following are some of the factors that could cause actual results to differ materially from the anticipated results or other expectations expressed, anticipated or implied in our forward-looking statements:
|
|
• |
the extent to which the Pandemic impacts our business, the medical community and the global economy; |
|
|
• |
the effectiveness and timeliness of our preclinical studies and clinical trials, and the usefulness of the data; |
|
|
• |
our expectations regarding the timing and clinical development of our product candidates, including EYP-1901, and the potential for EYP-1901 as a twice-yearly treatment for serious eye diseases, including wet age-related macular degeneration, diabetic retinopathy and retinal vein occlusion; |
|
|
• |
our ability to achieve profitable operations and access to needed capital; |
|
|
• |
fluctuations in our operating results; |
|
|
• |
our ability to successfully produce sufficient commercial quantities of YUTIQ and DEXYCU and to successfully commercialize YUTIQ and DEXYCU in the U.S.; |
|
|
• |
our ability to sustain and enhance an effective commercial infrastructure and enter into and maintain commercial agreements for the commercialization of YUTIQ and DEXYCU; |
|
|
• |
consequences of fluocinolone acetonide side effects for YUTIQ; |
|
|
• |
consequences of dexamethasone side effects for DEXYCU; |
|
|
• |
the success of current and future license and collaboration agreements, including our agreements with Ocumension Therapeutics (“Ocumension”) and Equinox Science, LLC (“Equinox”); |
|
|
• |
our dependence on contract research organizations, vendors and investigators; |
|
|
• |
effects of competition and other developments affecting sales of products; |
|
|
• |
market acceptance of our products; |
|
|
• |
protection of intellectual property and avoiding intellectual property infringement; |
|
|
• |
product liability; and |
|
|
• |
other factors described in our filings with the SEC. |
We cannot guarantee that the results and other expectations expressed, anticipated or implied in any forward-looking statement will be realized. The risks set forth under Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 describe major risks to our business, and you should read and interpret any forward-looking statements together with these risks. A variety of factors, including these risks, could cause our actual results and other expectations to differ materially from the anticipated results or other expectations expressed, anticipated or implied in our forward-looking statements. Should known or unknown risks materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected in the forward-looking statements. You should bear this in mind as you consider any forward-looking statements.
Our forward-looking statements speak only as of the dates on which they are made. We do not undertake any obligation to publicly update or revise our forward-looking statements even if experience or future changes makes it clear that any projected results expressed or implied in such statements will not be realized.
Our Business
Overview
We are a pharmaceutical company committed to developing and commercializing innovative therapeutics to help improve the lives of patients with serious eye disorders. Our pipeline leverages our proprietary Durasert® technology for extended intraocular drug delivery including EYP-1901, a potential twice-yearly sustained delivery intravitreal anti-VEGF treatment initially targeting wet age-related macular degeneration (“wet AMD”), the leading cause of vision loss among people 50 years of age and older in the United States. Our product candidate pipeline also includes YUTIQ® 50, a potential twice-yearly treatment for non-infectious uveitis affecting the posterior segment of the eye, one of the leading causes of blindness. We also have two commercial products: YUTIQ®, a once every three-year treatment for chronic non-infectious uveitis affecting the posterior segment of the eye, and DEXYCU®, a single dose treatment for postoperative inflammation following ocular surgery.
28
Recent Developments
|
|
• |
Underlying customer demand and distributor purchases by specialty distributors and specialty pharmacies (collectively, the “Distributors”) of both YUTIQ and DEXYCU was negatively impacted beginning in the first and especially the second quarter of 2020 due to shutdowns associated with the Pandemic in the U.S. A modest return of customer demand began in June 2020 which contributed to sequential product sales growth in the third and fourth quarters of 2020, and Pandemic-related restrictions on elective surgeries and physician office visits were largely removed during the first and second quarters of 2021. However, the future progression of the Pandemic and its effects on our business and operations are uncertain at this time. Depending on the future developments that are uncertain and difficult to predict, including new information that may emerge concerning the Pandemic, our customer demand may be adversely affected in the future as well. During the Pandemic, our sales organization has continued to call on physician offices, though at a reduced frequency. There have been no disruptions to the supply chains for YUTIQ and DEXYCU during the Pandemic and we continue to produce finished product for commercial sale. |
|
|
• |
In February 2021, we sold 10,465,000 shares of common stock in an underwritten public offering at a price of $11.00 per share, including the exercise in full by the underwriters of their option to purchase up to 1,365,000 additional shares of our common stock. The gross proceeds of the offering are approximately $115.1 million. Underwriter discounts and commissions and other share issue costs totaled approximately $7.2 million. |
|
|
• |
In a press release dated April 7, 2021, our Asia partner, Ocumension, announced that the new drug application (“NDA”) for OT-401 (YUTIQ) had been accepted by the National Medical Products Administration of the People’s Republic of China (“NMPA”). Ocumension reported that YUTIQ is its first ophthalmic drug for which an NDA has been accepted by the NMPA and is also the first sustained-release micro-insert submitted for NDA approval in mainland China that has a controlled release rate for up to 36 months. Ocumension’s press release also announced that this is the first time the NMPA has accepted an NDA based on real world study data. |
|
|
• |
In June 2021, we received notification from Silicon Valley Bank (“SVB”) that the Paycheck Protection Program Loan (“PPP Loan”) of $2.0 million has been fully forgiven by the U.S. Small Business Administration (“SBA”), and that payment and all accrued interest thereon were remitted by the SBA to SVB on June 16, 2021. |
|
|
• |
In June 2021, we announced that we had joined the Russell 2000® and the Russell 3000® indices. |
|
|
• |
In July 2021, we announced that the American Medical Association created a new Category III Current Procedural Terminology (CPT®) Code to describe the injection of medicines like DEXYCU®. The code, OX78T, is for the administration of a drug into the posterior chamber of the anterior segment of the eye and becomes effective January 1, 2022. Once implemented, it may provide an opportunity for an additional reimbursement pathway for the administration of DEXYCU, in addition to the pass-through payment for the drug itself. |
|
|
• |
In July 2021, we announced that we expect to receive a nine month extension of separate payment for DEXYCU, which would otherwise expire on March 31, 2022, with the end of the drug’s pass-through status. The announcement was based on the fiscal year (FY) 2022 Medicare Hospital Outpatient Prospective Payment System (OPPS) proposed rule. The rule includes a proposal to extend the period of separate payment for select pass-through drugs and devices that have their pass-through status scheduled to expire between December 31, 2021 and September 30, 2022, including DEXYCU. CMS proposes to extend the period of separate payment for these therapies beyond the expiration of pass-through status in light of the COVID-19 public health emergency. The proposal is subject to a public comment period and may be either adopted as proposed, modified, or withdrawn in the FY 2022 OPPS final rule, which is anticipated to be released in November 2021. |
|
|
• |
In August 2021, we announced the establishment of our Executive Scientific Advisory Board with prestigious members made up of some of the leading retinal surgeons in the world and chaired by Dr. Carl Regillo MD, FACS, Chief of the Retina Service at Wills Eye Hospital. |
29
R&D Highlights
|
|
• |
In January 2021, we dosed our first patient in our Phase 1 DAVIO clinical trial for EYP-1901. |
|
|
• |
In May 2021, studies of DEXYCU were presented in two separate poster sessions at the Association for Research in Vision and Ophthalmology (“ARVO”) Annual meeting. |
|
|
• |
In May 2021, we announced the completion of enrollment in our Phase 1 DAVIO clinical trial of EYP-1901 for the potential treatment of Wet AMD. |
|
|
• |
In July 2021, we reported positive 30-day safety results for all cohorts from the DAVIO clinical trial. Key safety observations through at least 30-Day post-dosing follow-up for all patients include: (i) No serious adverse events (SAEs), ocular or systemic, (ii) no reported adverse events (AEs) related to significant intraocular inflammation, best-corrected visual acuity (BCVA) reduction, or elevation of intraocular pressure (IOP) and (iii) no events of endophthalmitis, retinal detachment or migration into the anterior chamber. |
|
|
• |
In July 2021, DEXYCU was presented in three separate oral presentations, one poster session and a video symposium at the American Society of Cataract and Refractive Surgery (ASCRS) Annual Meeting. |
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements in conformity with GAAP requires that we make certain estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates, judgments and assumptions on historical experience, anticipated results and trends, and on various other factors that we believe are reasonable under the circumstances at the time. By their nature, these estimates, judgments and assumptions are subject to an inherent degree of uncertainty. Actual results may differ from our estimates under different assumptions or conditions. In our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, we set forth our critical accounting policies and estimates, which included revenue recognition, reserves for variable consideration associated with our commercial revenue and recognition of expense in outsourced clinical trial agreements. See Note 2 of the notes to our unaudited condensed consolidated financial statements contained in this quarterly report on Form 10-Q for a description of our accounting policies and estimates for reserves for variable consideration related to product sales.
30
Results of Operations
Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020:
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|||||
|
|
|
June 30, |
|
|
Change |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
Amounts |
|
|
% |
|
||||
|
|
|
(In thousands except percentages) |
|
|||||||||||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales, net |
|
$ |
8,738 |
|
|
$ |
3,706 |
|
|
$ |
5,032 |
|
|
|
136 |
% |
|
License and collaboration agreement |
|
|
94 |
|
|
|
35 |
|
|
|
59 |
|
|
|
169 |
% |
|
Royalty income |
|
|
181 |
|
|
|
381 |
|
|
|
(200 |
) |
|
|
(52 |
)% |
|
Total revenues |
|
|
9,013 |
|
|
|
4,122 |
|
|
|
4,891 |
|
|
|
119 |
% |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales, excluding amortization of acquired intangible assets |
|
|
1,929 |
|
|
|
502 |
|
|
|
1,427 |
|
|
|
284 |
% |
|
Research and development |
|
|
5,605 |
|
|
|
3,276 |
|
|
|
2,329 |
|
|
|
71 |
% |
|
Sales and marketing |
|
|
6,659 |
|
|
|
6,089 |
|
|
|
570 |
|
|
|
9 |
% |
|
General and administrative |
|
|
5,184 |
|
|
|
4,792 |
|
|
|
392 |
|
|
|
8 |
% |
|
Amortization of acquired intangible assets |
|
|
615 |
|
|
|
615 |
|
|
|
— |
|
|
na |
|
|
|
Total operating expenses |
|
|
19,992 |
|
|
|
15,274 |
|
|
|
4,718 |
|
|
|
31 |
% |
|
Loss from operations |
|
|
(10,979 |
) |
|
|
(11,152 |
) |
|
|
173 |
|
|
|
2 |
% |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income |
|
|
280 |
|
|
|
8 |
|
|
|
272 |
|
|
|
3400 |
% |
|
Interest expense |
|
|
(1,376 |
) |
|
|
(1,806 |
) |
|
|
430 |
|
|
|
24 |
% |
|
Gain on extinguishment of debt |
|
|
2,065 |
|
|
|
— |
|
|
|
2,065 |
|
|
na |
|
|
|
Other income (expense), net |
|
|
969 |
|
|
|
(1,798 |
) |
|
|
2,767 |
|
|
|
154 |
% |
|
Net loss |
|
$ |
(10,010 |
) |
|
$ |
(12,950 |
) |
|
$ |
2,940 |
|
|
|
23 |
% |
Product Sales, net
Product sales, net represents the gross sales of YUTIQ and DEXYCU less provisions for product sales allowances. Product sales, net increased by $5.0 million to $8.7 million for the three months ended June 30, 2021 compared to $3.7 million for the three months ended June 30, 2020. Product sales during 2020 were negatively impacted due to shutdowns associated with the Pandemic in the U.S. Although we did see a modest return of customer demand for both products in the third and fourth quarters of 2020, as Pandemic-related restrictions on elective surgeries and physician office visits were largely removed during the first and second quarters of 2021, the future progression of the Pandemic and its effects on our business and operations are uncertain at this time. Depending on the future developments that are uncertain and difficult to predict, including new information that may emerge concerning the Pandemic, our customer demand may be adversely affected in the future as well. Please see the Recent Development section for more information on the impact of the Pandemic on, among other things, our product sales.
License and collaboration agreement
License and collaboration agreement revenues increased by $59,000, or 169%, to $94,000 for the three months ended June 30, 2021 compared to $35,000 for the three months ended June 30, 2020. This increase was attributable primarily to our ongoing collaboration with Ocumension.
Royalty Income
Royalty income decreased by $200,000, or 52%, to $181,000 for the three months ended June 30, 2021 compared to $381,000 for the three months ended June 30, 2020. The decrease was attributable to the impact of the royalty monetization agreement with SWK Holdings that grants to SWK all future royalty payments under the Amended Alimera Agreement beginning with Q4 2020 for a one-time payment of $16.5 million. Due to the accounting treatment for this agreement (see the Revenue Recognition section), we recognize a non-cash portion of
31
deferred revenue as Alimera pays royalties to SWK beginning in the first quarter of 2021 (see Note 3). We expect lower royalty revenue related to the royalty monetization agreement in 2021 compared to 2020.
Cost of Sales, Excluding Amortization of Acquired Intangible Assets
Cost of sales, excluding amortization of acquired intangible assets, increased by $1.4 million, or 284%, to $1.9 million for the three months ended June 30, 2021 from $502,000 for the three months ended June 30, 2020. This increase was primarily attributable to increased costs associated with higher product sales, primarily costs of goods and royalties, due to higher DEXYCU product mix.
Research and Development
Research and development expenses increased by $2.3 million, or 71%, to $5.6 million for the three months ended June 30, 2021 from $3.3 million for the same period in the prior year. This increase was attributable primarily to (i) $1.7 million in increased personnel related costs due to expansion of our clinical and research organization and (ii) approximately $840,000 of increased clinical costs, primarily related to our EYP-1901 Phase 1 study, partially offset by a decrease of approximately $94,000 in investigator-initiated studies and other medical affairs related costs.
Sales and Marketing
Sales and marketing expenses increased by $570,000, or 9%, to $6.7 million for the three months ended June 30, 2021 from $6.1 million for the same period in the prior year. This increase was primarily attributable to $828,000 in commissions due to our commercial partner for DEXYCU, partially offset by approximately $212,000 in decreased net personnel related expenses, primarily due to the reduction in DEXYCU KAMs that occurred in Q2 2020.
General and Administrative
General and administrative expenses increased by $392,000, or 8%, to $5.2 million for the three months ended June 30, 2021 from $4.8 million for the same period in the prior year. This increase was attributable primarily to (i) $180,000 in personnel related expenses and (ii) $152,000 in consulting, investor relations and other spending initiatives, partially offset by a $65,000 decrease in legal, audit and other professional services,
Amortization of Acquired Intangible Assets
Amortization of acquired intangible assets totaled $615,000 for both the three months ended June 30, 2021 as well as the same period in the prior year. This amount was attributable to the DEXYCU product intangible asset that resulted from the Icon Acquisition (see Note 5).
Interest (Expense) Income
Interest expense totaled $1.4 million for the three months ended June 30, 2021, which included $153,000 of amortization of debt discount and $0 of non-cash payment-in-kind interest expense all related to the CRG Debt. We incurred lower interest expense due to the $13.7 million partial principal paydown in Q4-2020 on the CRG term loan. Interest expense in the three months ended June 30, 2020 was $1.8 million which included $177,000 of amortization of debt discount and $324,000 of non-cash payment-in-kind interest expense.
Interest income from amounts invested in an institutional money market fund decreased to $5,000 for the three months ended June 30, 2021 compared to $8,000 in the prior year quarter, due primarily to higher money market interest rates in the prior year quarter. At the start of the Pandemic, money market rates fell substantially beginning March 2020, current interest earned is therefore low, despite our increased cash balance. Other income for the three months ended June 30, 2021 is $275,000 from a tax refund related to FY2020.
Gain on Extinguishment of Debt
Forgiveness by the SBA of our PPP Loan resulted in a gain on extinguishment of debt, which consisted of approximately (i) $2.0 million of principal and (ii) $24,000 of interest (see Note 8).
32
Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020:
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
|||||
|
|
|
June 30, |
|
|
Change |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
Amounts |
|
|
% |
|
||||
|
|
|
(In thousands except percentages) |
|
|||||||||||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales, net |
|
$ |
15,540 |
|
|
$ |
8,393 |
|
|
$ |
7,147 |
|
|
|
85 |
% |
|
License and collaboration agreement |
|
|
435 |
|
|
|
2,055 |
|
|
|
(1,620 |
) |
|
|
(79 |
)% |
|
Royalty income |
|
|
361 |
|
|
|
1,163 |
|
|
|
(802 |
) |
|
|
(69 |
)% |
|
Total revenues |
|
|
16,336 |
|
|
|
11,611 |
|
|
|
4,725 |
|
|
|
41 |
% |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales, excluding amortization of acquired intangible assets |
|
|
3,319 |
|
|
|
1,482 |
|
|
|
1,837 |
|
|
|
124 |
% |
|
Research and development |
|
|
11,084 |
|
|
|
8,129 |
|
|
|
2,955 |
|
|
|
36 |
% |
|
Sales and marketing |
|
|
12,318 |
|
|
|
14,214 |
|
|
|
(1,896 |
) |
|
|
(13 |
)% |
|
General and administrative |
|
|
10,299 |
|
|
|
9,152 |
|
|
|
1,147 |
|
|
|
13 |
% |
|
Amortization of acquired intangible assets |
|
|
1,230 |
|
|
|
1,230 |
|
|
|
— |
|
|
na |
|
|
|
Total operating expenses |
|
|
38,250 |
|
|
|
34,207 |
|
|
|
4,043 |
|
|
|
12 |
% |
|
Loss from operations |
|
|
(21,914 |
) |
|
|
(22,596 |
) |
|
|
682 |
|
|
|
3 |
% |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other income |
|
|
281 |
|
|
|
62 |
|
|
|
219 |
|
|
|
353 |
% |
|
Interest expense |
|
|
(2,722 |
) |
|
|
(3,590 |
) |
|
|
868 |
|
|
|
24 |
% |
|
Gain on extinguishment of debt |
|
|
2,065 |
|
|
|
— |
|
|
|
2,065 |
|
|
na |
|
|
|
Other income (expense), net |
|
|
(376 |
) |
|
|
(3,528 |
) |
|
|
3,152 |
|
|
|
89 |
% |
|
Net loss |
|
$ |
(22,290 |
) |
|
$ |
(26,124 |
) |
|
$ |
3,834 |
|
|
|
15 |
% |
Product Sales, net
Product sales, net represents the gross sales of YUTIQ and DEXYCU less provisions for product sales allowances. Product sales, net increased by $7.1 million to $15.5 million for the six months ended June 30, 2021 compared to $8.4 million for the six months ended June 30, 2020. Product sales during 2020 were negatively impacted due to shutdowns associated with the Pandemic in the U.S. Although we did see a modest return of customer demand for both products in the third and fourth quarters of 2020, as Pandemic-related restrictions on elective surgeries and physician office visits were largely removed during the first and second quarters of 2021, the future progression of the Pandemic and its effects on our business and operations are uncertain at this time. Depending on the future developments that are uncertain and difficult to predict, including new information that may emerge concerning the Pandemic, our customer demand may be adversely affected in the future as well. Please see the Recent Development section for more information on the impact of the Pandemic on, among other things, our product sales.
License and collaboration agreement
License and collaboration agreement revenues decreased by $1.6 million, or 79%, to $435,000 for the six months ended June 30, 2021 compared to $2.1 million for the six months ended June 30, 2020. This decrease was attributable primarily to the recognition of approximately $2.0 million from Ocumension upon signing a license agreement for DEXYCU in China during the six months ended June 30, 2020, partially offset by higher billable technical support hours and material purchases by Ocumension.
Royalty Income
Royalty income decreased by $802,000, or 69%, to $361,000 for the six months ended June 30, 2021 compared to $1.2 million for the six months ended June 30, 2020. The decrease was attributable to the impact of the
33
royalty monetization agreement with SWK Holdings that grants to SWK all future royalty payments under the Amended Alimera Agreement beginning with Q4 2020 for a one-time payment of $16.5 million. Due to the accounting treatment for this agreement (see Revenue Recognition section), we recognize a non-cash portion of deferred revenue as Alimera pays royalties to SWK beginning in the first quarter of 2021 (see Note 3). We expect lower royalty revenue related to the royalty monetization agreement in 2021 compared to 2020.
Cost of Sales, Excluding Amortization of Acquired Intangible Assets
Cost of sales, excluding amortization of acquired intangible assets, increased by $1.8 million, or 124%, to $3.3 million for the six months ended June 30, 2021 from $1.5 million for the six months ended June 30, 2020. This increase was primarily attributable costs associated with higher product sales, primarily costs of goods and royalties, due to higher DEXYCU product mix.
Research and Development
Research and development expenses increased by $3.0 million, or 36%, to $11.1 million for the six months ended June 30, 2021 from $8.1 million for the same period in the prior year. This increase was attributable primarily to (i) $2.3 million in increased clinical costs, primarily related to our EYP-1901 Phase 1 study and (ii) approximately $1.9 million of personnel related costs for incremental new hires, partially offset by a decrease of approximately $396,000 in investigator-initiated studies and other medical affairs related costs. The first quarter of 2020 also included a one-time $1.0 million payment for the licensing of vorolanib for EYP-1901.
Sales and Marketing
Sales and marketing expenses decreased by $1.9 million, or 13%, to $12.3 million for the six months ended June 30, 2021 from $14.2 million for the same period in the prior year. This decrease was primarily attributable to (i) approximately $2.0 million in net personnel related expenses, primarily due to the reduction in DEXYCU KAMs that occurred in Q2 2020 and (ii) $1.3 million in marketing related expenses, partially offset by $1.4 million in commissions due to our commercial partner for DEXYCU.
General and Administrative
General and administrative expenses increased by $1.1 million, or 13%, to $10.3 million for the six months ended June 30, 2021 from $9.2 million for the same period in the prior year. This increase was attributable primarily to (i) $519,000 in consulting, investor relations and other spending initiatives and (ii) $318,000 in legal, audit, insurance and other professional services.
Amortization of Acquired Intangible Assets
Amortization of acquired intangible assets totaled $1.2 million for both the six months ended June 30, 2021 as well as the same period in the prior year. This amount was attributable to the DEXYCU product intangible asset that resulted from the Icon Acquisition (see Note 5).
Interest (Expense) Income
Interest expense totaled $2.7 million for the six months ended June 30, 2021, which included $300,000 of amortization of debt discount and $0 of non-cash payment-in-kind interest expense all related to the CRG Debt. We incurred lower interest expense due to the $13.7 million partial principal paydown in Q4-2020 on the CRG term loan. Interest expense in the six months ended June 30, 2020 was $3.6 million which included $348,000 of amortization of debt discount and $647,000 of non-cash payment-in-kind interest expense.
Interest income from amounts invested in an institutional money market fund decreased to $6,000 for the six months ended June 30, 2021 compared to $62,000 in the prior year quarter. At the start of the Pandemic, money market rates fell substantially beginning March 2020, current interest earned is therefore low, despite our increased cash balance. Other income for the six months ended June 30, 2021 is $275,000 from a tax refund related to FY2020.
Gain on Extinguishment of Debt
Forgiveness by the SBA of our PPP Loan resulted in a gain on extinguishment of debt, which consisted of approximately (i) $2.0 million of principal and (ii) $24,000 of interest.
34
Liquidity and Capital Resources
We have had a history of operating losses and an absence of significant recurring cash inflows from revenue, and at June 30, 2021 we had a total accumulated deficit of $533.0 million. Our operations have been financed primarily from sales of our equity securities, issuance of debt and a combination of license fees, milestone payments, royalty income and other fees received from collaboration partners. In the first quarter of 2019, we commenced the U.S. launch of our first two commercial products, YUTIQ and DEXYCU. However, we have not received sufficient revenues from our product sales to fund operations and we do not expect revenues from our product sales to generate sufficient funding to sustain our operations in the near-term.
Financing Activities
Our total cash and cash equivalents were $127.6 million at June 30, 2021. During the six months ended June 30, 2021, we recorded net proceeds of $107.9 million from the issuance of shares of our common stock (“Common Stock”) in an underwritten public offering (see Note 9). We also sold shares of our common stock under our at-the-market facility during the six months ended June 30, 2021 and recorded net proceeds of approximately $499,000.
The CRG Loan is due and payable on December 31, 2023 (the “Maturity Date”). The CRG Loan bears interest at a per annum rate (subject to increase during an event of default) equal to 12.5%, of which 2.5% may be paid in-kind at the election of the Company, so long as no default or event of default under the CRG Loan Agreement has occurred and is continuing. The Company is required to make interest only payments on a quarterly basis until the Maturity Date. The Company will also be required to pay an exit fee equal to 6% of the aggregate principal amounts advanced (including any paid-in-kind amounts) under the CRG Loan Agreement. to certain exceptions, we are required to make mandatory prepayments of the CRG Loan with the proceeds of assets sales and in the event of a change of control of our Company. In addition, we may make a voluntary prepayment of the CRG Loan, in whole or in part, at any time. All mandatory and voluntary prepayments of the CRG Loan are subject to the payment of prepayment premiums as follows: (i) if prepayment occurs after December 31, 2020 and on or prior to December 31, 2021, an amount equal to 3% of the aggregate outstanding principal amount of the CRG Loan being prepaid. No prepayment premium is due on any principal prepaid after December 31, 2021.
Certain of the Company’s existing and future subsidiaries, including the Guarantors, are guaranteeing the obligations of us under the CRG Loan Agreement. Our obligations under the CRG Loan Agreement and the guarantee of such obligations are secured by a pledge of substantially all of our and the Guarantors’ assets.
The CRG Loan Agreement contains affirmative and negative covenants customary for financings of this type, including limitations on our and our subsidiaries’ abilities, among other things, to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions and enter into affiliate transactions, in each case, subject to certain exceptions. In addition, the CRG Loan Agreement contains the following financial covenants requiring us and the Guarantors to maintain:
|
|
• |
liquidity in an amount which shall exceed the greater of (i) $5 million and (ii) to the extent we have incurred certain permitted debt, the minimum cash balance, if any, required of the Company by the creditors of such permitted debt; and |
|
|
• |
annual minimum product revenue from YUTIQ and DEXYCU: (i) for the twelve-month period beginning on January 1, 2021 and ending on December 31, 2021, of at least $25 million and (iii) for the twelve-month period beginning on January 1, 2022 and ending on December 31, 2022, of at least $90 million. |
On May 3, 2021, we entered into a waiver to the CRG Loan Agreement (the “Waiver”), pursuant to which CRG reduced the financial covenant associated with our revenue derived from sales of YUTIQ and DEXYCU for the twelve-month period ended December 31, 2021 from $45 million to $25 million. On October 8, 2020, we entered into a Waiver to the CRG Loan Agreement (the “Waiver”) pursuant to which CRG waived the financial covenant associated with our revenue derived from sales of YUTIQ and DEXYCU for the twelve-month period ended December 31, 2020 and reduced the revenue covenant for the twelve-month period ending December 31, 2021 from $80 million to $45 million. On November 19, 2019, we entered into a Waiver to the CRG Loan Agreement (the “Waiver”) pursuant to which CRG waived the financial covenant associated with our revenue derived from sales of YUTIQ and DEXYCU for the twelve-month period ended December 31, 2019. If we do not maintain compliance
35
with all of the continuing covenants and other terms and conditions of the CRG Loan or secure a waiver for any non-compliance, then the Lenders may choose to declare an event of default and require that we immediately repay all amounts outstanding, plus penalties and interest, including an exit fee and any prepayment fees, and foreclose on the collateral granted to them to secure such indebtedness. Such repayment would have a material adverse effect on our business and financial condition.
On December 17, 2020, we paid $15.0 million against the CRG Loan obligations in connection with the consummation of the RPA agreement (see Note 3). In addition to repayment of the $13.8 million principal portion of the CRG Loan, we paid (i) the $828,000 Exit Fee, and (ii) accrued and unpaid interest of $378,000 through that date. CRG waived the financial covenant in the CRG Loan associated with the payment of prepayment premiums if prepayment occurred after December 31, 2019 and on or prior to December 31, 2020. As of June 30, 2021, our outstanding balance, including principal and the exit fee, under the CRG Loan was approximately $40.5 million, and consisted of approximately $38.5 million of carrying value (see Note 12), and $2.0 million of the remaining balance of unamortized debt discount related to the CRG Loan.
Future Funding Requirements
At June 30, 2021, we had cash and cash equivalents of $127.6 million. We expect that our cash and cash equivalents combined with anticipated net cash inflows from product sales will fund our operating plan through December 31, 2022, under current expectations regarding (i) the timing and outcomes of our Phase 1 clinical trial for EYP-1901 for the treatment of wet AMD, and (ii) initiation of our Phase 2 clinical trials for EYP-1901 for the treatment of wet AMD. Due to the difficulty and uncertainty associated with the design and implementation of clinical trials, we will continue to assess our cash and cash equivalents and future funding requirements. However, there is no assurance that additional funding will be achieved and that we will succeed in our future operations.
Actual cash requirements could differ from management’s projections due to many factors, including cash generation from sales of YUTIQ and DEXYCU, additional investments in research and development programs, clinical trial expenses for EYP-1901, competing technological and market developments and the costs of any strategic acquisitions and/or development of complementary business opportunities. In addition, the Pandemic has had, and will likely continue to have, a material and adverse impact on our business, including as a result of preventive and precautionary measures that we, other businesses, and governments are taking. Due to these impacts and measures, we have experienced and will likely continue to experience significant and unpredictable reductions in the demand for our commercial products as customers have shut down their facilities and non-essential surgical procedures have been postponed in an effort to promote social distancing and to redirect medical resources and priorities towards the treatment of COVID-19.
The amount of additional capital we will require will be influenced by many factors, including, but not limited to:
|
|
• |
the potential for EYP-1901, as a twice-yearly sustained delivery intravitreal anti-VEGF treatment targeting wet age-related macular degeneration (“wet AMD”), with potential in diabetic retinopathy (“DR”) and retinal vein occlusion (“RVO”); |
|
|
• |
our expectations regarding the timing and clinical development of our product candidates, including EYP-1901 and YUTIQ 50; |
|
|
• |
the success of our U.S. direct commercialization of YUTIQ for the treatment of chronic non-infectious uveitis affecting the posterior segment of the eye including, among other things, patient and physician acceptance of YUTIQ and our ability to obtain adequate coverage and reimbursement for YUTIQ; |
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|
• |
the success of our U.S. direct commercialization of DEXYCU for the treatment of postoperative ocular inflammation including, among other things, patient and physician acceptance of DEXYCU and our ability to obtain adequate coverage and reimbursement for DEXYCU; |
|
|
• |
the cost of commercialization activities for YUTIQ and DEXYCU, including product manufacturing, marketing, sales and distribution; |
|
|
• |
the scheduled March 31, 2022 expiration of pass-through coverage under which DEXYCU is reimbursed for Medicare Part B patients, and our expectations regarding any potential extensions thereof; |
|
|
• |
whether and to what extent we internally fund, whether and when we initiate, and how we conduct other product development programs; |
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|
• |
payments we receive under any new collaboration agreements; |
36
|
|
• |
whether and when we are able to enter into strategic arrangements for our products or product candidates and the nature of those arrangements; |
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|
• |
the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing any patent claims; |
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• |
changes in our operating plan, resulting in increases or decreases in our need for capital; |
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|
• |
our views on the availability, timing and desirability of raising capital; and |
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|
• |
the extent to which our business could be adversely impacted by the effects of the Pandemic or by other pandemics, epidemics or outbreaks. |
We do not know if additional capital will be available when needed or on terms favorable to us or our stockholders. Collaboration, licensing or other agreements may not be available on favorable terms, or at all. We do not know the extent to which we will receive funds from the commercialization of YUTIQ or DEXYCU. If we seek to sell our equity securities, we do not know whether and to what extent we will be able to do so, or on what terms. If available, additional equity financing may be dilutive to stockholders, debt financing may involve restrictive covenants or other unfavorable terms and dilute our existing stockholders’ equity, and funding through collaboration, licensing or other commercial agreements may be on unfavorable terms, including requiring us to relinquish rights to certain of our technologies or products. If adequate financing is not available if and when needed, we may delay, reduce the scope of, or eliminate research or development programs, independent commercialization of YUTIQ and DEXYCU, or other new products, if any, postpone or cancel the pursuit of product candidates, or otherwise significantly curtail our operations to reduce our cash requirements and extend our capital.
Our consolidated statements of historical cash flows are summarized as follows (in thousands):
|
|
|
Six Months Ended |
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|
|
|
|
|||||
|
|
|
June 30, |
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|
|||||
|
|
|
2021 |
|
|
2020 |
|
|
Change |
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|||
|
Net loss: |
|
$ |
(22,290 |
) |
|
$ |
(26,124 |
) |
|
$ |
3,834 |
|
|
Changes in operating assets and liabilities |
|
|
(5,127 |
) |
|
|
450 |
|
|
|
(5,577 |
) |
|
Other adjustments to reconcile net loss to cash flows from operating activities |
|
|
1,775 |
|
|
|
4,208 |
|
|
|
(2,433 |
) |
|
Net cash used in operating activities |
|
$ |
(25,642 |
) |
|
$ |
(21,466 |
) |
|
$ |
(4,176 |
) |
|
Net cash used in investing activities |
|
$ |
(25 |
) |
|
$ |
(42 |
) |
|
$ |
17 |
|
|
Net cash provided by financing activities |
|
$ |
108,388 |
|
|
$ |
22,108 |
|
|
$ |
86,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash outflows for the six months ended June 30, 2021 totaled $25.6 million, primarily due to our net loss of $22.3 million, reduced by $1.8 million of non-cash expenses, which included $2.2 million of stock-based compensation, $1.2 million of amortization of the DEXYCU finite-lived intangible asset, $300,000 of amortization of debt discount and a $2.1 million gain on extinguishment of debt from the forgiveness of our PPP Loan.
Operating cash outflows for the six months ended June 30, 2020 totaled $21.5 million, primarily due to our net loss of $26.1 million, reduced by $4.2 million of non-cash expenses, which included $1.9 million of stock-based compensation, $1.2 million of amortization of the DEXYCU finite-lived intangible asset, and $995,000 of non-cash interest and amortization of debt discount.
Net cash used in investing activities for the six months ended June 30, 2021 consisted of $25,000 of purchases of property and equipment. Net cash used in investing activities for the six months ended June 30, 2020 consisted of $42,000 of purchases of property and equipment.
Net cash provided by financing activities for the six months ended June 30, 2021 totaled $108.4 million and consisted of the following:
|
|
(i) |
$107.9 million of net proceeds from the issuance of 10,465,000 shares of our Common Stock; |
|
|
(ii) |
$499,000 of net proceeds from the issuance of 48,538 shares of our Common Stock sold utilizing our ATM; and |
|
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(iii) |
$173,000 of proceeds from stock issued under our employee stock purchase plan. |
37
Net cash provided by financing activities for the six months ended June 30, 2020 totaled $22.1 million and consisted of the following:
|
|
(i) |
$20.0 million of net proceeds from the issuance of 15,000,000 shares of our Common Stock; and |
|
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(ii) |
$2.0 million of net proceeds from the PPP Loan; and |
|
|
(iii) |
$187,000 of proceeds from stock issued under our employee stock purchase plan. |
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements as of June 30, 2021 that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to investors.
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Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information under this item.
|
Item 4. |
Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2021. The term “disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure, particularly during the period in which this Quarterly Report on Form 10-Q was being prepared. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their desired objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30, 2021, our principal executive officer and our principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2021, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
38
PART II: OTHER INFORMATION
|
Item 1. |
Legal Proceedings |
We are subject to various routine legal proceedings and claims incidental to our business, which management believes will not have a material effect on our financial position, results of operations or cash flows.
We previously disclosed that on May 14, 2020 we had received a subpoena from the Division of Enforcement of the SEC seeking production of certain documents and information on topics including product sales and demand, revenue recognition and accounting in relation to product sales, product sales and cash projections, and related financial reporting, disclosure and compliance matters. On May 4, 2021, we were advised by the SEC Division of Enforcement that it has concluded its investigation of us and that, based on the information it has to date, the Enforcement Division does not intend to recommend an enforcement action against us.
Item 1A. Risk Factors
There have been no material changes to the risk factors previously disclosed in Part I, “Item 1A, Risk Factors”
of our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on March 12, 2021.
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
None
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Item 3. |
Defaults Upon Senior Securities |
None.
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Item 4. |
Mine Safety Disclosures |
None.
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Item 5. |
Other Information |
None.
39
|
Item 6. |
Exhibits |
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Incorporated by Reference to SEC Filing |
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Exhibit No. |
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Exhibit Description |
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Form |
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SEC Filing Date |
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Exhibit No. |
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3.1 |
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8-K12G3 |
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06/19/08 |
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3.1 |
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3.2 |
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Certificate of Amendment of the Certificate of Incorporation of pSivida Corp. |
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10-K |
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09/13/17 |
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3.2 |
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3.3 |
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8-K |
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04/02/18 |
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3.1 |
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3.4 |
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8-K |
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06/27/18 |
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3.1 |
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3.5 |
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10-K |
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09/18/18 |
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3.5 |
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3.6 |
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Amendment No. 1 to the By-Laws of EyePoint Pharmaceuticals, Inc. |
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8-K |
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11/06/18 |
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3.1 |
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3.7 |
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8-K |
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6/23/20 |
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3.1 |
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3.8 |
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8-K |
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12/08/20 |
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3.1 |
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4.1 |
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8-K12G3 |
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06/19/08 |
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4.1 |
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4.2 |
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Warrant to Purchase Common Stock of pSivida Corp., issued March 28, 2018, to SWK Funding, LLC |
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8-K |
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3/29/18 |
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4.1 |
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4.3 |
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8-K |
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3/29/18 |
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10.3 |
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4.4 |
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8-K |
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06/27/18 |
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10.1 |
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10.1 |
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EyePoint Pharmaceuticals, Inc. 2016 Long-Term Incentive Plan, as amended |
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8-K |
|
6/24/21 |
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10.1 |
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10.2 |
|
EyePoint Pharmaceuticals, Inc. 2019 Employee Stock Purchase Plan, as amended. |
|
8-K |
|
6/24/21 |
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10.2 |
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31.1* |
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31.2* |
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32.1** |
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40
|
101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104 |
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Cover Page Interactive Data File (embedded within the inline XBRL document and included in Exhibit 101) |
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* |
Filed herewith |
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** |
Furnished herewith |
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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EyePoint Pharmaceuticals, Inc. |
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Date: August 6, 2021 |
By: |
/s/ Nancy Lurker |
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Name: |
Nancy Lurker |
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|
Title: |
President and Chief Executive Officer (Principal Executive Officer) |
42
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
CERTIFICATIONS
I, Nancy Lurker, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of EyePoint Pharmaceuticals, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date:August 6, 2021
|
Name: Nancy Lurker |
|
Title: President and Chief Executive Officer (Principal Executive Officer) |
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
CERTIFICATIONS
I, George O. Elston, certify that:
|
1. |
I have reviewed this quarterly report on Form 10-Q of EyePoint Pharmaceuticals, Inc.; |
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date:August 6, 2021
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Name: George O. Elston |
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Title: Chief Financial Officer and Head of Corporate Development (Principal Financial Officer and Principal Accounting Officer) |
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Exhibit 32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
In connection with the Quarterly Report of EyePoint Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nancy Lurker, President and Chief Executive Officer of the Company, certify that to the best of my knowledge:
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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Name: Nancy Lurker |
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Title: President and Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
In connection with the Quarterly Report of EyePoint Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, George O. Elston, Chief Financial Officer and Head of Corporate Development of the Company, certify that to the best of my knowledge:
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
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Name: George O. Elston |
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Title: Chief Financial Officer and Head of Corporate Development (Principal Financial Officer and Principal Accounting Officer) |