pSivida Corp. (NASDAQ:PSDV)
F1Q13 Earnings Call
November 8, 2012 4:30 pm ET
Lori Freedman – Vice President, Corporate Affairs, General Counsel and Secretary
Paul Ashton – President and Chief Executive Officer
Leonard S. Ross – Vice President-Finance, Principal Financial Officer
Juan F. Sanchez – Ladenburg Thalmann Securities
Good day ladies and gentlemen, and welcome to the Q1 2013 pSivida Corp. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time (Operator Instructions). As a reminder, today’s conference is being recorded.
I would now like to introduce your host of this conference call, Ms. Lori Freedman. you may begin ma’am.
Thank you, Kevin. Good afternoon everyone and thank you for joining us. After the market-close today, we released our first quarter financial results for fiscal 2013. A copy of the release is available on the Investors section of our website at www.psivida.com. On the call with me today are Dr. Paul Ashton, President and Chief Executive Officer and Len Ross, our Vice President, Finance.
Before I hand the call over to Paul, I need to remind everyone that some of our prepared remarks are and answers to your questions maybe forward-looking in nature. Forward-looking statements are inherently subject to risks and uncertainties. All statements other than statements of historical fact are forward-looking statements and we cannot guarantee that the results and other expectations expressed, anticipated or implied will be realized.
Actual results could differ materially from those anticipated, estimated or projected in the forward-looking statements. For a more detailed discussion of the risk factors that could impact our future results and financial conditions, I’ll refer you to our filings with the SEC including our Annual Report on Form 10-K for the fiscal year ended June 30, 2012. We undertake no obligation to update any forward-looking statements in order to reflect events or circumstances that may arise after this conference call.
With that, I’d like to turn the call over to Paul.
Great, thank you, Lori, and welcome everyone as we discuss the results of our first quarter of fiscal 2013. This was another good quarter for us. Here are some of the headlines and I’ll go into some detail on each of these in a moment. First, we’re making good progress in the planning of the two pivotal Phase III clinical trials for posterior uveitis micro-insert. As you will recall, the FDA only accreted to proceed directly into these trials.
Next, we’re continuing to make strides in the development of our Tethadur platform technology for the delivery of peptides and proteins. Third Alimera Sciences, plans for the direct commercial launch of ILUVIEN in the EU next year and expected resubmission of the NDA in the U.S. in the first quarter of 2013.
And finally, with respect to our capital resources, we ended the quarter with over $17.6 million in cash and cash equivalents, following a registered direct offering in August 2013.
Now I’ll go into some details, the uveitis affecting the back of the eye or posterior segments is considered to be the third or fourth largest cause of blindness in the U.S. with an estimated 30,000 cases of blindness despite affecting less than 200,000 people in the U.S.
So it’s an open indication of that nasty one. The uveitis is an inflammatory condition that can have many triggers or it can occur spontaneously, but in many cases, it’s idiopathic. The disease is currently generally treated with off-label use of systemic drugs. But there are also two FDA approved products to treat the disease, our product Retisert, licensed and sold by Bausch & Lomb and OZURDEX sold by Allergan.
Unfortunately, neither of these products succeeded in significantly changing the malignance of the disease from those patients. As a result, uveitis patients continue to suffer the side effects of systemic steroids, while the side effect of the treatment become too problematic, we often achieved immune modulating drugs such as methyl phosphate, cyclophosphamide and Alimera, which of course have their own systemic problems.
So why do we think our micro-insert could succeed over systemic steroids. First, we believe there is a need for targeted delivery. Our micro-insert delivered fluocinolone acetonide, which is an off-patent steroid. So it provides direct steroid delivery to the eye rather than dosing the entire patients thereby staying the patients’ systemic side effects.
Retisert delivered the same drug with fluocinolone acetonide as our micro-insert and it’s extremely effective in treating uveitis, both have two main issues. It requires a surgical perceivably inserted and further, they have some significant side effects including increased intraocular pressure. In Phase III clinical trials, over 60% of patients developed increased eye pressure, and that’s a pressure above 30 millimeter. At some point during the trial, another 30% of patients needed a second operation to control this pressure.
By contrast, our micro-insert, which delivers fluocinolone acetonide on a steady basis up to 36 months, it injected intraocular uveitis. So there is one significant advantage of the surgically implanted Retisert. with respect to ocular pressure related side effects, our micro-insert is the same one Alimera is marketing, if you’re losing for diabetic macular edema.
So we already know quite a lot about how this micro-insert behaved in the eye. The ILUVIEN and DME studies conducted by Alimera should far fewer elevations of eye pressure less than 20% compared with approximately 60% to Retisert and far fewer pressure lowering surgeries less than 5% compared with our 30% for Retisert.
We expect a similar side effect profile from this micro insert and the uveitis patients. Now I want to reasonably ask if ILUVIEN and DME got a complete response letter from the FDA, why do you think you’ll do any best in uveitis. well, while the ILUVIEN for DME story in the U.S. is not yet over and I am getting to that shortly, it confirmed to point out that drugs are in any event, our foods on the basis of the relative risk versus benefit.
What may be an acceptable risk in the treatment of one disease may not be an acceptable risk in another. The approval of Retisert indicates the FDA, whilst at least in that case; we’ll intercept some side effects as an acceptable tradeoff for an effective therapy in the treatment of uveitis.
And while there are no guarantees, we are hopeful that our micro insert will further improve the risk benefit ratio, and the FDA will also find that improved ratio to the acceptable. Once the FDA cleared our IND for the micro insert, we’re straying to two pivotal Phase III clinical trials in posterior uveitis while planning a total of approximately 300 patients in this trial, which we’ll have at the primary end point, recurrence of the disease at 12 months. The FDA has agreed that we can reference much of the preclinical and clinical data including the human safety data already supplied under the NDA for ILUVIEN for DME.
The posterior uveitis insert is our own product and isn’t licensed to Alimera or anyone else. Now one of the micro-insert itself has the same one as ILUVIEN for DME. We have modified the inserter to allow the micro insert to be administered by the 27 gauge needle rather than the 25 gauge used for ILUVIEN, the 27 gauge is the same size needle that is routinely used for intravitreal injections and we believe this should make it still easier to administer.
Now let’s talk about Tethadur, our peptide protein delivery platform. Tethadur has the potential to provide sustained refill proteins and peptides in many therapeutic areas, and it’s currently being evaluated in ophthalmology under an agreement with our leading global biopharmaceutical company.
In the ophthalmic area, our sustained delivery system for proteins and antibodies could offer significant clinical advance over the existing therapies, which require repeat injections into the eye every one or two months. Now another potentially significant application for our platform Tethadur technology may be in the systemic delivery of proteins and peptides, particularly as biosimilar molecules begin to make the way into the market entry product, the systems that offer way to make a biosimilar into a biobetter.
Now let’s move on to the progress Alimera is making with ILUVIEN in Europe. Alimera announced yesterday, we planned to directly commercially launch ILUVIEN in Germany in Q1, 2013 followed by launches in the UK in Q2 and plans in Q3.
ILUVIEN has received marketing authorization in five EU countries; Austria, France, Germany, Portugal and the UK and have been recommended for marketing authorization in Italy and Spain for the treatments of vision impairment associated with chronic diabetic macular edema considered insufficiently responsive to available therapies.
Alimera estimated that approximately 1 million people suffering from DME in the seven EU countries where marketing authorization has either been received or recommended. In terms of market size, Alimera recently reviewed the size of the market and its views on revenue expectations going through to 2017 are posted on our website.
Our agreement with Alimera entangled us to receive 20% of net profit as defined on a country by country basis. Alimera has also recently completed $40 million financing, which Alimera believes from the commercial launch of the ILUVIEN in Germany, the UK and France.
Alimera also announced yesterday that it intends to resubmit the NDA for ILUVIEN for diabetic macular edema to the FDA during the first quarter of 2013, using data from its two previously completed pivotal Phase III clinical trials. resubmission will focus on the population of patients with chronic DME, the same group, for which marketing approval for ILUVIEN was granted in the various EU countries. Approval end of the year in the U.S. would entitle pSivida to $25 million milestone payment and 20% of net profit as defined from U.S. sales of ILUVIEN by Alimera.
Finally, the investigator-sponsored Phase I/II dose-escalation study of pSivida's bioerodible, injectable latanoprost micro-insert for glaucoma and ocular hypertension is ongoing. Pfizer has an exclusive option under various circumstances to license the development and commercialization worldwide of this micro-insert. So also we’ve had a very good quarter and ended the quarter with $17.6 million in cash and no debt.
So with that, I’ll turn the call over to Len, to take us through the financials. Len?
Leonard S. Ross
Thank you, Paul and good afternoon everyone. I will briefly review our first quarter fiscal year 2013 results reported earlier today, starting with our financial position. At September 30, 2012 we had cash, cash equivalents and marketable securities of $17.6 million, a net increase of $3 million during the quarter, which included $4.7 million of net proceeds from our August 2012 registered direct share offering.
We anticipate that these capital resources, together with expected royalty income from Bausch & Lomb, should enable us to fund our operations, that’s currently planned through the end of calendar year 2013, including plans for Phase III clinical trials of a posterior uveitis micro insert. The Company’s funding of its operations beyond 2013 will depend on the amount and timing of cash receives pursuant to our existing collaborations with Alimera, Bausch & Lomb and Pfizer and any potential future collaboration agreements, as well as any possible future financing transactions.
As Paul mentioned Alimera has reported its intention to proceed with the direct commercial launch of ILUVIEN for DME in Germany, the UK and France during calendar year 2013. As you know, we are entitled to 20% share of net profits as defined, measured quarterly in a country-by-country basis under the terms of our collaboration agreement. However, we do not know either the amount or the timing of any such payments that we may receive.
Turning to our results for the September 2012 quarter, we reported total revenues of $553,000, compared to $1.7 million for the same period last year. The revenue decrease was primarily due to the recognition of $1.1 million of revenue in the prior year period as a result of the July 2011 termination of a field-of-use license by Intrinsic. Actually offset by a $200,000 increase in royalty income from sales of Retisert by Bausch & Lomb.
Research and development expense totaled $1.5 million for the September 2012 quarter, compared to $2.1 million in the prior year period. The substantial decrease was primarily attributable to reduced amortization of intangible assets, resulting from our $14.8 million, intangible asset impairment write-down at December 31, 2011.
General and administrative expense totaled $1.6 million for the quarter ended September 30, 2012, compared to $2.1 million last year. This year-over-year decrease was primarily attributable to our lower levels of stock-based compensation and professional fees.
Net loss for the three months ended September 30, 2012 was $2.6 million, or $0.11 per share, compared to a net loss of $2.4 million or $0.12 per share for the prior year quarter.
I will now turn the call back over to Paul.
Thanks Len. So to sum up, it’s been an another excellent quarter. We are making good progress in the filing of the two pivotal Phase III clinical trials for micro insert for posterior uveitis. We are continuing to make progress with our Tethadur peptide protein delivery system and are working with a major player in ophthalmic applications of this platform technology. ILUVIEN for DME is also progressing with the Alimera financing and the announced plan for the commercial launch of ILUVIEN for they may in Germany in Q1 2013, followed by launches in the U.K. in Q2 and France in Q3. Alimera has also announced plan to resubmit the NDA for ILUVIEN for diabetic macular edema to the FDA in Q1 2013.
So at this point we would be happy to take your questions. Operator would you please initiate the Q&A portion of the call.
(Operator Instructions) Our first question comes from Juan Sanchez of Ladenburg.
Juan F. Sanchez – Ladenburg Thalmann Securities
Couple of questions, the first one is just a clarification is the injector that ILUVIEN uses different injector, ILUVIEN using the uveitis product. And the second question will be whether or not Alimera has shared with you the analysis of their plan to submit to the FDA and if so you any judgment about the quality of the submission?
Well. First with respect to the injector yes, it’s a different injector than the one which Alimera plans to commercially launch. The primary difference is the needle itself, is significantly smaller. Alimera, ILUVIEN injector is a 25 gauge. We've not go back down to a 27 gauge. It kind of depends on how you use, you also injecting eye balls, but it's certainly very easier to inject with small gauge needles than a larger needle.
With respect to your second question, will we see the resubmission Alimera filing, yes we will get to review that under our agreement with Alimera, I have not yet seen it.
Juan F. Sanchez – Ladenburg Thalmann Securities
Thank you, guys.
(Operator Instructions) And I am not showing any further questions at this time.
Okay, then, I’d like to thank you all for joining us today and I look forward to speaking with you again next quarter. In the meantime, if you have any additional questions, please feel free to contact us. Thanks very much.
Ladies and gentlemen that concludes today's presentation you may now disconnect and have a wonderful day.