On November 7, 2019 EyePoint Pharmaceuticals, Inc. (NASDAQ: EYPT), a specialty biopharmaceutical company committed to developing and commercializing innovative ophthalmic products, reported financial results for the third quarter ended September 30, 2019 and highlighted recent corporate developments (Press release, pSivida, NOV 7, 2019, View Source [SID1234550719]).
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"We are pleased with the strong growth in customer orders during the quarter as our sales team is making significant progress in penetrating targeted accounts for both DEXYCU and YUTIQ," said Nancy Lurker, President and Chief Executive Officer of EyePoint Pharmaceuticals. "At the customer level, DEXYCU is gaining momentum at high volume ambulatory surgery centers with increasing repeat orders by physicians who favor its targeted, efficient ocular administration, and its positive efficacy and safety profile. We also saw continued strong growth of 17% in physician demand for YUTIQ quarter over quarter despite a cumbersome reimbursement process under a miscellaneous J-Code. We expect that the issuance of a permanent and specific J-Code for YUTIQ, which went into effect on October 1, 2019, will enable customers to experience a faster and more straightforward reimbursement process and will support continued growth in demand for this important product. These positive customer and reimbursement trends were masked by our distributor’s strategic decision to substantially reduce carried inventory, limiting their restocking during the quarter and resulting in decreased reported revenue from the prior quarter."
Commercial Performance in Third Quarter 2019
DEXYCU (dexamethasone intraocular suspension) 9% for the treatment of post-operative inflammation following ocular surgery
Customer orders up 207% over Q2 with September representing the highest volume month to date, and with repeat customers representing 74% of Q3 order volume.
The average time for an account to re-order dropped from 4.8 weeks during Q2 to 2.5 weeks during Q3, as customers incorporate DEXYCU as part of their surgical protocol.
Medicare fee for service claims continue to be paid consistently, and Medicare Advantage and Commercial insurance claims increased quarter over quarter.
The average time to payment in all payor sectors continues to improve post launch. We expect the time to payment to decrease as payor systems incorporate DEXYCU’s J-Code.
Since launch, over 5,400 patients have been injected with DEXYCU. In that time, over 500 physicians have been trained to use the product.
YUTIQ (fluocinolone acetonide intravitreal implant) 0.18 mg for chronic non-infectious uveitis affecting the posterior segment of the eye
Customer orders up 17% over Q2, prior to effective date of a permanent J-Code.
Repeat customers represented 85% of order volume, and importantly, 40% of the target account list has ordered, representing solid adoption with continued growth opportunity.
Medicare fee for service claims paid consistently and Medicare Advantage and Commercial payors beginning to cover YUTIQ.
The permanent and specific J-Code, J7314, was issued by the Centers for Medicare and Medicaid Services (CMS) one quarter earlier than under prior CMS policy and is in effect as of October 1, 2019.
Corporate Developments
In November 2019, EyePoint announced two new agreements to expand the reach of DEXYCU and YUTIQ within large integrated healthcare networks. An interim agreement with the U.S. Department of Veterans Affairs (VA) became effective on November 2, 2019, adding DEXYCU and YUTIQ to the Federal Supply Schedule. The VA serves approximately nine million beneficiaries. A final VA contract is anticipated within several months and is expected to have a five-year term. In addition, a three-year contract was signed with Vizient Inc., effective November 1, 2019, offering DEXYCU to its diverse membership network. Vizient provides solutions and services to over 50% of the nation’s acute care providers, including 95% of the nation’s academic medical centers, and more than 20% of ambulatory care providers.
In August 2019, EyePoint received a $1 million milestone payment from Ocumension Therapeutics triggered by the approval of its Investigational New Drug (IND) in China for Eyepoint’s three-year intravitreal micro-insert containing 0.18mg of fluocinolone acetonide using the Durasert technology (known as YUTIQ in the United States). The IND allows the importation of finished product into China for use in its initiated clinical trial to support regulatory approval for the treatment of chronic uveitis affecting the posterior segment of the eye. Ocumension has also received a special approval by the Hainan Province People’s Government to market this product for chronic, non-infectious posterior segment uveitis in the Hainan Bo Ao Lecheng International Medical Tourism Pilot Zone.
R&D Highlights
Two oral presentations highlighting 36-month data supporting YUTIQ for the treatment of non-infectious uveitis affecting the posterior segment of the eye occurred at the annual Retina Society meeting held in London, United Kingdom, on September 11-15, 2019. The first presentation "Minimizing Uveitic Recurrences: Results from a 36M Study of Fluocinolone Acetonide Intravitreal Insert (FAi) in Subjects with Chronic Non-Infectious Uveitis Affecting the Posterior Segment" concluded that treatment with YUTIQ not only resulted in a reduction in the 3-year rate of uveitic recurrences but that YUTIQ also reduced the cumulative number of inflammatory episodes in eyes that did relapse. The second presentation, "The Use of Adjunctive Anti-inflammatory Medications: Results from a 36M Study of a Fluocinolone Acetonide
Intravitreal Insert (FAi) in Subjects with Chronic Non-Infectious Uveitis (NIPU) Affecting the Posterior Segment" highlighted that the treatment with a single intravitreal injection of YUTIQ significantly reduced the need for adjunctive therapies in this group of patients.
YUTIQ was highlighted in separate events at the American Academy of Ophthalmology (AAO) 2019 Annual Meeting held October 12 – 15, 2019 in San Francisco, CA. First, an oral presentation entitled, "Effect of Fluocinolone Acetonide Insert on the Presence of Uveitic Macular Edema: Outcomes at 36 Months" was presented at a well-attended session at the Retina Subspecialty Day and demonstrated the long-term durability of YUTIQ for this difficult to treat ocular disease. Additionally, a poster entitled, "Fluocinolone Acetonide Intravitreal Insert for Noninfectious Posterior Uveitis: Analysis of Significant IOP Elevation" provided further evidence of the favorable safety and tolerability profile of YUTIQ.
Review of Results for Third Quarter Ended September 30, 2019
For the three months ended September 30, 2019, total revenue was $2.5 million. Net product revenue was $1.0 million, primarily generated from sales of DEXYCU.
DEXYCU and YUTIQ are sold through a distributor under a title model and, accordingly, product revenue is recognized as inventory is shipped to the distributor and title transfers. Due to this title model, quarterly reported revenue and underlying customer sales will likely track separately for an extended period of time beyond initial launch, as customer demand patterns may not align with the distributor’s inventory restocking procedures.
Net revenue from licenses, royalties and collaborations for the three months ended September 30, 2019 totaled $1.5 million compared to $486,000 in the corresponding quarter in 2018.
Operating expenses for the three months ended September 30, 2019 increased to $16.6 million from $14.0 million in the prior year period, due primarily to investments in sales and marketing infrastructure and program costs, professional services, and cost of sales related to product revenue, partially offset by a decrease in research and development expense. Non-operating expense, net, for the three months ended September 30, 2019 totaled $1.6 million of net interest expense. Net loss for the three months ended September 30, 2019 was $15.6 million, or $0.15 per share, compared to a net loss of $33.1 million, or $0.44 per share, for the prior year quarter.
Review of Nine Months Results Ended September 30, 2019
For the nine months ended September 30, 2019, total net product revenue was $8.9 million. Neither product had net revenue in the corresponding period in 2018. Net revenue from licenses, royalties and collaborations for the nine months ended September 30, 2019 totaled $2.8 million compared to $2.1 million in the corresponding period in 2018.
Operating expenses for the nine months ended September 30, 2019 increased to $50.6 million from $30.1 million in the prior year period, due primarily to investments in sales and marketing infrastructure and program costs, professional services, stock-based compensation, cost of sales related to product revenue and amortization of the DEXYCU intangible asset, partially offset by a decrease in research and development expense. Non-operating expense, net, for the nine months ended September 30, 2019 totaled $7.5 million and consisted of $3.7 million of net interest expense and $3.8 million from the loss on extinguishment of debt related to the payoff of the SWK term loan. Net loss for the nine months ended September 30, 2019 was $46.4 million, or $0.45 per share, compared to a net loss of $74.5 million, or $1.27 per share, for the prior year period.
Cash and cash equivalents at September 30, 2019 totaled $31.8 million compared to $44.2 million at June 30, 2019.
Financial Outlook
We expect that the Company’s existing cash and cash equivalents at September 30, 2019 and cash inflows from anticipated YUTIQ and DEXYCU product sales will be sufficient to fund the Company’s operating plan into 2020.
Conference Call Information
EyePoint will host a conference call today, Thursday, November 7, 2019 at 8:30 AM ET to discuss the results for the third quarter ended September 30 and recent operational developments. To access the conference call, please dial (877) 312-7507 from the U.S. and Canada or (631) 813-4828 (international) at least 10 minutes prior to the start time and refer to conference ID 3149087. A live webcast will be available on the Investor Relations section of the corporate website at View Source A replay of the webcast will also be available on the corporate website.