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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020  

OR

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 000-51122

 

EyePoint Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction of

incorporation or organization)

 

26-2774444

(I.R.S. Employer

Identification No.)

 

 

 

480 Pleasant Street

Watertown, MA

(Address of principal executive offices)

 

02472

(Zip Code)

(617) 926-5000

(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:

 

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001

EYPT

The Nasdaq Stock Market LLC

 

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. Yes      No  

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). Yes      No

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.

 

Large accelerated filer 

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

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      No  

There were 125,217,066 shares of the registrant’s common stock, $0.001 par value, outstanding as of July 30, 2020.

 

 


EYEPOINT PHARMACEUTICALS, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

 

 

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Unaudited Financial Statements

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets – June 30, 2020 and December 31, 2019

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss – Three and Six Months Ended June 30, 2020 and 2019

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity – Three and Six Months Ended June 30, 2020 and 2019

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2020 and 2019

 

6

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

7

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

26

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

38

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

38

 

 

 

 

 

PART II: OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

39

 

 

 

 

 

Item 1A.

 

Risk Factors

 

39

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

43

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

43

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

43

 

 

 

 

 

Item 5.

 

Other Information

 

43

 

 

 

 

 

Item 6.

 

Exhibits

 

44

 

 

 

 

 

Signatures

 

46

 

 

 

 

 

Certifications

 

 

 

 

 

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)

 

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

22,814

 

 

$

22,214

 

Accounts and other receivables, net

 

 

7,350

 

 

 

11,368

 

Prepaid expenses and other current assets

 

 

5,895

 

 

 

5,997

 

Inventory

 

 

3,773

 

 

 

2,138

 

Total current assets

 

 

39,832

 

 

 

41,717

 

Property and equipment, net

 

 

412

 

 

 

357

 

Operating lease right-of-use assets

 

 

2,852

 

 

 

3,078

 

Intangible assets, net

 

 

26,439

 

 

 

27,669

 

Restricted cash

 

 

150

 

 

 

150

 

Total assets

 

$

69,685

 

 

$

72,971

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,882

 

 

$

4,192

 

Accrued expenses

 

 

5,131

 

 

 

6,832

 

Deferred revenue

 

 

 

 

 

15

 

Other current liabilities

 

 

573

 

 

 

481

 

Total current liabilities

 

 

9,586

 

 

 

11,520

 

Long-term debt

 

 

50,259

 

 

 

47,223

 

Operating lease liabilities - noncurrent

 

 

2,626

 

 

 

2,898

 

Other long-term liabilities

 

 

3,026

 

 

 

3,000

 

Total liabilities

 

 

65,497

 

 

 

64,641

 

Contingencies (Note 14)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares

   issued and outstanding

 

 

 

 

 

 

Common stock, $.001 par value, 300,000,000 and 150,000,000 shares authorized at June 30, 2020 and December 31, 2019, respectively; 125,197,899 and 109,417,322 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 

 

125

 

 

 

109

 

Additional paid-in capital

 

 

494,633

 

 

 

472,667

 

Accumulated deficit

 

 

(491,410

)

 

 

(465,286

)

Accumulated other comprehensive income

 

 

840

 

 

 

840

 

Total stockholders' equity

 

 

4,188

 

 

 

8,330

 

Total liabilities and stockholders' equity

 

$

69,685

 

 

$

72,971

 

 

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)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales, net

 

$

3,706

 

 

$

6,705

 

 

$

8,393

 

 

$

7,932

 

License and collaboration agreement

 

 

35

 

 

 

5

 

 

 

2,055

 

 

 

70

 

Royalty income

 

 

381

 

 

 

500

 

 

 

1,163

 

 

 

1,220

 

Total revenues

 

 

4,122

 

 

 

7,210

 

 

 

11,611

 

 

 

9,222

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales, excluding amortization of acquired intangible assets

 

 

502

 

 

 

706

 

 

 

1,482

 

 

 

1,035

 

Research and development

 

 

3,276

 

 

 

3,955

 

 

 

8,129

 

 

 

7,753

 

Sales and marketing

 

 

6,089

 

 

 

7,284

 

 

 

14,214

 

 

 

14,595

 

General and administrative

 

 

4,792

 

 

 

4,815

 

 

 

9,152

 

 

 

9,425

 

Amortization of acquired intangible assets

 

 

615

 

 

 

615

 

 

 

1,230

 

 

 

1,230

 

Total operating expenses

 

 

15,274

 

 

 

17,375

 

 

 

34,207

 

 

 

34,038

 

Loss from operations

 

 

(11,152

)

 

 

(10,165

)

 

 

(22,596

)

 

 

(24,816

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other income, net

 

 

8

 

 

 

266

 

 

 

62

 

 

 

509

 

Interest expense

 

 

(1,806

)

 

 

(1,599

)

 

 

(3,590

)

 

 

(2,619

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

(3,810

)

Total other expense, net

 

 

(1,798

)

 

 

(1,333

)

 

 

(3,528

)

 

 

(5,920

)

Net loss

 

$

(12,950

)

 

$

(11,498

)

 

$

(26,124

)

 

$

(30,736

)

Net loss per share - basic and diluted

 

$

(0.10

)

 

$

(0.11

)

 

$

(0.22

)

 

$

(0.30

)

Weighted average shares outstanding - basic and diluted

 

 

124,771

 

 

 

106,238

 

 

 

120,151

 

 

 

100,847

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(12,950

)

 

$

(11,498

)

 

$

(26,124

)

 

$

(30,736

)

Foreign currency translation adjustments

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Comprehensive loss

 

$

(12,950

)

 

$

(11,497

)

 

$

(26,124

)

 

$

(30,735

)

 

See notes to consolidated financial statements

4


EYEPOINT PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(In thousands except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Number of

 

 

Par Value

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income

 

 

Equity

 

Balance at March 31, 2019

 

 

95,554,228

 

 

$

96

 

 

$

446,673

 

 

$

(427,731

)

 

$

839

 

 

$

19,877

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(11,498

)

 

 

 

 

 

(11,498

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

Issuance of stock, net of issue cost

 

 

10,526,500

 

 

 

10

 

 

 

18,333

 

 

 

 

 

 

 

 

 

18,343

 

Exercise of stock options

 

 

25,000

 

 

 

 

 

 

44

 

 

 

 

 

 

 

 

 

44

 

Vesting of stock units

 

 

192,064

 

 

 

 

 

 

(53

)

 

 

 

 

 

 

 

 

(53

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,496

 

 

 

 

 

 

 

 

 

1,496

 

Balance at June 30, 2019

 

 

106,297,792

 

 

$

106

 

 

$

466,493

 

 

$

(439,229

)

 

$

840

 

 

$

28,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2020

 

 

124,741,832

 

 

$

125

 

 

$

493,969

 

 

$

(478,460

)

 

$

840

 

 

$

16,474

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(12,950

)

 

 

 

 

 

(12,950

)

Vesting of stock units

 

 

456,067

 

 

 

 

 

 

(71

)

 

 

 

 

 

 

 

 

(71

)

Stock-based compensation

 

 

 

 

 

 

 

 

735

 

 

 

 

 

 

 

 

 

735

 

Balance at June 30, 2020

 

 

125,197,899

 

 

$

125

 

 

$

494,633

 

 

$

(491,410

)

 

$

840

 

 

$

4,188

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Common Stock

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

 

Number of

 

 

Par Value

 

 

Paid-In

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income

 

 

Equity

 

Balance at January 1, 2019

 

 

95,372,236

 

 

 

95

 

 

 

445,192

 

 

 

(408,493

)

 

 

839

 

 

 

37,633

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(30,736

)

 

 

 

 

 

(30,736

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

Issuance of stock, net of issue cost

 

 

10,526,500

 

 

 

10

 

 

 

18,333

 

 

 

 

 

 

 

 

 

18,343

 

Exercise of stock options

 

 

166,760

 

 

 

1

 

 

 

307

 

 

 

 

 

 

 

 

 

308

 

Vesting of stock units

 

 

232,296

 

 

 

 

 

 

(73

)

 

 

 

 

 

 

 

 

(73

)

Stock-based compensation

 

 

 

 

 

 

 

 

2,734

 

 

 

 

 

 

 

 

 

2,734

 

Balance at June 30, 2019

 

 

106,297,792

 

 

$

106

 

 

$

466,493

 

 

$

(439,229

)

 

$

840

 

 

$

28,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

 

109,417,322

 

 

$

109

 

 

$

472,667

 

 

$

(465,286

)

 

$

840

 

 

$

8,330

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(26,124

)

 

 

 

 

 

(26,124

)

Issuance of stock, net of issue costs

 

 

15,000,000

 

 

 

15

 

 

 

19,975

 

 

 

 

 

 

 

 

 

19,990

 

Employee stock purchase plan

 

 

161,660

 

 

 

1

 

 

 

186

 

 

 

 

 

 

 

 

 

187

 

Vesting of stock units

 

 

618,917

 

 

 

 

 

 

(90

)

 

 

 

 

 

 

 

 

(90

)

Stock-based compensation

 

 

 

 

 

 

 

 

1,895

 

 

 

 

 

 

 

 

 

1,895

 

Balance at June 30, 2020

 

 

125,197,899

 

 

$

125

 

 

$

494,633

 

 

$

(491,410

)

 

$

840

 

 

$

4,188

 

 

 

See notes to consolidated financial statements

5


EYEPOINT PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Six Months Ended

 

 

 

June 30

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(26,124

)

 

$

(30,736

)

Adjustments to reconcile net loss to cash flows used in operating activities:

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

 

1,230

 

 

 

1,230

 

Depreciation of property and equipment

 

 

88

 

 

 

78

 

Amortization of debt discount

 

 

348

 

 

 

270

 

Non-cash interest expense

 

 

647

 

 

 

406

 

Loss on extinguishment of debt

 

 

 

 

 

3,810

 

Stock-based compensation

 

 

1,895

 

 

 

2,734

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable and other current assets