Second Sight Medical Products, Inc. (NASDAQ: EYES) ("Second
Sight" or "the Company"), a developer, manufacturer and marketer of
implantable visual prosthetics to provide useful vision to blind
patients, today reported financial results for the three- and
six-month periods ended June 30, 2017.
Recent Company Highlights:
- Generated net sales of $2.2 million in
the second quarter of 2017 compared to $1.0 million in the second
quarter of 2016;
- Increased implant volume to 19 Argus®
II Retinal Prosthesis Systems (Argus II) during the second quarter
of 2017, compared to 14 in the first quarter of 2017 and 11 in the
second quarter of 2016;
- Submitted an Investigational Device
Exemption (IDE) application to the FDA in mid-July seeking approval
to conduct a feasibility study of the Orion™ Visual Cortical
Prosthesis System (Orion) treating up to five human subjects;
- Expanded U.S. reimbursement coverage
with the decision by Novitas authorizing coverage for medically
necessary Argus II outpatient procedures. Novitas is the largest
Medicare Administrative Contractor (MAC) in the U.S. with
jurisdictions in 11 states and the District of Columbia,
representing almost 80 million people;
- Performed the first Argus II implant at
a center in Boston, Massachusetts, which represents our first
Center of Excellence in the Northeastern U.S.; and,
- Continued the expansion of our global
footprint with market entry into South Korea and Russia in the
second quarter of 2017.
“We are encouraged by the momentum in the business and pleased
with our second quarter results, including our expanded Medicare
coverage and the submission of the Orion IDE to the FDA requesting
approval to begin human trials. The Novitas decision authorizing
coverage for medically necessary Argus procedures significantly
expands the Company’s total coverage area by almost 50% in the U.S.
to include 28 states, two territories, and the District of
Columbia,” stated Will McGuire, President and Chief Executive
Officer of Second Sight.
“We are also pleased to have opened our first center in the
Northeastern U.S., where we have Medicare coverage and access to a
significant patient population. We expect to open additional
centers in this region later this year and are excited about the
opportunity for growth. Lastly, the Orion IDE submission to the FDA
is an important milestone as we advance a technology that could
provide useful vision to millions of people with no option today,”
McGuire added.
Second Quarter 2017 Financial Results
Total revenue was $2.2 million for the second quarter of
2017, compared with $1.0 million in the second quarter of
2016. The higher revenue is mainly due to the increase in implant
volume and the higher CMS U.S. reimbursement rate available in
2017.
Gross profit was $1.1 million in the second quarter of
2017, compared to a $2.2 million gross loss in the second quarter
of 2016. Gross profit in the second quarter of 2017 included a
credit of $743,000 to partially reverse for a previously
established reserve for slow-moving inventory as implant volume
rebounded. The gross loss for the second quarter of 2016 included a
reserve for slow-moving inventory of $1.5 million.
Total operating expenses in the second quarter of 2017
were $8.0 million, compared to $6.3 million in the second
quarter of 2016, reflecting higher personnel and consulting costs
related to the Company’s development and commercial efforts. Grant
revenue, which is used to offset research and development costs,
also declined by $682,000 in the second quarter of 2017 compared to
the second quarter of 2016, due to a grant that was fully utilized
by the end of the first quarter of 2017 and provided no benefit in
the second quarter of 2017.
Net loss for the second quarter of 2017 was $6.8 million,
or $0.12 per share, compared to a net loss of $8.5 million, or
$0.23 per share, in the prior year quarter. The Company
recorded net non-cash charges of $0.3 million and $2.3 million
during the second quarters of 2017 and 2016, respectively.
The non-GAAP adjusted net loss for the second quarter of 2017,
excluding non-cash charges, was $6.6 million, or $0.12 per share,
compared with a non-GAAP adjusted net loss of $6.2 million, or
$0.17 per share in the second quarter of 2016.
Six Months Ended June 30, 2017 and 2016 Financial
Results
For the six months ended June 30, 2017, total revenue
was $3.2 million compared to $2.1 million in 2016. This
increase is mainly due to the higher implant levels and U.S.
reimbursements rates in 2017 compared to the prior year.
Gross profit in first six months of 2017 was $1.0 million,
versus a gross loss of $2.1 million in 2016. Gross profit for
the first six months of 2017 included a credit of $1.5 million to
partially reverse for a previously established reserve for
slow-moving inventory as implant volume rebounded. The gross loss
for the first half of 2016 included a reserve for slow-moving
inventory of $1.5 million.
Total operating expenses during the first six months of 2017
were $15.4 million versus $12.3 million during the same
period in 2016. This increase is primarily due to higher costs for
compensation and outside consultants as the Company increased its
commercial and development activities. Grant revenue, which is used
to offset research and development costs, also declined by $1.1
million in the first half of 2017, due to a grant that was fully
utilized by the end of first quarter of 2017, and provided minimal
expense offset in the first half of 2017 compared to the first half
of 2016.
Operating loss in the first half of 2017 was $14.4 million,
compared to an operating loss of $14.3 million in the
comparable 2016 period.
Net loss for the six months ended June 30,
2017 was $14.4 million, or $0.28 per share, compared
with a net loss of $14.3 million, or $0.39 per share in the prior
year period. The non-GAAP adjusted net loss for the six months
ended June 30, 2017, excluding non-cash expenses, was $13.8
million, or a loss of $0.27 per share, compared with a non-GAAP
adjusted net loss of $11.0 million, or $0.30 per share in the prior
year period.
2017 Key Objectives
- Validate revised Centers of Excellence
commercial model in U.S. in order to demonstrate adoption
- Implant Orion in humans, creating the
opportunity to treat up to six million blind individuals worldwide
who today have no options
- Demonstrate the ability to treat
better-sighted Retinitis Pigmentosa (RP) patients in order to
expand our treatable population beyond bare light RP
Conference Call
As previously announced, Second Sight management will host its
second quarter 2017 conference call as follows:
Date August 1, 2017 Time 4:30 PM EDT Telephone
U.S.:
(888) 225-7848 International: (303) 223-2685 Webcast (live and
archive)
www.secondsight.com under the 'Investor
Relations' section.
A replay of the conference call will be available for two weeks
after the call's completion by dialing (800) 633-8284 (U.S.)
or (402) 977-9140 (International). The conference ID for the
replay is 21855626. The archived webcast will be available for 30
days via the aforementioned URL.
About the Argus II Retinal Prosthesis System
Second Sight's Argus II System provides electrical stimulation
that bypasses the defunct retinal cells and stimulates remaining
viable cells inducing visual perception in individuals with severe
to profound Retinitis Pigmentosa. The Argus II works by converting
images captured by a miniature video camera mounted on the
patient's glasses into a series of small electrical pulses, which
are transmitted wirelessly to an array of electrodes implanted on
the surface of the retina. These pulses stimulate the retina's
remaining cells, intending to result in the perception of patterns
of light in the brain. The patient must learn to interpret these
visual patterns, having the potential to regain some visual
function. The Argus II was the first artificial retina to receive
widespread approval, and is offered at approved centers in Canada,
France, Germany, Italy, Russia, Saudi Arabia, South Korea, Spain,
Taiwan, Turkey, United Kingdom, and the U.S.
About Second Sight
Second Sight's mission is to develop, manufacture and market
innovative implantable visual prosthetics to enable blind
individuals to achieve greater independence. Second Sight has
developed and now manufactures and markets the Argus® II Retinal
Prosthesis System. Enrollment has been completed in a feasibility
trial to test the safety and utility of the Argus II in individuals
with Dry Age-Related Macular Degeneration. Second Sight is also
developing the Orion™ Visual Cortical Prosthesis to restore some
vision to individuals who are blind due to causes other than
preventable or treatable conditions. U.S. Headquarters are in
Sylmar, California, and European Headquarters are in Lausanne,
Switzerland. For more information, visit www.secondsight.com.
Safe Harbor
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange and Exchange
Act of 1934, as amended, which are intended to be covered by the
"safe harbor" created by those sections. All statements in this
release that are not based on historical fact are "forward looking
statements." These statements may be identified by words such as
"estimates," "anticipates," "projects," "plans," or "planned,"
"seeks," "may," "will," "expects," "intends," "believes," "should"
and similar expressions or the negative versions thereof and which
also may be identified by their context. All statements that
address operating performance or events or developments that Second
Sight expects or anticipates will occur in the future are
forward-looking statements. While management has based any forward
looking statements included in this release on its current
expectations, the information on which such expectations were based
may change. Forward-looking statements involve inherent risks and
uncertainties which could cause actual results to differ materially
from those in the forward-looking statements, as a result of
various factors including those risks and uncertainties described
in the Risk Factors and in Management's Discussion and Analysis of
Financial Condition and Results of Operations sections of our
Annual Report on Form 10-K as filed on March 16,
2017, and our other reports filed from time to time with
the Securities and Exchange Commission. We urge you to
consider those risks and uncertainties in evaluating our
forward-looking statements. We caution readers not to place undue
reliance upon any such forward-looking statements, which speak only
as of the date made. Except as otherwise required by the federal
securities laws, we disclaim any obligation or undertaking to
publicly release any updates or revisions to any forward-looking
statement contained herein (or elsewhere) to reflect any change in
our expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is
based.
Reconciliation to Non-GAAP Financial Measures
In addition to reporting all financial information required in
accordance with generally accepted accounting principles (GAAP),
the Company is also reporting Non-GAAP net loss and Non-GAAP net
loss per share which are non-GAAP financial measures. Non-GAAP net
loss and Non-GAAP net loss per share are not measurements of
financial performance under GAAP and should not be used in
isolation or as a substitute or alternative to net income,
operating income or any other performance measure derived in
accordance with GAAP, or as a substitute or alternative to cash
flow from operating activities or a measure of the Company’s
liquidity. In addition, the Company's definition of Non-GAAP net
loss and Non-GAAP net loss per share may not be comparable to
similarly titled non-GAAP financial measures reported by other
companies. Non-GAAP net loss and Non-GAAP net loss per share, as
defined by the Company, represent net loss adjusted for non-cash
stock-based compensation and a reserve for excess inventory.
Management believes that these non-GAAP financial measures provide
useful supplemental information regarding the performance of the
Company’s business operations and facilitates comparisons to the
Company’s historical operating results. For a full reconciliation
of Non-GAAP net loss to the most comparable GAAP financial
measures, please see the tables at the end of this press
release.
Financial Tables Follow
SECOND SIGHT MEDICAL PRODUCTS, INC. AND
SUBSIDIARY Condensed
Consolidated Balance Sheets (in thousands)
June
30,
December 31, 2017 2016 (unaudited)
ASSETS Current assets:
Cash $ 763 $ 539 Money market funds 17,366 10,336 Accounts
receivable, net 926 274 Inventories, net 3,052 3,416 Prepaid
expenses and other current assets 702 717
Total current assets 22,809 15,282 Property and equipment,
net 1,414 1,489 Deposits and other assets 44 39
Total assets $ 24,267 $ 16,810
LIABILITIES AND
EQUITY Current liabilities: Accounts payable $ 558 $ 1,156
Accrued expenses 2,304 2,088 Accrued compensation expenses 1,823
1,600 Accrued clinical trial expenses 632 629 Deferred revenue 147
85 Deferred grant revenue
-
104 Total current liabilities 5,464 5,662
Commitments and contingencies Stockholders’ equity
18,803 11,148 Total liabilities and stockholders’
equity $ 24,267 $ 16,810
SECOND SIGHT MEDICAL PRODUCTS,
INC.
AND SUBSIDIARY
Condensed Consolidated Statements of Operations (in
thousands, except per share data) (unaudited)
Three
Months Ended Six Months Ended June 30, June
30, 2017 2016
2017 2016
Net sales $ 2,236 $ 1,037 $ 3,245 $ 2,090 Cost of sales
1,127 3,241 2,254 4,153
Gross profit (loss) 1,109 (2,204 ) 991 (2,063 )
Operating expenses: Research and development, net of grants 1,949
916 3,796 1,678 Clinical and regulatory 684 568 1,298 1,346 Selling
and marketing 2,447 2,199 4,682 4,211 General and administrative
2,901 2,620 5,642
5,030 Total operating expenses 7,981 6,303 15,418 12,265
Loss from operations (6,872 ) (8,507 ) (14,427 ) (14,328 )
Interest and other income, net 29 3
36 8 Net loss
$ (6,843 ) $
(8,504 ) $
(14,391 ) $
(14,320 ) Net loss per common
share – basic and diluted
$ (0.12
) $ (0.23 )
$ (0.28 ) $
(0.39 ) Weighted average shares
outstanding – basic and diluted
56,513
37,540 51,380
36,756 SECOND SIGHT
MEDICAL PRODUCTS, INC. AND SUBSIDIARY
Reconciliation of Non-GAAP Information to
Most Comparable GAAP Measures (in thousands, except per share
data) (unaudited)
Three Months Ended Six Months
Ended June 30, June 30, 2017
2016 2017
2016 Net loss $ (6,843 ) $
(8,504 ) $ (14,391 ) $ (14,320 ) Add back non-cash charges:
Stock-based compensation 1,000 802 2,046 1,823 Excess inventory
reserve (743 ) 1,505 (1,456 )
1,505 Non GAAP net loss $ (6,586 ) $ (6,197 ) $ (13,801 ) $
(10,992 ) Net loss per share $ (0.12 ) $ (0.23 ) $ (0.28 ) $
(0.39 ) Add back non-cash charges: Stock-based compensation
0.01 0.02 0.04 0.05 Excess inventory reserve (0.01 )
0.04 (0.03 ) 0.04 Non GAAP net loss per
share
$ (0.12 )
$ (0.17 ) $
(0.27 ) $ (0.30
)
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version on businesswire.com: http://www.businesswire.com/news/home/20170801006498/en/
Investor Relations:Institutional
InvestorsIn-Site Communications, Inc.Lisa Wilson,
President212-452-2793lwilson@insitecony.comorIndividual InvestorsMZ North AmericaGreg Falesnik,
Managing Director949-385-6449greg.falesnik@mzgroup.us
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