Encouraging Interim Results of Orion®
Feasibility Study with Four Subjects Cleared for Home
Use
Second Sight Medical Products, Inc. (NASDAQ: EYES) (“Second Sight”
or the “Company”), a developer, manufacturer and marketer of
implantable visual prosthetics that are intended to create an
artificial form of useful vision for blind individuals, today
reported financial results for the three and nine months ended
September 30, 2018.
Recent Corporate Highlights:
- Implanted 20 Argus® II Retinal Prosthesis Systems (Argus II)
worldwide in the third quarter of 2018;
- Reported net sales of $2.2 million in the third quarter of
2018;
- Received final U.S. Medicare hospital outpatient payment rate
of $152,500 for the Argus II and related procedural costs, which
represents the highest average reimbursement rate to date for the
Argus II and reflects a change in the rate setting methodology that
considers multiple years of historical data for a low volume device
such as the Argus II;
- Completed a $4 million private placement in October 2018 with
Gregg Williams, Chairman of the Board;
- Initiated a restructuring of operations outside of North
America to align with overall corporate strategy; this
restructuring is expected to save $3 million per year in operating
expenses;
- Awarded a $1.6 million grant (with the intent to fund $6.3
million over five years subject to annual review and approval) from
the National Institutes of Health to fund the “Early Feasibility
Clinical Trial of a Visual Cortical Prosthesis” that commenced in
January 2018; and
- Appointed Pat Ryan as Chief Operating Officer. In this newly
created role, Mr. Ryan assumed responsibility for Research &
Development, Manufacturing, Planning & Materials, Quality
Assurance, and Information Technology.
“We made important progress on our R&D programs and the
feasibility study for Orion. More recently, we took steps to align
our organizational resources to better support a refined strategy
that focuses on Orion R&D and clinical programs. Five subjects
have been implanted as part of our Orion feasibility study and
early performance of subjects undergoing artificial vision training
is encouraging, with some subjects able to locate signs, locate a
person in front of them and/or distinguish light from dark laundry.
We expect to have a more thorough assessment of performance
potential by the end of the year and will use this data to inform
our continued dialogue with the FDA. We are very excited about the
road ahead and the potential for this ground-breaking technology
based on the early results from the feasibility study, combined
with market research that confirmed a huge addressable market
consisting of individuals blind from glaucoma, diabetic
retinopathy, optic nerve disease and eye injury,” stated Will
McGuire, President and CEO of Second Sight.
“In October, Gregg Williams invested an additional $4 million in
Second Sight through a private placement, to provide us with
additional runway to execute our programs. His continued financial
commitment reflects his belief in the company and the future of
Orion. Given our current plans, we believe we have sufficient funds
through early Q1-2019 and continue to evaluate financing options
with our Board beyond that. We expect to share more details in the
first quarter of 2019,” concluded McGuire.
Third Quarter 2018 Financial Results
Net sales on a GAAP basis were $2.2 million for the third
quarter of 2018 compared to $1.6 million in the third quarter of
2017. Revenue was recognized for 22 units in the third quarter of
2018 as compared to 12 units in the prior year quarter. On a GAAP
basis, revenue recognized per implant was approximately $102,000 in
the third quarter of 2018 and $133,000 in the same period of 2017.
The Company continues to expect its average revenue recognized per
implant unit for the remainder of 2018 to be in a range of $100,000
to $120,000, depending on the geographic mix of implants.
Gross profit for the third quarter of 2018 was $0.5 million
compared to a gross profit of $0.6 million in the third quarter of
2017. Cost of sales in the third quarter of 2018 included an
increase in the Company’s inventory reserve of $0.1 million while
cost of sales in the third quarter of 2017 included a credit of
$0.3 million. The Company expects cost of goods on a per-unit basis
to stabilize, particularly related to overhead absorption and
excess inventory reserve, as it produces more units.
Research and development expense, net of funding received from
grants, increased to $2.7 million during the third quarter of 2018
compared to $1.8 million in the third quarter of 2017. The increase
from the prior year was primarily due to verification and
validation activities related to Argus 2s and consists of increased
headcount, outside services, and costs for internally produced
prototypes. In both the third quarter of 2018 and 2017, the Company
utilized $0.1 million of grant funds to offset costs.
Clinical and regulatory expense was $1.0 million during the
third quarter of 2018 compared to $0.6 million in the third quarter
of 2017. The increase of $0.4 million primarily related to costs
associated with the Orion feasibility study. The Company expects
clinical and regulatory costs to increase in the future as it
conducts additional clinical trials to assess new products such as
Orion and enhancements to existing products, and enrolls more
patients in post-market clinical studies for Argus II.
Selling and marketing expense was $3.0 million during the third
quarter of 2018 compared to $2.4 million in the third quarter of
2017. The increase of $0.6 million is attributable to increased
market development activities, including compensation expenses.
General and administrative expense was $2.3
million in the third quarter of 2018 compared to $2.5 million in
the third quarter of 2017. The decrease of $0.2 million is
primarily due to lower non-cash stock compensation costs from
executive transitions.
Net loss for the third quarter of 2018
was $8.5 million, or a loss of $0.12 per share, compared to a
net loss of $6.7 million, or a net loss of $0.12 per
share, in the third quarter of 2017. The non-GAAP net loss for
the third quarter of 2018, excluding certain non-cash items, was
$7.5 million, or $0.11 per share, compared to a non-GAAP net loss
of $6.0 million, or $0.11 per share in the third quarter of
2017.
As of September 30, 2018, Second Sight had $5.0 million in cash
and cash equivalents. The Company expects its current cash and cash
equivalents to fund operations into early Q1-2019.
For a full reconciliation of non-GAAP financial measures to the
most comparable GAAP financial measures, please refer to the tables
included with this press release.
2018 Key Objectives
- Complete Orion feasibility trial enrollment and prepare for the
initiation of the next phases of clinical testing;
- Gain additional visibility to Orion’s commercialization path,
including pivotal trial and post-market requirements via the FDA’s
Breakthrough Device program;
- Submit regulatory filings for Argus 2s next-generation
externals and execute a commercial launch before year-end; and
- Prioritize Argus activities that maximize our return on
investment or have strategic value.
Conference Call
As previously announced, Second Sight management will host its
third quarter 2018 conference call as follows:
Date |
Wednesday, November 7,
2018 |
Time |
4:30 PM EST |
Telephone U.S: |
(800) 933-2547 |
International: |
(212) 231-2909 |
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
21898690. The archived webcast will be available for 30 days via
the aforementioned URL.
About Second Sight Second Sight Medical
Products, Inc. (NASDAQ: EYES) develops, manufactures and markets
implantable visual prosthetics that are intended to deliver useful
artificial vision to blind individuals. A recognized global leader
in neuromodulation devices for blindness, the Company is committed
to developing new technologies to treat the broadest population of
sight-impaired individuals.
Second Sight’s Argus® II Retinal Prosthesis System is the only
FDA and CE Mark approved device for treating retinitis pigmentosa,
with proven implant durability of multiple years. In 2016, the
Company published five year results. Today, several Argus II
devices have been implanted and continue to be operational in
humans for more than 10 years. The Company is developing the Orion®
Visual Cortical Prosthesis which is intended to provide useful
artificial vision to individuals who are blind due to various
causes. The Company’s U.S. headquarters are in Los Angeles,
California, and European headquarters are in Lausanne, Switzerland.
More information is available at www.secondsight.com.
About the Argus II Retinal Prosthesis System
The Argus® II Retinal Prosthesis System is an established, FDA and
CE mark approved retinal implant that delivers a useful form of
artificial vision to individuals who are blind due to severe to
profound retinitis pigmentosa (RP). The Argus II works in place of
lost photoreceptor cells and sends electrical pulses to remaining
viable retinal cells to induce visual perception. The system works
by converting images captured by a miniature video camera mounted
on 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, enabling the perception of patterns of light in
the brain. The user learns to interpret these visual patterns in
order to regain some visual function. The Argus platform, which
leverages the unique, patented design of its 60-contact array, is
supported by more than 10 years of clinical experience and has been
evaluated in multiple peer reviewed publications. Argus II was also
the first retinal neuromodulation prosthesis to receive widespread
commercial approval and is presently available at more than 50
leading medical centers in North America, Europe, the Middle East
and Asia. Further information on the long-term benefits and risks
can be found in the peer reviewed paper at:
http://www.sciencedirect.com/science/article/pii/S0161642016305796
About the Orion Visual Cortical Prosthesis
SystemLeveraging Second Sight’s 20 years of experience in
neuromodulation for vision, the Orion® Visual Cortical Prosthesis
System is an implanted cortical stimulation device intended to
provide useful artificial vision to individuals who are blind due
to a wide range of causes, including glaucoma, diabetic
retinopathy, optic nerve injury or disease, or forms of cancer and
trauma. The Orion System is intended to convert images captured by
a miniature video camera mounted on glasses into a series of small
electrical pulses. The device is designed to bypass diseased or
injured eye anatomy and to transmit these electrical pulses
wirelessly to an array of electrodes implanted on the surface of
the brain’s visual cortex, where it is intended to provide the
perception of patterns of light. A feasibility study of the Orion I
device is currently underway at the Ronald Reagan UCLA Medical
Center in Los Angeles and Baylor College of Medicine in Houston. No
published in-human data is available yet for the Orion system.
Based on the results of this first in-human testing of the Orion
cortical stimulation device, the Company anticipates initiation of
the next study in 2019.
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,” “goal,” 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, such as stated objectives or goals, or
that are not otherwise historical facts, 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, filed on March 20, 2018 and Form 10-Q, filed on
August 7, 2018, 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.
Investor Relations Contacts:Institutional
InvestorsIn-Site Communications, Inc. Lisa Wilson, President T:
212-452-2793E: lwilson@insitecony.comor Individual InvestorsMZ
North AmericaGreg Falesnik, Managing DirectorT: 949-385-6449E:
greg.falesnik@mzgroup.us
Media Contacts: Nobles Global Communications Laura Nobles or
Helen Shik T: 617-510-4373 E: Laura@noblesgc.comE:
Helen@noblesgc.com
|
SECOND SIGHT MEDICAL PRODUCTS,
INC. |
AND SUBSIDIARY |
|
|
|
|
|
|
|
|
Condensed Consolidated Balance
Sheets |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
|
2018 |
|
2017 |
|
|
|
|
|
(unaudited) |
|
|
ASSETS |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash
and cash equivalents |
|
|
$ |
4,972 |
|
$ |
7,839 |
Accounts receivable, net |
|
|
|
1,194 |
|
|
1,831 |
Inventories,
net |
|
|
|
|
3,604 |
|
|
2,700 |
Prepaid expenses and other current assets |
|
507 |
|
|
795 |
|
|
|
|
|
|
|
|
Total
current assets |
|
|
|
|
10,277 |
|
|
13,165 |
|
|
|
|
|
|
|
|
Property
and equipment, net |
|
|
|
1,114 |
|
|
1,299 |
Deposits
and other assets |
|
|
|
29 |
|
|
33 |
|
|
|
|
|
|
|
|
Total
assets |
|
|
|
$ |
11,420 |
|
$ |
14,497 |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts payable |
|
|
|
$ |
1,546 |
|
$ |
752 |
Accrued expenses |
|
|
|
|
1,975 |
|
|
2,425 |
Accrued compensation expenses |
|
|
2,962 |
|
|
2,611 |
Accrued clinical trial expenses |
|
|
934 |
|
|
779 |
Contract liabilities |
|
|
|
|
111 |
|
|
48 |
|
|
|
|
|
|
|
|
Total
current liabilities |
|
|
|
7,528 |
|
|
6,615 |
|
|
|
|
|
|
|
|
Commitments
and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity |
|
|
|
|
3,892 |
|
|
7,882 |
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity |
|
$ |
11,420 |
|
$ |
14,497 |
|
|
|
|
|
|
|
|
SECOND SIGHT MEDICAL PRODUCTS,
INC. |
AND SUBSIDIARY |
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations |
(in thousands, except per share data) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
|
September
30, |
|
September
30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
Net sales |
|
|
$ |
2,246 |
|
|
$ |
1,610 |
|
|
$ |
5,129 |
|
|
$ |
4,855 |
|
Cost of
sales |
|
|
1,784 |
|
|
|
1,001 |
|
|
|
3,287 |
|
|
|
3,255 |
|
Gross profit |
|
|
462 |
|
|
|
609 |
|
|
|
1,842 |
|
|
|
1,600 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development, net of grants |
|
|
2,672 |
|
|
|
1,826 |
|
|
|
7,567 |
|
|
|
5,622 |
|
Clinical and regulatory |
|
|
964 |
|
|
|
629 |
|
|
|
3,439 |
|
|
|
1,927 |
|
Selling and marketing |
|
|
3,040 |
|
|
|
2,375 |
|
|
|
8,931 |
|
|
|
7,057 |
|
General and administrative |
|
|
2,332 |
|
|
|
2,528 |
|
|
|
8,208 |
|
|
|
8,170 |
|
Total
operating expenses |
|
|
9,008 |
|
|
|
7,358 |
|
|
|
28,145 |
|
|
|
22,776 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
|
(8,546 |
) |
|
|
(6,749 |
) |
|
|
(26,303 |
) |
|
|
(21,176 |
) |
|
|
|
|
|
|
|
|
|
Interest
and other income, net |
|
|
24 |
|
|
|
33 |
|
|
|
67 |
|
|
|
69 |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
$ |
(8,522 |
) |
|
$ |
(6,716 |
) |
|
$ |
(26,236 |
) |
|
$ |
(21,107 |
) |
|
|
|
|
|
|
|
|
|
Net loss per common
share – basic and diluted |
|
|
$ |
(0.12 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.40 |
) |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding – basic and diluted |
|
|
68,763 |
|
|
|
56,799 |
|
|
|
64,113 |
|
|
|
53,206 |
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(8,522 |
) |
|
$ |
(6,716 |
) |
|
$ |
(26,236 |
) |
|
$ |
(21,107 |
) |
|
|
|
|
|
|
|
|
|
Add back
non-cash charges: |
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
877 |
|
|
|
970 |
|
|
|
2,898 |
|
|
|
3,016 |
|
Excess inventory reserve |
|
|
110 |
|
|
|
(275 |
) |
|
|
171 |
|
|
|
(1,731 |
) |
Non GAAP net loss |
|
$ |
(7,535 |
) |
|
$ |
(6,021 |
) |
|
$ |
(23,167 |
) |
|
$ |
(19,822 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share |
|
$ |
(0.12 |
) |
|
$ |
(0.12 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.40 |
) |
|
|
|
|
|
|
|
|
|
Add back
non-cash charges: |
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.05 |
|
|
|
0.06 |
|
Excess inventory reserve |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
(0.03 |
) |
Non GAAP net loss per
share |
|
$ |
(0.11 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.37 |
) |
|
|
|
|
|
|
|
|
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