-- Received CE Mark Certification and U.S. Food
and Drug Administration conditional approval for Argus 2s,
next-generation wearables --
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 months and full year ended
December 31, 2019.
Recent Financial and Corporate Highlights:
- Received CE Mark Certification and U.S. Food and Drug
Administration (“FDA”) conditional approval for Argus 2s, the
Company’s next-generation wearables. Enhancements include a more
powerful video processing unit, an improved camera and more
ergonomic glasses;
- Completed the 12-month testing for the sixth subject in the
Orion® Visual Cortical Prosthesis System (“Orion”) Early
Feasibility Study, with continued positive overall safety and
efficacy results across key measures;
- Commenced validation of a new version of the Functional Low
Vision Observer Rated Assessment (“FLORA 20”), which will serve as
the primary efficacy endpoint for the Orion pivotal trial. This
process has been suspended due to the implementation of COVID-19
social distancing protocols;
- Held in-person discussions with Centers for Medicare and
Medicaid Services (“CMS”) regarding reimbursement pathways
available for Orion; and
- Effected a 1:8 reverse split of the Company’s common
stock.
“We are pleased that our development work on the Argus 2s has
been completed, and that we received both FDA conditional approval
and CE Mark Certification for these new wearables. The improved
technology will serve as an important base for the next generation
Orion system that will be used in the U.S. pivotal study. Our
discussions with FDA around the primary safety endpoint for the
pivotal trial are ongoing, as we work together to determine the
appropriate parameters for a first-in-class technology like Orion,”
stated Pat Ryan, Chief Operating Officer of Second Sight.
“Now that the last subject enrolled in our Early Feasibility
Study has reached the 12-month mark, we are pleased to report that
overall safety and efficacy metrics remain positive and support
moving forward with a pivotal study. It is gratifying to know that
this device can help profoundly blind individuals gain some
independence and participate once again in certain activities of
daily life. We look forward to making continued strides in
advancing this breakthrough technology,” concluded Ryan.
Fourth Quarter 2019 Financial Results
Net sales on a GAAP basis were $0.5 million for the fourth
quarter of 2019 compared to $1.8 million in the fourth quarter of
2018. Revenue was recognized for three units in the fourth quarter
of 2019 as compared to 16 units in the prior year quarter. On a
GAAP basis, revenue recognized per implant was approximately
$166,000 in the fourth quarter of 2019 and $110,000 in the same
period of 2018, reflecting an average higher reimbursement rate set
by CMS in 2019 in the US.
Gross profit for the fourth quarter of 2019 was $0.4 million
compared to $0.2 million in the fourth quarter of 2018. Cost of
sales in the fourth quarter of 2019 was $0.1 million as compared to
$1.6 million in the fourth quarter of 2018. During the fourth
quarter of 2019, costs previously reported as cost of sales are
reported in research and development expense in connection with the
Company’s changeover in production from Argus II commercial units
to Orion prototypes.
Research and development expense, net of funding received from
grants, increased to $4.1 million during the fourth quarter of 2019
compared to $2.4 million in the fourth quarter of 2018. The
increase primarily reflects costs to produce Orion prototypes. The
Company expects research and development expenses to increase in
future periods reflecting additional personnel and verification and
validation testing of Orion prototypes, including costs previously
related to production activities such as facilities and personnel
that have transitioned to Orion development activities.
Clinical and regulatory expense was $1.0 million during the
fourth quarter of 2019 compared to $1.2 million in the fourth
quarter of 2018. The decrease is attributable to lower costs from
the Orion Early Feasibility Study. The Company expects clinical and
regulatory costs to increase in the future as it conducts
additional clinical trials to assess Orion and related enhancements
to the user experience.
Selling and marketing expense was $1.0 million during the fourth
quarter of 2019 compared to $2.4 million in the fourth quarter of
2018. The decrease of $1.4 million is the result of the Company’s
de-emphasis of commercial activities for Argus II.
General and administrative expense was $2.3 million in the
fourth quarter of 2019 compared to $2.5 million in the fourth
quarter of 2018. The decrease of $0.2 million is primarily due to
lower non-cash stock compensation costs from executive
transitions.
Net loss for the fourth quarter of 2019 was $7.9 million, or a
loss of $0.50 per share, compared to a net loss of $8.9 million, or
a net loss of $0.96 per share, in the fourth quarter of 2018.
The non-GAAP net loss for the fourth quarter of 2019, excluding
certain non-cash items, was $7.4 million, or $0.47 per share,
compared to a non-GAAP net loss of $7.6 million, or $0.83 per share
in the fourth quarter of 2018.
Full Year 2019 Financial Results
Net sales on a GAAP basis were $3.4 million in 2019 compared to
$6.9 million in 2018. This decrease is mainly due to lower implant
volumes as the Company restructured its commercial activities to
transition from the Argus II to the Orion platform. In 2019, there
were 26 implants recognized compared to 64 in 2018.
On a GAAP basis, revenue recognized per implant was
approximately $130,000 in 2019 and $108,000 in 2018, reflecting an
average higher reimbursement rate set by CMS in 2019 in the
U.S.
Gross profit in 2019 was $1.2 million, compared to $2.0 million
in 2018. Cost of sales decreased to $2.2 million in 2019 from $4.9
million in 2018, a decrease of $2.7 million. In 2019, cost of sales
was impacted by decreased production volumes. In 2019, the Company
ceased production of Argus II. A significant portion of the
Company’s manufacturing activity related to Argus 2s and Orion
prototypes and thus were reported in research and development
expenses.
Research and development expense increased from $10.0 million in
2018 to $13.1 million in 2019, an increase of $3.1 million, or 31%.
The increase from the prior year was primarily due to increased
headcount, outside services, and costs for internally produced
prototypes related to the Orion platform.
Clinical and regulatory expense decreased from $4.6 million in
2018 to $3.4 million in 2019, a decrease of $1.2 million, or 27%.
The decrease of $1.2 million primarily related to costs associated
with the Orion feasibility study, which were higher in 2018 driven
by the costs of the surgeries and devices in the early phases of
the study, and $0.5 million of grant revenue received in 2019. The
Company expects clinical and regulatory costs to increase in the
future as it conducts additional clinical trials, such as a future
pivotal study with Orion and if the Company enrolls additional
subjects in the Early Feasibility Study.
Selling and marketing expense was $6.1 million in 2019 compared
to $11.3 million in 2018. The decrease of $5.2 million is the
result of the Company’s de-emphasis of commercial activities for
Argus II.
General and administrative expense was $9.2 million in 2019
compared to $10.7 million in 2018. The decrease is primarily
related to reduced personnel costs of $1.0 million that includes a
reduction in non-cash stock compensation expense of $0.7 million
primarily due to executive transitions, patent costs and outside
services.
The Company incurred $3.4 million in restructuring charges in
2019, consisting of a non-cash restructuring charge of $2.6 million
to reserve for Argus II inventory, and $0.8 million for severance
and other employee termination benefits, substantially all of which
were settled in cash during 2019.
Net loss in 2019 was $33.6 million, or $2.28 per share, compared
with a net loss of $35.1 million, or $4.23 per share in 2018. The
non-GAAP adjusted net loss in 2019, excluding non-cash expenses,
was $28.1 million, or a loss of $1.91 per share, compared with a
non-GAAP adjusted net loss of $30.8 million, or $3.71 per share in
2018.
As of December 31, 2019, Second Sight had $11.3 million in cash
and cash equivalents. The Company expects its cash and cash
equivalents to fund operations into the second quarter of 2020.
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.
Conference Call
As previously announced, Second Sight management will host its
fourth quarter 2019 conference call as follows:
Date
Thursday, March 19, 2020
Time
4:30 PM ET
Telephone
U.S:
(800) 710-8126
International:
(720) 634-2491
Webcast (live and archive)
www.secondsight.com under the ‘Investor
Relations’ section.
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. 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 Orion Visual Cortical Prosthesis System
Leveraging Second Sight’s 20 years of experience in
neuromodulation for vision, the Orion Visual Cortical Prosthesis
System (Orion) 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, and eye injury. Orion
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 six-subject early feasibility study of the Orion is
currently underway at the Ronald Reagan UCLA Medical Center in Los
Angeles and the Baylor College of Medicine in Houston. No
peer-reviewed data is available yet for the Orion system. The
Company anticipates negotiating the clinical and regulatory pathway
to commercialization with the FDA as part of the Breakthrough
Devices Program.
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 19, 2020, 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.
Financial Tables
Follow
SECOND SIGHT MEDICAL PRODUCTS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2019
2018
ASSETS Current assets: Cash and cash equivalents
$
11,327
$
4,471
Accounts receivable, net
455
504
Inventories, net
1,029
3,250
Prepaid expenses and other current assets
299
1,395
Total current assets
13,110
9,620
Property and equipment, net
1,122
1,025
Right-of-use asset
2,342
-
Deposits and other assets
25
37
Total assets
$
16,599
$
10,682
LIABILITIES AND EQUITY Current liabilities: Accounts
payable
$
1,093
$
1,305
Accrued expenses
1,889
2,503
Accrued compensation expenses
2,698
2,690
Accrued clinical trial expenses
707
933
Current operating lease liabilities
237
-
Contract liabililties
335
167
Total current liabilities
6,959
7,598
Long term operating lease liabilities
2,365
-
Total liabilities
9,324
7,598
Commitments and contingencies Stockholders’ equity
7,275
3,084
Total liabilities and stockholders’ equity
$
16,599
$
10,682
SECOND SIGHT MEDICAL PRODUCTS, INC. AND
SUBSIDIARY Condensed Consolidated Statements of
Operations (in thousands, except per share data)
Three Months Ended Twelve Months Ended December
31, December 31,
2019
2018
2019
2018
Net sales
$
497
$
1,767
$
3,379
$
6,896
Cost of sales
124
1,601
2,152
4,888
Gross profit
373
166
1,227
2,008
Operating expenses: Research and development, net of grants
$
4,145
$
2,438
$
13,143
$
10,005
Clinical and regulatory, net of grants
950
1,161
3,354
4,600
Selling and marketing
1,001
2,405
6,101
11,336
General and administrative
2,343
2,484
9,226
10,692
Restructuring charges
60
555
3,357
555
Total operating expenses
8,499
9,043
35,181
37,188
Loss from operations
(8,126
)
(8,877
)
(33,954
)
(35,180
)
Interest and other income, net
258
19
362
86
Net loss
$
(7,868
)
$
(8,858
)
$
(33,592
)
$
(35,094
)
Net loss per common share – basic and diluted
$
(0.50
)
$
(0.96
)
$
(2.28
)
$
(4.23
)
Weighted average shares outstanding – basic and diluted
15,598
9,203
14,708
8,297
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 Twelve Months Ended
December 31, December 31,
2019
2018
2019
2018
Net loss
$
(7,868
)
$
(8,858
)
$
(33,592
)
$
(35,094
)
Add back non-cash charges: Stock-based compensation
482
800
2,925
3,698
Excess inventory reserve
-
448
-
619
Restructuring charges/inventory impairment
-
-
2,587
-
Non GAAP net loss
$
(7,386
)
$
(7,610
)
$
(28,080
)
$
(30,777
)
Net loss per share
$
(0.50
)
$
(0.96
)
$
(2.28
)
$
(4.23
)
Add back non-cash charges: Stock-based compensation
0.03
0.08
0.20
0.45
Excess inventory reserve
-
0.05
-
0.07
Restructuring charges/inventory impairment
-
-
0.17
-
Non GAAP net loss per share
$
(0.47
)
$
(0.83
)
$
(1.91
)
$
(3.71
)
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Investor Relations: Institutional
Investors In-Site Communications, Inc. Lisa Wilson,
President T: 212-452-2793 E: lwilson@insitecony.com or Individual Investors MZ North America Greg
Falesnik, Managing Director T: 949-385-6449 E:
greg.falesnik@mzgroup.us
Media Contacts: Nobles Global
Communications Laura Nobles or Helen Shik T: 617-510-4373 E:
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