Second Sight Medical Products, Inc. (NASDAQ: EYES) ("Second Sight" or
"the Company"), a developer, manufacturer and marketer of implantable
visual prosthetics to provide some useful vision to blind patients,
today reported financial results for the three-month and twelve-month
periods ended December 31, 2015.
Recent Company Highlights:
-
Net revenue increased by 55% to $2.4 million in the fourth quarter of
2015; net revenue for the full year 2015 grew 163% to $8.9 million;
-
Implanted 21 Argus® II Retinal Prosthesis Systems worldwide during the
fourth quarter of 2015 for a total of 75 implants in 2015. This
compares to 15 implants in the fourth quarter of 2014 and a total of
29 implants in 2014, representing implant volume growth of 40% and
159% respectively;
-
Improved gross margin to 29% versus 7% during the fourth quarter of
2014 and 41% for the full year versus a margin of negative 5% in 2014;
-
Added two new implanting centers during the fourth quarter for a total
of 33 worldwide at the end of 2015, compared to 18 at the end of 2014;
-
Successfully implanted four of the five subjects in the Company's Dry
Age-Related Macular Degeneration (AMD) clinical trial in the U.K.;
-
Ended 2015 with Medicare coverage for four Medicare Administrative
Contractor (MACs) regions across 16 states, compared with one MAC
jurisdiction covering four states at the end of 2014;
-
Added one MAC jurisdiction in February 2016 covering Florida, Puerto
Rico and the U.S. Virgin Islands bringing the current total to five
MAC jurisdictions across 17 states;
-
Signed exclusive agreement with Tecnosalud to distribute the Argus II
in Argentina; and
-
Filed a rights offering on January 25, 2016 for existing shareholders
to raise up to $20 million.
“In 2015, Second Sight invested in building the foundation of our
business while delivering strong revenue growth,” stated Will McGuire,
Chief Executive Officer of Second Sight. “We nearly doubled our global
footprint and recently expanded MAC coverage to 17 states and two US
territories. We plan to build upon these successes while focusing on
overcoming U.S. reimbursement challenges and penetrating our targeted
markets in 2016.”
“At the same time, we believe there are multiple meaningful
opportunities to reach larger populations with our platform. We believe
the work we are doing to upgrade the existing Argus technology, expand
into Dry AMD and explore the use of our Orion I™ Cortical Visual
Prosthesis for direct cortical stimulation may potentially open up
significant markets for us, ensuring that we can deliver long-term
shareholder value,” concluded McGuire.
Fourth Quarter 2015 Financial Results
Total revenue was $2.4 million for the fourth quarter of 2015, up 55%
compared with $1.5 million in the fourth quarter of 2014. The increase
was primarily due to a higher number of implanted Argus II retinal
prostheses in the fourth quarter of 2015 versus the year ago quarter.
There were 21 Argus II retinal prostheses implanted in the fourth
quarter of 2015, compared to 15 for the fourth quarter of 2014.
Gross profit was $691,000 in the fourth quarter of 2015, compared to
$99,000 in the fourth quarter of 2014.
Total operating expenses in the fourth quarter of 2015 were $6.2
million, compared with $5.7 million in the fourth quarter of 2014,
reflecting the Company's increased investment in sales, marketing and
research and development, as well as costs associated with being a
publicly traded company.
Operating loss in the fourth quarter of 2015 was $5.5 million, compared
to an operating loss of $5.6 million for the same period last year.
Net loss in the fourth quarter of 2015 was $5.5 million, or $0.15 per
share, compared with a net loss of $13.6 million, or $0.46 per share, in
the prior year quarter. The Company recorded non-cash charges of $0.9
million and $8.4 million during the fourth quarters of 2015 and 2014,
respectively.
Non-GAAP adjusted net loss in the fourth quarter of 2015, excluding
non-cash charges, was $4.6 million, or a non-GAAP net loss of $0.13 per
share, compared to a non-GAAP adjusted net loss of $5.1 million, or
$0.17 per share, in the fourth quarter of 2014.
Full Year 2015 Financial Results
Total revenue was $8.9 million in 2015, compared to $3.4 million in
2014. The increase reflects volume growth in the number of implanted
Argus II retinal prostheses. The Company implanted 75 Argus II retinal
prostheses in 2015, compared to 29 in 2014.
Gross profit in 2015 was $3.7 million, versus a gross loss of $0.2
million in 2014. The improvement is primarily due to increased sales of
implants.
Total costs and operating expenses in 2015 were $23.7 million versus
$21.1 million in 2014. This increase is primarily due to additional
investments in the business, incremental clinical and regulatory
expenses related to the launch of our Dry AMD trial in the U.K. offset
by lower research and development costs, as well as costs associated
with being a publicly traded company.
Operating loss in 2015 was $20.0 million, compared to an operating loss
of $21.2 million in 2014.
Net loss in 2015 was $20.0 million, or $0.56 per share, compared with a
net loss of $35.2 million, or $1.41 per share, in the prior year period.
Non-GAAP adjusted net loss in 2015, excluding non-cash expenses, was
$17.0 million, or a loss of $0.48 per share, compared with non-GAAP
adjusted net loss of $19.0 million, or a loss of $0.76 per share, in
2014.
As of December 31, 2015, Second Sight had $16.0 million in cash and cash
equivalents and no debt.
2016 Objectives
-
Secure coverage with additional MACs in the U.S. as well as other key
markets globally;
-
Work with CMS to establish Medicare reimbursement rates that cover the
facility costs related to furnishing the Argus II to patients in 2017
and beyond;
-
Expand our global footprint by continuing to grow the number of
implanting centers and enter additional markets;
-
Improve the Argus II technology, including significant R&D milestones
for the next generation externals and advanced software;
-
Complete enrollment of the Dry Age-Related Macular Degeneration
feasibility clinical trial and finalize a go forward strategy; and
-
Complete animal testing and file the IDE application with the FDA to
test the Orion™ I Visual Cortical Prosthesis in humans.
Conference Call
As previously announced, Second Sight management will host its fourth
quarter conference call as follows:
Date
|
|
|
March 3, 2016
|
Time
|
|
|
4:30 PM EST
|
Telephone
|
|
|
U.S:
|
|
|
(800) 732-8470
|
|
|
|
International:
|
|
|
(212) 271-4651
|
|
|
|
|
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 21805798. 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 are intended to stimulate the retina's remaining cells, resulting
in the perception of patterns of light in the brain. The patient then
learns to interpret these visual patterns, thereby regaining some visual
function. The Argus II is the first artificial retina to receive
widespread approval, and is offered at approved centers in Canada,
France, Germany, Italy, Netherlands, Saudi Arabia, Spain, Switzerland,
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 manufactures the
Argus® II Retinal Prosthesis System. Enrollment is underway in a 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™ I 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," "potentially," "objectives," 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 or might occur in the future, such as those outlined
above under "2016 Objectives," 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 17, 2015 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
our 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,
interest expense on convertible notes and amortization of discount on
convertible notes. Management believes that these non-GAAP financial
measures provide useful supplemental information regarding the
performance of our business operations and facilitates comparisons to
our 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.
|
SECOND SIGHT MEDICAL PRODUCTS, INC.
|
AND SUBSIDIARY
|
|
Condensed Consolidated Balance Sheets
|
(in thousands)
|
|
|
|
December 31,
|
|
December 31,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash
|
|
$
|
239
|
|
$
|
619
|
Money market funds
|
|
|
15,721
|
|
|
34,000
|
Accounts receivable
|
|
|
1,501
|
|
|
708
|
Inventories, net
|
|
|
8,209
|
|
|
5,722
|
Prepaid expenses and other current assets
|
|
|
1,094
|
|
|
927
|
|
|
|
|
|
Total current assets
|
|
|
26,764
|
|
|
41,976
|
|
|
|
|
|
Property and equipment, net
|
|
|
1,432
|
|
|
1,005
|
Deposits and other assets
|
|
|
49
|
|
|
88
|
|
|
|
|
|
Total assets
|
|
$
|
28,245
|
|
$
|
43,069
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
710
|
|
$
|
513
|
Accrued expenses
|
|
|
2,068
|
|
|
1,412
|
Accrued compensation expense
|
|
|
2,069
|
|
|
1,362
|
Accrued clinical trial expense
|
|
|
616
|
|
|
489
|
Deferred revenue
|
|
|
322
|
|
|
600
|
Deferred grant revenue
|
|
|
2,197
|
|
|
4,075
|
|
|
|
|
|
Total current liabilities
|
|
|
7,982
|
|
|
8,451
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
20,263
|
|
|
34,618
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
28,245
|
|
$
|
43,069
|
|
|
|
|
|
|
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,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
2,362
|
|
$
|
1,520
|
|
$
|
8,950
|
|
$
|
3,398
|
Cost of sales
|
|
|
1,671
|
|
|
1,421
|
|
|
5,293
|
|
|
3,558
|
Gross profit (loss)
|
|
|
691
|
|
|
99
|
|
|
3,657
|
|
|
(160)
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development, net of grants
|
|
|
547
|
|
|
1,361
|
|
|
3,036
|
|
|
5,041
|
Clinical and regulatory
|
|
|
966
|
|
|
684
|
|
|
3,510
|
|
|
2,622
|
Selling and marketing
|
|
|
2,510
|
|
|
2,155
|
|
|
8,935
|
|
|
6,845
|
General and administrative
|
|
|
2,144
|
|
|
1,464
|
|
|
8,223
|
|
|
6,565
|
Total operating expenses
|
|
|
6,167
|
|
|
5,664
|
|
|
23,704
|
|
|
21,073
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(5,476)
|
|
|
(5,565)
|
|
|
(20,047)
|
|
|
(21,233)
|
|
|
|
|
|
|
|
|
|
Interest and other income, net
|
|
|
2
|
|
|
1
|
|
|
29
|
|
|
21
|
Interest expense on convertible promissory notes
|
|
|
-
|
|
|
(301)
|
|
|
-
|
|
|
(1,957)
|
Amortization of discount on convertible promissory notes
|
|
|
-
|
|
|
(757)
|
|
|
-
|
|
|
(5,077)
|
Write-off of amortized discount on conversion of convertible
promissory notes
|
|
|
|
(6,955)
|
|
|
|
|
(6,955)
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,474)
|
|
$
|
(13,577)
|
|
$
|
(20,018)
|
|
$
|
(35,201)
|
|
|
|
|
|
|
|
|
|
Net loss per common share – basic and diluted
|
|
$
|
(0.15)
|
|
$
|
(0.46)
|
|
$
|
(0.56)
|
|
$
|
(1.41)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding – basic and diluted
|
|
|
35,879
|
|
|
29,510
|
|
|
35,637
|
|
|
25,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(5,474)
|
|
$
|
(13,577)
|
|
$
|
(20,018)
|
|
$
|
(35,201)
|
|
|
|
|
|
|
|
|
|
Add back non-cash charges:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
860
|
|
|
430
|
|
|
3,011
|
|
|
1,816
|
Forgiveness of notes receivable related to stock option exercise
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
423
|
Non-cash interest accrued on convertible notes payable
|
|
|
-
|
|
|
296
|
|
|
-
|
|
|
1,952
|
Amortization of discount on convertible notes payable
|
|
|
-
|
|
|
757
|
|
|
-
|
|
|
5,078
|
Write-off of amortized discount on conversion of convertible
promissory notes
|
|
|
-
|
|
|
6,955
|
|
|
-
|
|
|
6,955
|
Non GAAP net loss
|
|
$
|
(4,614)
|
|
$
|
(5,139)
|
|
$
|
(17,007)
|
|
$
|
(18,977)
|
|
|
|
|
|
|
|
|
|
Net loss per share
|
|
$
|
(0.15)
|
|
$
|
(0.46)
|
|
$
|
(0.56)
|
|
$
|
(1.41)
|
|
|
|
|
|
|
|
|
|
Add back non-cash charges:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
0.02
|
|
|
0.01
|
|
|
0.08
|
|
|
0.07
|
Forgiveness of notes receivable related to stock option exercise
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
0.02
|
Non-cash interest accrued on convertible notes payable
|
|
|
-
|
|
|
0.01
|
|
|
-
|
|
|
0.08
|
Amortization of discount on convertible notes payable
|
|
|
-
|
|
|
0.03
|
|
|
-
|
|
|
0.20
|
Write-off of amortized discount on conversion of convertible
promissory notes
|
|
|
-
|
|
|
0.24
|
|
|
-
|
|
|
0.28
|
Non GAAP net loss per share
|
|
$
|
(0.13)
|
|
$
|
(0.17)
|
|
$
|
(0.48)
|
|
$
|
(0.76)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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