EyePoint Pharmaceuticals(EYPT) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Unaudited Financial Statements Condensed Consolidated Balance Sheets The company's financial position as of June 30, 2025, shows a decrease in total assets and stockholders' equity compared to December 31, 2024, primarily driven by a reduction in cash, cash equivalents, and marketable securities | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $71,143 | $99,704 | | Marketable securities | $184,590 | $271,209 | | Total current assets | $265,251 | $383,306 | | Total assets | $301,147 | $418,465 | | Total current liabilities | $33,175 | $49,048 | | Total liabilities | $55,138 | $81,964 | | Total stockholders' equity | $246,009 | $336,501 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the three and six months ended June 30, 2025, the company reported increased net losses, primarily due to a significant rise in research and development expenses for DURAVYU™ Phase 3 clinical trials, despite fluctuations in revenue streams | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (%) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Total revenues | $5,333 | $9,477 | -44% | $29,786 | $21,161 | 41% | | Research and development | $55,498 | $29,822 | 86% | $114,072 | $60,011 | 90% | | Net loss | $(59,426) | $(30,826) | 93% | $(104,621) | $(60,110) | 74% | | Net loss per share (Basic & Diluted) | $(0.85) | $(0.58) | 47% | $(1.50) | $(1.13) | 33% | Condensed Consolidated Statements of Stockholders' Equity The company's accumulated deficit significantly increased for both the three and six months ended June 30, 2025, reflecting the net losses incurred, while common stock shares outstanding increased due to various equity activities | Metric (in thousands except shares) | Balance at April 1, 2025 | Balance at June 30, 2025 | Balance at January 1, 2025 | Balance at June 30, 2025 | | :---------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Net loss (3 months) | $(59,426) | N/A | N/A | N/A | | Net loss (6 months) | N/A | N/A | $(104,621) | N/A | | Stock-based compensation (3 months) | $6,876 | N/A | N/A | N/A | | Stock-based compensation (6 months) | N/A | N/A | N/A | $14,696 | | Common stock shares outstanding | 68,811,357 (Apr 1, 2025) | 68,889,649 (Jun 30, 2025) | 68,266,005 (Jan 1, 2025) | 68,889,649 (Jun 30, 2025) | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, the company experienced a significant increase in cash used in operating activities, partially offset by cash provided by investing activities, primarily from sales and maturities of marketable securities | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash (used in) operating activities | $(115,709) | $(51,349) | | Net cash (used in) provided by investing activities | $87,861 | $(139,589) | | Net cash (used in) provided by financing activities | $(713) | $444 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(28,561) | $(190,494) | Notes to Condensed Consolidated Financial Statements 1. Operations EyePoint Pharmaceuticals is focused on developing innovative therapeutics for retinal diseases, with its lead product candidate DURAVYU™ in Phase 3 clinical trials for wet AMD and advancing towards a Phase 3 program for DME. The company had $255.7 million in cash, cash equivalents, and marketable securities as of June 30, 2025, and expects this to fund operations for at least the next twelve months - DURAVYU™ is in two global Phase 3 clinical trials (LUGANO and LUCIA) for wet AMD, with enrollment completed for LUGANO and expected completion for LUCIA in Q3 2025. Top-line data for both is expected in H2 2026[17][18] - DURAVYU™ completed a positive Phase 2 clinical trial in DME, meeting primary and secondary endpoints, with an anticipated Phase 3 start in 2026[17][18] - The company had $255.7 million in cash, cash equivalents, and marketable securities at June 30, 2025, which is expected to fund operations for at least the next twelve months[19] 2. Summary of Significant Accounting Policies The company's significant accounting policies remain unchanged since December 31, 2024. It is currently evaluating the impact of new FASB ASUs 2023-09 (Income Taxes) and 2024-03 (Expense Disaggregation Disclosures), effective for fiscal years beginning after December 15, 2024, and December 15, 2026, respectively - ASU 2023-09 (Income Taxes) effective for the Company in Q1 2025, impact on disclosures being evaluated[22] - ASU 2024-03 (Expense Disaggregation Disclosures) effective for fiscal years beginning after December 15, 2026, impact on disclosures being evaluated[23] 3. Revenue Total revenues for the three months ended June 30, 2025, decreased by 44% YoY, primarily due to no product sales and a decrease in license and collaboration revenue. However, for the six months ended June 30, 2025, total revenues increased by 41% YoY, driven by a significant increase in royalty income due to the recognition of deferred SWK royalty revenue | Revenue Type (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (%) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Product sales, net | $0 | $1,068 | -100% | $715 | $1,726 | -59% | | License and collaboration agreements | $5,333 | $7,782 | -31% | $16,382 | $18,345 | -11% | | Royalty income | $0 | $627 | -100% | $12,689 | $1,090 | 1064% | | Total revenues | $5,333 | $9,477 | -44% | $29,786 | $21,161 | 41% | - The Commercial Supply Agreement (CSA) with ANI terminated on May 31, 2025. Royalty payments from ANI to the Company will begin in 2025 based on U.S. annual net sales exceeding certain thresholds[28][27] - Royalty income for the six months ended June 30, 2025, included the recognition of the remaining $12.7 million of deferred SWK royalty revenue due to the termination of the SWK royalty purchase agreement on March 18, 2025[95] 4. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets decreased from $9.481 million at December 31, 2024, to $6.215 million at June 30, 2025, primarily due to a reduction in prepaid clinical expenses | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Prepaid expenses | $2,860 | $2,339 | | Prepaid clinical expenses | $1,783 | $5,737 | | Other | $1,572 | $1,405 | | Total | $6,215 | $9,481 | 5. Inventory Total inventory increased from $2.305 million at December 31, 2024, to $2.678 million at June 30, 2025, driven by an increase in work in process | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Raw materials | $1,676 | $1,657 | | Work in process | $1,002 | $648 | | Total inventory | $2,678 | $2,305 | 6. Accrued Expenses Accrued expenses decreased from $18.103 million at December 31, 2024, to $11.478 million at June 30, 2025, mainly due to lower personnel and clinical trial costs | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Personnel costs | $7,747 | $11,830 | | Clinical trial costs | $1,663 | $4,541 | | Professional and legal fees | $1,236 | $840 | | Sales chargebacks, rebates and other revenue reserves | $79 | $147 | | Other | $753 | $745 | | Total accrued expenses | $11,478 | $18,103 | 7. Leases The company amended its headquarters lease to extend the term and recognized a $0.9 million increase in lease liabilities and ROU assets. The Northbridge manufacturing facility lease, with a 15-year term, commenced in Q2 2024, adding $17.7 million to lease liabilities. Total operating lease liabilities were $23.7 million at June 30, 2025 - Headquarters lease amended, extending term to May 31, 2028, resulting in a $0.9 million increase in lease liabilities and ROU assets[39] - Northbridge manufacturing facility lease (41,141 sq ft, 15-year term) commenced in Q2 2024, adding $17.7 million to lease liabilities and $17.9 million to ROU assets[40] | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total operating lease liabilities | $23,715 | $23,105 | | Total lease expense (6 months) | $2,235 | $1,074 | 8. Stockholders' Equity The company did not sell any shares under its ATM facility during Q2 2025 or Q2 2024. As of June 30, 2025, 1,090,909 Pre-Funded Warrants (PFWs) were outstanding. The 2023 Long-Term Incentive Plan was amended to increase authorized shares by 2,900,000 to a total of 10,400,000 shares - No shares sold under the ATM Facility during the three and six months ended June 30, 2025 and 2024[46] - 1,090,909 Pre-Funded Warrants (PFWs) were outstanding as of June 30, 2025[48] - The 2023 Long-Term Incentive Plan was amended to increased authorized shares by 2,900,000 to 10,400,000 shares, with 4,743,299 shares available for new awards at June 30, 2025[49] 9. Share-Based Payment Awards Stock-based compensation expense for the six months ended June 30, 2025, was $14.7 million, a decrease from $21.4 million in the prior year. As of June 30, 2025, there was $28.7 million of unrecognized compensation expense related to outstanding equity awards | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Stock options granted | 2,366,135 shares | N/A | | RSUs granted | 822,208 units | N/A | | ESPP shares issued | 55,283 shares | N/A | | Total stock-based compensation expense | $14,696 | $21,394 | - Unrecognized compensation expense related to outstanding equity awards was approximately $28.7 million at June 30, 2025, expected to be recognized over 1.61 years[57] 10. Fair Value Measurements The company's cash equivalents and marketable securities, totaling $245.6 million at June 30, 2025, are classified within Level 1 (money market funds) or Level 2 (commercial paper, U.S. Treasury/Agency securities) based on valuation hierarchy | Asset Type (in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :------------------------ | :----------------------- | :--------------------------- | | Money market funds (Level 1) | $60,973 | $95,859 | | Commercial paper (Level 2) | $49,378 | $94,842 | | U.S. Treasury securities (Level 2) | $115,364 | $114,711 | | U.S. Agency securities (Level 2) | $19,848 | $61,656 | | Total | $245,563 | $367,068 | 11. Segment Information EyePoint Pharmaceuticals operates as a single business segment focused on developing and commercializing ophthalmic products. For the six months ended June 30, 2025, total revenues were $29.8 million, and the net loss was $104.6 million, with DURAVYU™ direct R&D expense being a significant component | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $29,786 | $21,161 | | DURAVYU™ direct research and development expense | $(79,247) | $(30,086) | | Net loss | $(104,621) | $(60,110) | 12. Contingencies The company is involved in routine legal proceedings and is cooperating with a U.S. Department of Justice subpoena received in August 2022 regarding sales, marketing, and promotional practices related to DEXYCU®. The outcome and financial impact of this matter are currently unpredictable - Received a subpoena from the U.S. Attorney's Office in August 2022 related to sales, marketing, and promotional practices for DEXYCU®[65] - The company is cooperating fully, but the duration, scope, or outcome, and potential material impact on financial condition, results of operations, or cash flow, are currently unpredictable[65] 13. Net Loss per Share For the six months ended June 30, 2025, the basic and diluted net loss per share was $(1.50). Common stock equivalents totaling 11,055,774 shares were excluded from the diluted EPS calculation as their effect would have been anti-dilutive | Common Stock Equivalents Excluded | As of June 30, 2025 | As of June 30, 2024 | | :-------------------------------- | :------------------ | :------------------ | | Stock options | 9,475,631 | 7,426,691 | | ESPP | 57,876 | 9,102 | | Restricted stock units | 1,522,267 | 1,378,823 | | Total | 11,055,774 | 8,814,616 | 14. Related Party Transactions The company recorded $0.6 million in research and development expense for the six months ended June 30, 2025, related to preclinical and analytical services provided by Altasciences, a company where a current board member also serves - Recorded $0.6 million in R&D expense with Altasciences for the six months ended June 30, 2025[68] - Nancy S. Lurker, a current Vice Chair of the Board, is also a board member of Altasciences' parent company[68] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Note Regarding Forward-Looking Statements This section outlines the company's forward-looking statements, which involve risks and uncertainties, and advises readers that actual results may differ materially due to various factors, including clinical trial outcomes, regulatory approvals, and financial resources - Forward-looking statements include expectations for DURAVYU™'s potential, timing of clinical trials, regulatory interactions, and funding needs[71] - Risks include uncertainties in clinical development, regulatory approval, sufficiency of cash resources, and intellectual property protection[75] Our Business Overview EyePoint Pharmaceuticals is dedicated to developing innovative treatments for serious retinal diseases, utilizing its Durasert E™ technology. Its lead candidate, DURAVYU™, is in Phase 3 trials for wet AMD and has completed Phase 2 for DME, with other pipeline programs like EYP-2301 also in development - DURAVYU™ is in two global Phase 3 clinical trials (LUGANO and LUCIA) for wet AMD[76] - DURAVYU™ completed a positive Phase 2 clinical trial for diabetic macular edema (DME)[76] - Additional pipeline programs include EYPT-2301, a promising TIE-2 agonist[76] Recent Developments Enrollment for the pivotal Phase 3 LUCIA clinical trial evaluating DURAVYU™ was completed on July 29, 2025 - Enrollment completed in pivotal Phase 3 LUCIA clinical trial for DURAVYU™ on July 29, 2025[78] R&D Highlights Enrollment for the pivotal Phase 3 LUGANO clinical trial evaluating DURAVYU™ was completed on May 27, 2025 - Enrollment completed in pivotal Phase 3 LUGANO clinical trial for DURAVYU™ on May 27, 2025[79] Critical Accounting Policies and Estimates The company's critical accounting policies and estimates, including revenue recognition and clinical trial expense recognition, remain consistent with those disclosed in the 2024 Form 10-K, with no material changes noted in this report Results of Operations Three months ended June 30, 2025 Compared to Three months ended June 30, 2024 Total revenues decreased by 44% to $5.3 million, primarily due to no product sales and lower license revenue. Operating expenses increased by 53% to $67.6 million, driven by an 86% surge in R&D costs for DURAVYU™ Phase 3 trials, leading to a 93% increase in net loss to $59.4 million | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (Amount) | Change (%) | | :-------------------------- | :--------------------------- | :--------------------------- | :-------------- | :--------- | | Total revenues | $5,333 | $9,477 | $(4,144) | -44% | | Product sales, net | $0 | $1,068 | $(1,068) | -100% | | License and collaboration agreements | $5,333 | $7,782 | $(2,449) | -31% | | Royalty income | $0 | $627 | $(627) | -100% | | Research and development | $55,498 | $29,822 | $25,676 | 86% | | Net loss | $(59,426) | $(30,826) | $(28,600) | 93% | Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024 Total revenues increased by 41% to $29.8 million, largely due to a 1064% increase in royalty income from deferred revenue recognition. Operating expenses rose by 58% to $140.9 million, primarily from a 90% increase in R&D for DURAVYU™ Phase 3 trials, resulting in a 74% higher net loss of $104.6 million | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (Amount) | Change (%) | | :-------------------------- | :--------------------------- | :--------------------------- | :-------------- | :--------- | | Total revenues | $29,786 | $21,161 | $8,625 | 41% | | Product sales, net | $715 | $1,726 | $(1,011) | -59% | | License and collaboration agreements | $16,382 | $18,345 | $(1,963) | -11% | | Royalty income | $12,689 | $1,090 | $11,599 | 1064% | | Research and development | $114,072 | $60,011 | $54,061 | 90% | | Net loss | $(104,621) | $(60,110) | $(44,511) | 74% | Liquidity and Capital Resources The company had $255.7 million in cash, cash equivalents, and marketable securities at June 30, 2025, which is projected to fund operations into 2027. Operating cash outflows significantly increased to $115.7 million for the six months ended June 30, 2025, primarily due to net loss and changes in deferred revenue - Cash, cash equivalents, and marketable securities totaled $255.7 million at June 30, 2025, expected to fund operations into 2027, beyond the topline data expected in 2026[19][103] - Net cash used in operating activities for the six months ended June 30, 2025, was $115.7 million, an increase of $64.4 million compared to the prior year[107] - Net cash provided by investing activities for the six months ended June 30, 2025, was $87.9 million, primarily from sales of marketable securities[109] - Future capital requirements are influenced by clinical trial progress, R&D programs, and potential strategic acquisitions[104][105][106] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, EyePoint Pharmaceuticals is not required to provide quantitative and qualitative disclosures about market risk Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025 - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of June 30, 2025[113] Changes in Internal Control over Financial Reporting There were no material changes in the company's internal control over financial reporting during the quarter ended June 30, 2025 - No material changes in internal control over financial reporting during the quarter ended June 30, 2025[114] PART II: OTHER INFORMATION Item 1. Legal Proceedings The company is subject to routine legal proceedings and an ongoing U.S. Department of Justice subpoena concerning sales and marketing practices for DEXYCU®. The outcome and financial impact of the subpoena remain uncertain - Ongoing U.S. Department of Justice subpoena regarding sales, marketing, and promotional practices for DEXYCU®[117] - Outcome and financial impact of the subpoena are currently unpredictable[117] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period Item 4. Mine Safety Disclosures The company reported no mine safety disclosures Item 5. Other Information Nancy S. Lurker, a director, adopted a Rule 10b5-1 trading arrangement on June 16, 2025, for the sale of 83,351 shares of common stock, effective until June 16, 2026 - Nancy S. Lurker, Director, adopted a Rule 10b5-1 trading arrangement on June 16, 2025, to sell 83,351 shares of common stock[122] - The plan's duration is until June 16, 2026[122] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including various corporate documents, equity plans, and certifications SIGNATURES SIGNATURES The report was signed by Jay S. Duker, M.D., President and Chief Executive Officer, and George O. Elston, Executive Vice President and Chief Financial Officer, on August 7, 2025