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Second Sight Reports Third Quarter 2019 Financial Results

November 14, 2019

LOS ANGELES--(BUSINESS WIRE)--Nov 14, 2019--

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, 2019.

Recent Corporate Highlights:

“Our ongoing discussions with the FDA are proceeding well, and we are pleased to have reached agreement on the primary efficacy endpoint for the Orion pivotal trial. This endpoint is a new version of the FLORA assessment tool used in the Argus II trial and is designed to measure the technology’s impact to orientation, mobility and activities of daily living. Our efforts are currently focused on finalizing agreement with the FDA on the primary safety endpoint by year end. We are also engaged in productive dialogue with CMS about reimbursement for the critically important post-surgical training for Orion users, in an effort to ensure that patients are able to achieve the greatest benefit from the device,” stated Will McGuire, President and Chief Executive Officer of Second Sight.

“Orion has received excellent coverage in the media recently, as awareness and excitement builds for this innovative, life-changing device. R&D efforts continue to focus on enhancements to Orion that are required for a pivotal trial and ultimately for commercialization. Most importantly, the Orion subjects in our feasibility study are doing well, and we look forward to advancing this important technology and making it available to the large population of blind individuals who can benefit,” concluded McGuire.

Third Quarter 2019 Financial Results

Net sales on a GAAP basis were $0.5 million for the third quarter of 2019 compared to $2.2 million in the third quarter of 2018. Revenue was recognized for four implants on a GAAP basis with an average selling price of $118,000 in the third quarter of 2019 compared to 22 implants with an average selling price of $102,000 in the same period of 2018.

Gross profit for the third quarter of 2019 was $0.1 million compared to a gross profit of $0.5 million in the third quarter of 2018. Cost of sales was $0.4 million in the third quarter of 2019 compared to $1.8 million in the prior year period. In the third quarter of 2019, cost of sales included approximately $0.2 million for the cost of products implanted and unabsorbed production costs of $0.2 million. The Company expects to record cost of sales for any remaining Argus II inventory that is sold and a majority of the expenses related to production capabilities and fixed overhead to be reported as research and development expense in future periods.

Research and development expense increased to $3.4 million during the third quarter of 2019 from $2.7 million in the third quarter of 2018. The increase primarily reflects costs to produce Orion prototypes. The Company expects research and development expenses to increase in future periods as it accelerates the transition to the Orion platform, including costs previously related to production activities such as facilities and personnel that will be transitioning to Orion development activities.

Clinical and regulatory expense was $0.9 million during the third quarter of 2019 compared to $1.0 million in the third 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 $1.3 million during the third quarter of 2019 compared to $3.0 million in the third quarter of 2018. The decrease of $1.7 million is primarily driven by reduced commercial activities related to Argus II. The Company expects selling and marketing expense to decrease as it reduces Argus II commercial activities and sells through existing inventory.

General and administrative expense was $2.2 million in the third quarter of 2019 compared to $2.3 million in the third quarter of 2018. The decrease is primarily attributable to lower compensation costs. The Company expects general and administrative expense to remain consistent for the remainder of 2019.

Net loss for the third quarter of 2019 was $7.6 million, or a loss of $0.06 per share, compared to a net loss of $8.5 million, or a net loss of $0.12 per share, in the third quarter of 2018.

The non-GAAP net loss for the third quarter of 2019, excluding certain non-cash items, was $6.9 million, or $0.06 per share, compared to a non-GAAP net loss of $7.5 million, or $0.11 per share, in the third quarter of 2018.

As of September 30, 2019, Second Sight had $18.5 million in cash and cash equivalents. The Company continues to expect its cash 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.

2019 Key Objectives

Conference Call

As previously announced, Second Sight management will host its third quarter 2019 conference call as follows:

Date

Thursday, November 14, 2019

Time

4:30 PM EST

Telephone

U.S.:

(800) 771-6759

International:

(212) 231-2937

Webcast (live and archive)

www.secondsight.com under the ‘Investors’ 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 21933121. 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 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,” “strategy,” “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, our refinement of strategy, 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 or implied by 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, 2019, our Form 10-Q to be filed on or about November 14, 2019, 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)

 
 
September 30,December 31,

2019

2018

(unaudited)
ASSETS
Current assets:
Cash and cash equivalents

$

18,462

$

4,471

Accounts receivable, net

 

264

 

504

Inventories, net

 

1,264

 

3,250

Prepaid expenses and other current assets

 

366

 

1,395

 
Total current assets

 

20,356

 

9,620

 
Property and equipment, net

 

1,125

 

1,025

Right-of-use assets

 

2,399

 

-

Deposits and other assets

 

18

 

37

 
Total assets

$

23,898

$

10,682

 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable

$

1,126

$

1,305

Accrued expenses

 

2,082

 

2,503

Accrued compensation expense

 

2,461

 

2,690

Accrued clinical trial expenses

 

734

 

933

Current operating lease liabilities

 

228

 

-

Contract liabilities

 

554

 

167

 
Total current liabilities

 

7,185

 

7,598

 
Long term operating lease liabilities

 

2,427

 

-

 
Total liabilities

 

9,612

 

7,598

 
Commitments and contingencies
 
Stockholders’ equity

 

14,286

 

3,084

 
Total liabilities and stockholders’ equity

$

23,898

$

10,682

 
 
SECOND SIGHT MEDICAL PRODUCTS, INC.
AND SUBSIDIARY
 
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
 
Three Months EndedNine Months Ended
September 30,September 30,

2019

2018

2019

2018

 
Net sales

$

472

 

$

2,246

 

$

2,882

 

$

5,129

 

Cost of sales

 

364

 

 

1,784

 

 

2,028

 

 

3,287

 

Gross profit

 

108

 

 

462

 

 

854

 

 

1,842

 

 
Operating expenses:
Research and development, net of grants

$

3,379

 

$

2,672

 

$

8,998

 

$

7,567

 

Clinical and regulatory, net of grants

 

862

 

 

964

 

 

2,404

 

 

3,439

 

Selling and marketing

 

1,308

 

 

3,040

 

 

5,100

 

 

8,931

 

General and administrative

 

2,178

 

 

2,332

 

 

6,883

 

 

8,208

 

Restructuring charges

 

-

 

 

-

 

 

3,297

 

 

-

 

Total operating expenses

 

7,727

 

 

9,008

 

 

26,682

 

 

28,145

 

 
Loss from operations

 

(7,619

)

 

(8,546

)

 

(25,828

)

 

(26,303

)

 
Interest and other income, net

 

35

 

 

24

 

 

104

 

 

67

 

 
Net loss

$

(7,584

)

$

(8,522

)

$

(25,724

)

$

(26,236

)

 
Net loss per common share – basic and diluted

$

(0.06

)

$

(0.12

)

$

(0.22

)

$

(0.41

)

 
Weighted average shares outstanding – basic and diluted

 

124,592

 

 

68,763

 

 

115,266

 

 

64,113

 

 
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 EndedNine Months Ended
September 30,September 30,

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 
 
Net loss

$

(7,584

)

$

(8,522

)

$

(25,724

)

$

(26,236

)

 
Add back non-cash charges:
Stock-based compensation

 

686

 

 

877

 

 

2,443

 

 

2,898

 

Excess inventory reserve

 

-

 

 

110

 

 

(793

)

 

171

 

Restructuring charges/inventory impairment

 

-

 

 

-

 

 

2,587

 

 

-

 

Non GAAP net loss

$

(6,898

)

$

(7,535

)

$

(21,487

)

$

(23,167

)

 
Net loss per share

$

(0.06

)

$

(0.12

)

$

(0.22

)

$

(0.41

)

 
Add back non-cash charges:
Stock-based compensation

 

-

 

 

0.01

 

 

0.02

 

 

0.05

 

Excess inventory reserve

 

-

 

 

-

 

 

(0.01

)

 

-

 

Restructuring charges/inventory impairment

 

-

 

 

-

 

 

0.02

 

 

-

 

Non GAAP net loss per share

$

(0.06

)

$

(0.11

)

$

(0.19

)

$

(0.36

)

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191114005856/en/

CONTACT: 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

or

Media:

Nobles Global Communications

Laura Nobles or Helen Shik

T: 617-510-4373

E:Laura@noblesgc.com

E:Helen@noblesgc.com

KEYWORD: CALIFORNIA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: OPTICAL HEALTH MEDICAL DEVICES

SOURCE: Second Sight Medical Products, Inc.

Copyright Business Wire 2019.

PUB: 11/14/2019 04:05 PM/DISC: 11/14/2019 04:05 PM

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