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pSivida Ltd. Reports Operating Results (10-Q)

February 11, 2009 | About:
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pSivida Ltd. (PSDV) filed Quarterly Report for the period ended 2008-12-31.

PSIVIDA CORP is a global drug delivery company committed to the biomedical sector and the development of drug delivery products. Retisert is FDA approved for the treatment of uveitis. Vitrasert is FDA approved for the treatment of AIDS-related CMV Retinitis. Bausch & Lomb owns the trademarks Vitrasert and Retisert. pSivida has licensed the technologies underlying both of these products to Bausch & Lomb. The technology underlying Medidur for diabetic macular edema is licensed to Alimera Sciences and is in Phase III clinical trials. pSivida has a worldwide collaborative research and license agreement with Pfizer Inc. for other ophthalmic applications of the Medidur technology (excluding FA). pSivida Ltd. has a market cap of $17.09 million; its shares were traded at around $0.76 with and P/S ratio of 4.92.

Highlight of Business Operations:

Research and development decreased by approximately $2.9 million, or 58%, to approximately $2.1 million for the three months ended December 31, 2008 from approximately $4.9 million for the three months ended December 31, 2007. This decrease was primarily attributable to (i) the absence of $2.5 million of Iluvien co-development costs incurred in the prior year period as a result of the assumption by Alimera of all financial responsibility for the development of licensed products under the amended collaboration agreement and (ii) a decrease of approximately $300,000 of UK-based research and development costs attributable to the relative strengthening of the dollar to the Pound Sterling currency. As a result of the amended Alimera agreement, the Company does not expect to incur future costs for the development of Iluvien. Assuming that average exchange rates remain substantially equivalent to the current period rate, we currently expect research and development expense for the remaining quarters of fiscal 2009 to increase by less than 10% compared to the current quarterly period.

General and administrative decreased by $884,000, or 27%, to approximately $2.3 million for the three months ended December 31, 2008 from approximately $3.2 million for the three months ended December 31, 2007. This decrease was primarily attributable to (i) reduced legal, audit and related consulting fees of approximately $1.1 million, largely due to the effects of having reincorporated in the U.S. in June 2008; and (ii) the absence of $200,000 of prior period costs for market development research for certain product candidates, which were partially offset by a $667,000 provision for losses on the note receivable from GEM. We currently expect general and administrative expense for the remaining quarters of fiscal 2009 to increase by approximately 5% compared to the current quarterly period, exclusive of the $667,000 provision for losses.

Interest income decreased by $132,000, or 71%, to $55,000 for the three months ended December 31, 2008 from $187,000 for the three months ended December 31, 2007. This decrease was attributable to (i) a combination of lower average interest-bearing cash equivalent balances and reduced money market interest rates and (ii) the absence in this years quarter of interest accrued in the prior years quarter on the $1.5 million note receivable from GEM in connection with the April 2007 sale of our former subsidiary, AION Diagnostics Limited.

Research and development decreased by approximately $4.1 million, or 49%, to approximately $4.3 million for the six months ended December 31, 2008 from approximately $8.4 million for the six months ended December 31, 2007. This decrease was primarily attributable to (i) the absence of $3.6 million of Iluvien co-development costs incurred in the prior year period as a result of the assumption by Alimera of all financial responsibility for the development of licensed products under the amended collaboration agreement and (ii) a decrease of approximately $480,000 of UK-based research and development costs attributable entirely to the relative strengthening of the dollar to the Pound Sterling currency.

General and administrative increased by approximately $228,000, or 5%, to approximately $5.3 million for the six months ended December 31, 2008 from approximately $5.1 million for the six months ended December 31, 2007. This increase was primarily attributable to a $1.3 million current year provision for losses on the note receivable from GEM partially offset by (i) reduced legal, audit and related consulting fees of approximately $900,000, largely due to the effects of having reincorporated in the U.S. in June 2008; and (ii) reduced market development research for certain product candidates of $160,000.

Interest income decreased by $280,000, or 68%, to $133,000 for the six months ended December 31, 2008 from $413,000 for the six months ended December 31, 2007. This decrease was attributable to (i) a combination of lower average interest-bearing cash equivalent balances and reduced money market interest rates and (ii) the absence in the current year period of interest accrued in the prior year on the $1.5 million GEM note receivable.

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