Second Sight's 2019 Sales Dropped as Company Transitioned to New Retinal Implant Technology

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LOS ANGELES—Second Sight Medical Products reported net sales for the full year ended Dec. 31, 2019 of $3.4 million on a GAAP basis compared to $6.9 million in 2018. The company attributed the steep decrease primarily to lower implant volumes as it restructured its commercial activities to transition from the Argus II retinal implant to newer 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, Second Sight 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.

Net loss in 2019 was $33.6 million compared with a net loss of $35.1 million in 2018. The non-GAAP adjusted net loss in 2019, excluding non-cash expenses, was $28.1 million compared with a non-GAAP adjusted net loss of $30.8 million in 2018. As of Dec. 31, 2019, Second Sight had $11.3 million in cash and cash equivalents. The company said it expects its cash and cash equivalents to fund operations into the second quarter of 2020.

Pat Ryan, chief operating officer of Second Sight said, “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.

“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," he said.

Fourth quarter net sales on a GAAP basis were $0.5 million 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.

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.

Net loss for the fourth quarter of 2019 was $7.9 million compared to a net loss of $8.9 million 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 compared to a non-GAAP net loss of $7.6 million in the fourth quarter of 2018.