Ocugen Q1 2023 Earnings Call Transcript

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May 5, 2023

There are 12 speakers on the call.

Operator

Good morning, and welcome to the Ocugen's First Quarter 2023 Financial Results and Business Update Call. Please note that this call is being recorded at this time. All participant lines are in a listen only mode. Following the speakers' commentary, there will be a question and answer session. I will now turn the call over to Sharon Cho, Ocugen's Head of Investor Relations.

Operator

You may begin.

Speaker 1

Thank you, Mandeep. Joining me today are Cajun's Chairman, CEO and Co Founder, Doctor. Shankar Musunuri, who will provide a business update and our Chief Financial Officer and Chief Business Officer, Kwon Vu, who will provide a financial update. Earlier this morning, we issued a press We encourage listeners to review the press release, which is available on our website at www.ocugen. Within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties.

Speaker 1

We may in some cases use terms such as predict, believe, potential, propose, continue, estimate, anticipate, expect, Plans, intend, may, could, might, will, should or other words that convey uncertainty of future events or outcomes to identify these forward looking statements. Such statements are subject to numerous important factors, risks and uncertainties and may cause actual events or results to differ materially from our current expectations. Investors should familiarize themselves with the company's filings for complete detail. Except as required by law, We assume no obligation to update forward looking statements contained in this presentation, whether as a result of new information, future events or otherwise after the date of this presentation. Finally, Ocugen's quarterly report on Form 10Q covering the Q1 of 2023, will be filed soon after today's call.

Speaker 1

I will now turn the call over Doctor. Musonuri?

Speaker 2

Thank you, Sharon. Good morning and thank you all for joining us today. Looking at what we have achieved Since we reported our 2022 Q4 and full year results, I'm kicking off today's call with a high sense of accomplishment and optimism for the future of Oncugen. At the top of our list of highlights is the recent announcement of positive preliminary and efficacy results from the Phase III trial of our OcQ-four hundred program and the FDA's Orphan drug designation for our Ocuv410 ST program to potentially treat ABCA4 associated retinopathies such as We also forged ahead in our pursuit of non dilutive government funding to support our inhaled vaccines pipeline and submitted multiple proposals to various federal agencies, and we will begin seeking corporate partnerships for our gene therapies. I will also share updates on our ORQI 200 and NeoCART And you can see we remain on track to achieve the significant milestones for the year that we first shared with you during the last business update webcast.

Speaker 2

Our modified gene therapy approach continues to be the leading differentiator for Ocugen. Unlike single gene replacement therapies, which only target one genetic mutation, we believe that our modifier gene therapy platform Through its use of nuclear hormone receptors represents a novel approach that has the potential to both address multiple retinal diseases Imbalances in multiple gene networks. Currently, Ocugen has 3 modifier gene therapy programs: Ocu400 retinitis pigmentosa and Leber congenital amaurosis, which affects Mutated Genes. RQ410 for dry age related macular degeneration, a disease affecting approximately 10,000,000 people in the U. S.

Speaker 2

Alone and Ocuv410 SD for the treatment of ABCA4 associated retinopathies, including Stargardt, retinitis pigmentosa19, RP19 and cone We recently announced positive preliminary Safety and efficacy results from the Phase III trial of Ocu400 for the treatment of retinitis pigmentosa and LIBOR congenital amaurosis. These preliminary positive results serve as the first clinical validation of the platform where patient responses across various genetic mutations support that ARQ400 has the potential to transform the lives of many patients or struggling with debilitating blindness diseases. This Phase III trial is a multicenter, open label, dose ranging study. We have enrolled a total of 18 RP patients in this study, with 10 subjects in the dose escalation and 8 subjects in the expansion phase. The age of subjects enrolled to date ranges from 18 to 77 years across rhodopsin and NR2A3 gene mutations.

Speaker 2

We further expanded this Phase III trial to enroll LCA patients with the CEP290 gene mutation and pediatric patients with NR2-three, dro and CEP290 mutations. In Cohort 1, which is low dose and Cohort 2, which is medium dose, a total of 7 subjects with moderate to advanced vision impairment due to RP associated With Rho and NR2E3 gene mutations received a unilateral sub retinal injection of either a low dose, which is 1.66x1010vgsmil and Cohort 1 Our medium dose, which is 3.33x1010 10 Pgsmil of OcQ400 and Cohort 2, respectively. In the preliminary data analysis, 9 month follow-up data for 3 subjects in Cohort 1 and 6 month follow-up data and tolerability profile for MLMT, a primary efficacy endpoint used in clinical trials for an FDA approved product in this disease area and Best Corrected Visual Equity or BCVA. Key efficacy outcomes from 7 subjects demonstrated 4 key points: 100% of treated eyes showed a stable or improved MLMT score trend. 71% Of our Q400 treated ice demonstrated a 1 or more lux level improvement in MLMT score compared to 29% of untreated ice.

Speaker 2

67% of our Q400 treated ice in Cohort 1 with a 9 month follow-up demonstrated a 2 or more lux level improvement in MLMT score compared to none of the untreated eyes And 43% of our Q400 treated eyes demonstrated 8 to 11 letters of improvement in BCVA score Compared to none of the untreated eyes, the early results from patients treated in the Phase onetwo trial Are encouraging and support the paradigm changing potential of our modifier gene therapy technology to address unmet medical needs for patients with RP and LCA. With this favorable safety profile and positive trend in efficacy signals, we are very eager to see longer term data and to potentially initiate Phase 3 clinical trials in the U. S. And EU. As I mentioned earlier, We received exciting news last week that the FDA granted orphan drug designation for Ocuv410st, AAV5 Aurora for the treatment of ABCA4 associated retinopathies, including Stargardt, RP-nineteen and CORD III diseases.

Speaker 2

As a refresher, orphan drug designation is granted by the FDA to certain products that show promise and the treatment, prevention or diagnosis of rare and serious diseases affecting fewer than 200,000 people in the United States. Additionally, the orphan drug designation status allows for a potential 7 year market exclusivity, specifically to the designated orphan use following FDA approval. Other development incentives include the clinical protocol, design and potentially accelerated review times. This designation represents a noteworthy milestone in our effort to develop innovative treatment for inherited retinal diseases. And while Ocu410 ST is intended to treat rare diseases, Ocu410, Also targeting the RORA gene network is aimed at treating dry age related macular degeneration that affects 100 of millions of people across the globe.

Speaker 2

Using our modified gene therapy, we believe OQ410 potentially addresses shortcomings of current treatments for geographic atrophy that affects about 1,000,000 people in the U. S. Because it is a broad spectrum approach that has potential as a one time curative therapy with a single subretinal injection. Now turning to vaccines. The Ocu500 series of vaccines in development grants Opigen a distinct product candidate profile status that could significantly impact major global health obstacles and maximize our opportunity to serve broader patient markets.

Speaker 2

Current COVID-nineteen vaccines are limited by a lack of durability and inability to stop transmission. As part of our commitment to address current gaps in the fight against COVID-nineteen, we are developing a novel inhalation vaccine platform That includes Ocu500, a bivalent COVID-nineteen inhaled vaccine Ocu510, a Seasonal quadrivalent flu inhaled vaccine and Ocu-five twenty, a combination quadrivalent seasonal flu And BioValent COVID-nineteen Inhaled Vaccine. The Ocu500 vaccine series is based on a novel CHaD platform designed to reduce transmission and protect against new variants with the potential durability up to 1 year. We decided to develop the flu vaccine in addition to addressing COVID-nineteen because flu will always be a health concern. There is also longer term business potential as Americans continue to be regularly vaccinated against the flu.

Speaker 2

For the 2022 to 2023 flu season, our 50% of the U. S. Population above 6 months of age Received a seasonal flu shot, representing a market size of more than 170,000,000 doses. To optimize resources across our diverse at critically needed development programs and maintain shareholder value, our team has been busy in D. Speaking with the government agencies to pursue non dilutive funding opportunities for our Ocu400 vaccine series, We have submitted multiple comprehensive proposals for review and consideration and maintain an ongoing dialogue with the respective agencies regarding the development of the inhaled vaccines platform.

Speaker 2

We look forward to updating you as we hear more. Last quarter, we submitted an investigation of new drug application, IND, with the U. S. Food and Drug Administration to initiate a Phase 1 trial of ORQ200 for treating diabetic macular edema, DME. The IND was placed on clinical hold by the FDA as part of its request for additional information related to chemistry, manufacturing and controls Prior to initiating the Phase 1 trial, the company plans to respond to the FDA promptly to get FDA clearance to initiate the Phase 1 clinical trial.

Speaker 2

We believe ARPU-two hundred works with a distinct mechanism of action compared to existing therapies and targets multiple positive pathways such as angiogenesis, oxidation and inflammation and has a potential to offer better treatment to all patients. NeoCART is our Phase 3 ready, regenerative cell therapy technology that combines novel advancement in bioengineering and cell processing to enhance the autologous cartilage repair process. We are in the process of renovating our facility to accommodate cGMP Manufacturing for NeoCord and plan to complete construction in the Q4 of 2023 with the Phase 3 randomized controlled study in subjects with articulate cartilage defect commencing in 2024. As you can see, we are highly dedicated to completing our stated objective with sound strategies that we believe will enable Ocugen to reach several value enhancing milestones over the course of 2023 and beyond. With that, I will now turn the call over to our Chief Financial Officer and Chief Business Officer, Kwan Wu, to review our Q1 financial update.

Speaker 2

Kwan? Thank you, Chantal, and good morning, everyone.

Speaker 3

I will now provide an overview of the key financial results for the Q1 of 2023. Our research and development expenses for the quarter ended March 31, 2023 were $9,600,000 compared to $7,900,000 for the Q1 of 2022. General and administrative expenses for the quarter ended March 31, 2023 were $8,200,000 compared to $10,100,000 for the Q1 of 2022. Net loss was approximately $16,500,000 or $0.07 net loss per share of Q1 ended March 31, 2023 compared to a net loss of approximately $18,000,000 or $0.09 net loss per share for the Q1 of 2022. Our cash, cash equivalents and investments totaled $76,700,000 as of March 31, 2023 compared to $90,900,000 as of December 31, 2022.

Speaker 3

We expect that our cash, Cash equivalents and investment balance will enable us to fund operations into the Q1 of 2024. We are continuously exploring opportunities to increase our working capital and will be focused on seeking out corporate Partnerships for gene therapies and non dilutive funding for vaccines, as Shankar mentioned earlier, that concludes my update for the quarter. Sharon, back to you.

Speaker 1

Thanks, Juan. We will now open the call for questions.

Operator

The floor is now open for your questions. Our first question comes from the line of Jennifer Kim from Cantor Fitzgerald. Please proceed.

Speaker 4

Hey, good morning. Thanks for taking my questions. I have a couple of here. The first is, you spoke about seeking potential Partnerships with your gene therapy programs. I'm wondering, are you thinking of this on the basis of your lead program or the underlying platform technology or what platform technology or what type of structure are you looking for?

Speaker 4

And in terms of timing, is that something that you would seek post Updated interim data and before initiating a Phase 3 program? And then my second question is on the inhaled vaccine. I know it's hard to sort of asking a crystal ball, but do you know potentially when you might have some better visibility there?

Speaker 2

Yes. Jennifer, good morning. I'll let Quan answer the first question and I'll get to the second one. Yes. Hi, Jennifer.

Speaker 3

So the answer to the first question is Seeking partnership is going to be related to the Ocun-four hundred specifically. As we continue to develop and see further data, That serves as further justification in providing more credence to the platform itself. So that in the future will definitely be An evaluated process of how the platform itself can be capitalized. With respect to data, we are initiating Now because as I'm sure you're well aware, business development takes time. And so in the process, we'd like to Establish those relationships, engage in discussion and as more data comes out, we will continue to share that And that will facilitate and if not expedite the entire business development process.

Speaker 2

And Jennifer, can you repeat your second question related to COVID-nineteen?

Speaker 4

Yes. I was wondering yes, for the inhaled I know you submitted some proposals. Have you gotten any feedback in terms of when You might get more visibility on that end?

Speaker 2

Not yet. Again, we're actively working with them.

Speaker 4

Okay. And then maybe if I could sneak one more. The R and D burn for this quarter, is that a good basis when thinking about, I guess your go forward, Vern?

Speaker 3

Yes, it is.

Speaker 4

All right.

Speaker 5

Thanks guys.

Speaker 2

Thank you.

Operator

Our next question comes from the line of Jonathan Aschoff from ROTH Capital. Please proceed.

Speaker 4

Thanks, guys. I was wondering

Speaker 6

if you could elaborate on your key focus Being gene therapy, I kind of noticed that the word biologics was removed from your company description.

Speaker 2

Yes. I mean, We are on Ocugen, we're really focused on modified gene therapy platform. And with the recent results, preliminary results released, Rocky 400, it, in a way, validates the platform, and so we're excited about it. Obviously, we'll continue to Move that program, as we stated before, and work with the regulatory agencies and the lineup of potentially Phase 3 clinical trials more than later. And that's our focus.

Speaker 2

And obviously, the 2 other programs in the pipeline are coming through, Rafi, a subset of dry AMD population and AKI-four ten ST with Stargardt disease, INDs are going to be filed this quarter. So once again, the company is going to focus our major effort on gene therapies because there is a lot of promise, there is so much of unmet medical need.

Speaker 6

Okay. Can we have any other color on Ocu200 via clinical hold? Or is there just really nothing to say other than what's in the press release?

Speaker 2

Yes. At this stage, nothing to say. It's related to CMC questions and the company is going to respond promptly.

Speaker 6

Okay. And can you help us I'm sorry, I didn't mean to cut you off there.

Speaker 2

No, that's it.

Speaker 6

Can you help us understand the drop in R and D? Is that I mean, Vaxx, what is that?

Speaker 3

Yes. So a lot of the wind down now is obviously related to COVAXIN. And so as we begin to look at the various aspects of Company, which comes back to what Shankar just alluded to you earlier, the heavy focus now will be on the development of the gene therapy And so to that extent, the R and D expenses will be extraordinarily focused as well as the entire organization. And so the winding down of COPAXONE is one of the major factors that are causing the problem.

Speaker 6

Okay. Because if you do that into the I mean, you kind of have cash, I mean, well, well, well into the first Quarter of 'twenty four, so is that just an overly conservative statement from lawyers?

Speaker 3

I can't comment on the risk assessments placed by lawyers and how they draft the various Thanks, Jonathan. But for the most part, we believe firmly that, that is going to be the case. We believe that is a realistic estimate. Perhaps could be conservative, but I think the thing that the key takeaway here is that The organization is indeed examining operational efficiencies as with all companies moving forward in the Biotech Sector, as I'm sure you're well aware. And given the challenging capital markets, we want to be extremely focused and cost conscious in order for us to achieve our goals.

Speaker 3

And so you can imagine that the longer we can extend this cash runway,

Operator

Our next question comes from the line of Ui Ihir from Mizuho. Please proceed.

Speaker 7

Hey, guys. Thanks for taking my question. I guess, the First question I have is, it looks like the timeline for NeoCard has sort of shifted to At least the cGMP manufacturing facility completion to 4Q from first half. And there doesn't seem to be a date as well for when you'll start the filed. And so just wondering if you can elaborate on that and as well as where does NeoCard now sits, I guess, in terms of Priority given what you said about challenging capital markets, etcetera.

Speaker 7

Thanks.

Speaker 2

Good morning, Uvi. Just want to clarify, we always stated CGNP facility is going to be ready sometime later part of this year. So that's very consistent. There is no change to that. We are planning to finish the facility construction and everything else by the end of this year.

Speaker 2

As far as the clinical trial is concerned, yes, we are still targeting next year. Obviously, our priority is going to be Focused on modified gene therapy platform, getting the other 2 clinical trials get started as well as Phase III started for our 1st program, ARQ400. And so the NeoCART obviously will take a second preference compared to that priority wise. And our goal is to still initiate that Phase III clinical trial in

Speaker 7

Okay. Thanks. And second question, I guess, is when should we Sort of expect to see more data from Ocuv-four hundred. I noticed that in the slide presentation, It just it only has initiation of Phase 3 in the Q4, just curious. Thanks.

Speaker 2

So we are going to continue to monitor as we see patients on a 3 month basis. And obviously, we will have another update on data we're expecting sometime in Q3 this year before moving on

Speaker 5

to date.

Speaker 7

Thank you.

Operator

Our next question comes from the line of Robert Laboy from Noble Capital Markets. Please proceed.

Speaker 8

Good morning.

Speaker 9

My only remaining question is

Speaker 8

On the OCU-two hundred clinical hold and any timeframe on when that may be resolved?

Speaker 2

I mean, we are trying to respond to the FDA, continue to work with them. And I mean sooner than later of course. And this is we didn't even start the clinical trial. This is a novel biologic. It's a Sometimes it's typical of agency has more questions.

Speaker 2

This one is related to CMC, Nothing related to toxicity or anything else. Just want to clarify. So we will be responding promptly. And as soon as We get clearance, we'll let's notate the markets.

Speaker 10

Okay. Thank you very much.

Operator

Our next question comes from the line of Swayampankula Ramakanth from Wainwright. Please proceed.

Speaker 5

Thank you. This is RK from Telsey Envoy. I'm not interested in current one. One question to each of you. Shankar, on the ORQ400, Have you started conversations with EMA as you start thinking beyond The current study and trying to get into pivotal studies.

Speaker 2

Yes. Good morning, RK. We are planning to initiate those conversations a little later this year. Obviously, our goal is to Align various regulatory agencies before we get into Phase 3.

Speaker 5

Thank you for that. And then, Juan, on the BD activity side of things, Have you had any conversations at all with potential collaborators Outside of the government agencies for the inhalation vaccine, especially with some of the flu vaccine players?

Speaker 3

Yes. So the focus on the Yaki 400 program is development, we are in its initial stages. We have had some initial conversations even before my time here and kind of set the landscape. And then I think ultimately, I will I am beginning to do A second reach out. But are you talking about just inhalation itself with respect to the 500 right now?

Speaker 3

Or do you want to

Speaker 5

Yes, yes, yes, because we've always for the last one year, we've been hearing that folks are Looking for government funds, but guess what, we have trouble with the government raising their own debt limit. So if there's a problem with the funding, Would this move forward at all?

Speaker 3

Yes, absolutely.

Speaker 5

I'm looking for corporate partners.

Speaker 3

Yes, absolutely. And so the idea behind all this as a part of our very focused play here is that we do indeed have However, as this most of the centralized around public health crisis, We're looking for that government support. I'm sure you're well aware, RK, that with all these types of programs, government It's critical not only from a funding perspective, but also from in a way the way that The politics work, for lack of a better word, supports these very programs. And so without that, These programs can get extraordinarily expensive and we don't intend to spend a lot more than we are. Our idea is to have enough development data In order to be able to apply for these fundings and to be able to advance it further, without that support, it would be very challenging for small

Speaker 2

And RK, once we get there, but if the opportunities exist for perfect partnerships, we'll look into that.

Speaker 5

And also as Jonathan pointed out, since you don't have biologics on your corporate mandate, Does that mean RQ200 is also subject for BD activities?

Speaker 2

I think AKI-two hundred, I mean, typically with the Phase 1, we do anticipate signal, even though it's a dose escalation study. And if you do get a positive signal on efficacy, obviously, we will definitely evaluate that next

Speaker 11

To add on

Speaker 3

to that, RK, I mean, obviously, a lot of BB activity program, As a lot of companies look for a much derisked program, and so these are relatively early. And as We advance them, we will have a bit more clarity. It's very challenging to go out and have conversations with the various Players in the market without Pivotal data for the most part, but that does not preclude us, for example, from always establishing these relationships early and

Operator

Our final question comes from the line of Daniel Gadlin from Chardan. Please proceed.

Speaker 11

Hi, good morning guys. Thank you for taking the questions. So I have a couple on OCU-four hundred. Just wanted to ask if your next readout in the Q1 is going to include any patient level data. And in terms of, I guess, the timing for Phase 3, it looks like you're planning on initiating that at the end of this year.

Speaker 11

But your 1 year data from the Phase III is not going to come until at least Q1 of 2024, just wanted to ask about your strategy there. And yes, and I have a quick follow-up too.

Speaker 2

Yes. So we're planning to release data in Q3 and update obviously. And at this stage, we haven't decided we'll release patient level data because we'll also be working with regulatory agencies and we have to weigh those factors in. And the second thing is, the 12 month duration for Phase III, even though there's an expansion phase after the For durability, you're right, it will be completed in the Q1 next year. However, what we're looking for Is at least certain population in this clinical trial crossing 12 months and collecting adequate safety?

Speaker 2

And the second thing we'll be looking for to discuss with regulatory agencies is tuning in and finalizing our primary efficacy endpoint. And as we stated in our results, if you continue to look at that functional endpoint That's in an approved product already. It makes it easier with regulatory agencies. And if we confirm that, and that's what is the endpoint as a primary efficacy endpoint going forward, It makes it easier. So we believe having adequate safety some level at least in certain patient population crossing 12 months, which we will have this year and also confirming with multiple mutations focusing on one efficacy Potentially, primary endpoint will help us because we are going after gene agnostic RP and LCA indication, Having one efficacy endpoint will make it easier for Phase III design.

Speaker 11

Got it. Got it. That makes sense. And I'll take it. And another quick Follow-up for pediatric Phase III, okay, 400.

Speaker 11

How many pediatric patients do you plan on enrolling and at which doses?

Speaker 2

We're planning to enroll 3 to get some baseline safety data on these patients, so that at least in Phase 3 we can include pediatric population.

Operator

This concludes the Q and A portion. I will now turn the call back over to Chairman and CEO, Doctor. Shankar Musanuri.

Speaker 2

Thank you, operator. In closing, I would like to thank the entire team for their hard work and resilient efforts to advance our patient centric mission. To our shareholders and partners, thank you for your ongoing trust and support. We look forward to sharing more details of our progress in the coming quarters.

Speaker 1

Thanks again everyone. Have a great weekend.

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