LENZ Therapeutics Q1 2024 Earnings Call Transcript

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May 8, 2024

There are 9 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to Lens Therapeutics First Quarter 2024 Financial Results and Business Update. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you.

Operator

I would now like to turn the conference over to Dan Shevalard. Please go ahead, sir.

Speaker 1

Thank you. Good afternoon, everyone, and thank you for joining us today to discuss LENS' Q1 2024 financial results and business updates. My name is Dan Shevalard, Chief Financial Officer of Lens Therapeutics. We are joined today by Eef Schimmelpennik, our President and Chief Executive Officer, who will provide our business update as well as Doctor. Mark Odrich, Chief Medical Officer and Sean Olson, Chief Commercial Officer, both of whom will join us for Q and A.

Speaker 1

Before we begin, I would like to remind you that this call will contain forward looking statements regarding LINZ's future expectations, plans, prospects, corporate strategy, cash runway projections and performance, which constitute forward looking statements. Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in our filings with the SEC. In addition, any forward looking statements represent only our views as of the date of this webcast and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements. With that, I will now turn the call over to Eef.

Speaker 2

Thank you, Dan, and thank you everyone for joining us today. Let me start by saying that the Q1 of 2024 and the weeks following have been transformative for Lens. In March, we completed our merger with Graphite Bio and a concurrent $53, 500, 000 pipe financing. And as a result, we became a public company trading on NASDAQ under the ticker lens. These transactions led us to be well capitalized with around $213, 000, 000 of cash and cash equivalents at the end of the quarter on our balance sheet.

Speaker 2

Importantly, we anticipate this cash balance to be sufficient to fund our operations to post launch positive operating cash flow. I want to acknowledge the hard work that went into this and thank the teams at both Lens and Graphite as well as advisors on both sides that got us to the strong position. Only a few weeks after our public debut, we announced our positive CLARITY Phase 3 data and selected LNZ100, a single agent acyclin product as our commercial candidate to treat presbyopia. As a reminder, presbyopia is the inevitable loss of near vision that impacts the daily lives of nearly all people over the age of 45. As the crystalline lens in our eyes hardens with age, the eye is less able to accommodate and focus the incoming light for near vision on the retina, resulting in blurry near vision.

Speaker 2

Although the progression of presbyopia is gradual, presbyopia often experience an abrupt change in their daily life as the symptoms become more pronounced starting in their mid-40s when reading glasses or other corrective aids are suddenly necessary to read text or conduct close-up work. To address the daily challenges faced by presbyopes, we are developing a once daily pharmacological eye drop that has been shown to be capable of improving near vision throughout the full work day without the need for reading glasses. Before I give a brief summary of the positive clarity top line data, I want to highlight that throughout the development of LNZ100, our objective has always been to commercialize the product that we believe will most effectively meet the needs of the widest range of presbyopes and best create loyalty and value based on an all eyes, all day brand mission. That means that we're not only aiming for high efficacy with a rapid onset and long duration, but also that the product candidate has to deliver that consistently across the majority of the presbyopic population. This is why we make sure that the close to 1100 participants in our CLARITY studies represented the majority of the 128, 000, 000 Presby ops in the U.

Speaker 2

S. Alone. We included participants aged 45 to 75 with a mean age of 55. We also made sure to include people that had a wide range of refractive errors. Think of this as including people that need to wear contact lenses or glasses to correct their distance vision, but also people that have never had to wear any distance vision or correction in their life.

Speaker 2

We made sure to also include people that had previously undergone LASIK or cataract surgery. And importantly, we included participants with a wide range of presbyopia to make sure that we have a product that can appeal to mild, moderate and severe presbyopes. By doing so, we feel confident that the results that we generated truly reflect the potential benefits that LNZ100 can bring to the vast majority of the close to 2, 000, 000, 000 presby ops globally. On that note, let's talk about the key outcomes of the CLARITY Phase 3 study in which MZ100, a single agent, a cyclin product candidate, continued to show strong performance and best in class potential. Consistent with previous trials and for the moment focusing on results for the CLARITY-two trial as this is the direct vehicle controlled trial, LMC-one hundred showed a rapid onset with 71% of participants achieving 3 lines or more of near vision improvement without losing 1 line or more of distance vision at 30 minutes on the very first day of use of the product.

Speaker 2

At the primary endpoint of 3 hours, we also observed a 3 line or more responder rate of 71%. LNZ100 also maintains high levels of near vision improvement with 40% of participants achieving 3 lines or more of near vision improvement at 10 hours, the last time point measured in our efficacy trials. All results were highly statistically significant with p values at each time points of less than 0.0001. We also saw a very impressive near universal response to LNG100 with 95% of participants achieving at least 2 lines of near vision improvements. This is an important measure because it is seen as clinically meaningful and significant for most presbyopes.

Speaker 2

Notably, 69% of the participants still reported this improvement at the end of the day, 10 hours after dosing. In both efficacy trials, CLARITY-one and 2, the participants use their assigned treatment agents every day for 42 days. Saw similarly high response rates for LNZ100 across both trials at the various days we brought participants in for measurements. In terms of safety, LNZ100 was seen to be well tolerated with no treatment related series of adverse events observed in the over 30, 000 treatment days across all 3 CLARITY trials. Of all reported non serious adverse events, 95% were classified as mild believed to be transient and consistent with those observed in previous trials.

Speaker 2

Commercial potential was further confirmed by participant surveys with 90% of participants noticing an improvement in near vision and 75% of them indicating that they would continue to use LNZ100 after the study. Together with the broad inclusion criteria we mentioned earlier, we believe this positions LNZ100 well for the estimated over $3, 000, 000, 000 potential market opportunity. We recently received the full data sets of the 3 CLARITY trials and are currently analyzing them for additional insights. While that work is still ongoing, I can share that some of the early new data that is coming out is exciting and continues to show nearly universal high efficacy of LNG100. For example, looking at pooled data across both of our efficacy trials, CLARITY 12, we see that not only that 97% of participants achieved at least a 3 line improvement at some point, but an impressive 84% improved their near vision by at least 4 or more lines.

Speaker 2

We believe that these results indicate that the vast majority of people that if approved sample the product would notice a rapid and meaningful improvement in their near vision. This is something that will play a key role in our future commercialization strategy and could serve as a very strong differentiator from the VOD launch. As mentioned, we are conducting analysis of the full data set for Phase 3 results beyond the already shared top line results. We're excited to announce that we are planning a Phase 3 capstone KOL event on June 18, 2024 in New York City. With this event, we will share additional data and importantly, we will have distinguished and respected KOLs and lead investigators from our study share their views on our data, expectations for the clinical practice and market and firsthand experiences with LNZ100.

Speaker 2

We look forward to providing additional information on this event in the weeks ahead. Turning to our upcoming NDA submission, I'm pleased to share that the CLARITY Phase 3 study was designed in close alignment with the FDA and the positive top line data generated concludes the clinical development program for LNZ100. The team is now fully focused on the execution of the filing and we are well on track to submit our NDA for LNZ100 to the FDA in mid-twenty 24. In parallel to working towards our NDA submission, our commercial launch preparedness is also well underway. In February 2024, Lens launched its unbranded I'm campaign to educate and excite eye care professionals about future presbyopia solution.

Speaker 2

Over 40 key opinion leaders are involved in the campaign and are featured at imselective.com that is e ydmselective.com where eye care professionals can learn about ideal pupil size, iris muscle selectivity and expected early adopters of presbyopia eyedrops. Continue on that momentum and to support the projected launch following potential FDA approval, Lens is actively building out its U. S. Commercial capabilities highlighted by completion of 3rd party logistics contracting in the Q1 of 2024 and the addition of key commercial expertise in direct to consumer and influencer marketing, all in preparation for a potential launch of LNG100 as early as the second half of 2025. In summary, we are very pleased with the progress the team has made on all fronts.

Speaker 2

The recent period has been and promises to continue to be a very exciting time at Lens. With that, I'll hand it over to Dan, our CFO for an update on our financial results.

Speaker 1

Thank you, Eef. As Eef mentioned, we're pleased with the successful close of the merger transaction and concurrent pipe. Having ended Q1 with approximately $213, 300, 000 in cash, cash equivalents and marketable securities, inclusive of the over $117, 000, 000 acquired in the recent merger and the $53, 500, 000 in proceeds from the concurrent private placement. Importantly, we announced today that this is anticipated to fund the company's cash runway through to post launch positive cash flow from operations. We believe this puts us in a strong position to focus on execution.

Speaker 1

Our operating results and resulting cash burn for the Q1 were substantially in line with our plan. As is common around transactions such as what we just completed, there have been and will be into the 2nd quarter certain non recurring or 1 time transaction costs. Those aside, our total operating expenses inclusive of both research and development and sales, general and administrative expenses for Q1 20 24 were approximately $16, 100, 000 compared to $12, 600, 000 for the same period in 2023. Overall, this increase was substantially a result of additional operating costs incurred in our preparations for being a publicly traded company and early commercial planning. More specifically, our research and development expenses for Q1, 2024 were $10, 500, 000 which was materially consistent with research and development expenses of $10, 300, 000 for the same period in 2023.

Speaker 1

Substantially all research and development expenses incurred for these comparative periods related to the clinical development and manufacturing required to support our Phase 2 Incyte and Phase 3 CLARITY clinical trials. Selling, general and administrative expenses for Q1 2024 increased to $5, 600, 000 compared to $2, 300, 000 for the same period in 20 23. This increase was primarily driven by costs associated with preparations to be a publicly traded company in addition to an increase in prelaunch commercial expenses. As well, expenses in Q1 2024 included a non recurring, non cash stock based compensation charge associated with the merger. Finally, our net loss per share both basic and diluted was $3.53 per share in the Q1 of 2024 on a net loss of $16, 600, 000 compared to a net loss per share of $6.50 per share in the Q1 of 2023 on a net loss of $12, 700, 000 Please note that these loss per share figures considered only the weighted average common stock outstanding for the respective periods.

Speaker 1

And thus, most notably for Q1 2024, do not fully weight any of 1, the convertible preferred and convertible common stock from pre merger Private Lens that converted into common stock upon the merger close, totaling 11, 300, 000 shares 2, the shares acquired from legacy Graphite shareholders as of the merger date, totaling 8, 300, 000 shares or 3, shares of common stock issued in the 2024 concurrent private placement totaling 3, 600, 000 shares. More simply stated, we ended Q1 2024 with approximately 25, 500, 000 shares of common stock outstanding, most of which were not fully weighted in our Q1 2024 net loss per share previously noted. Now as we advance from here, our allocation of capital will begin to change over the balance of the year, and we would like to take a moment to highlight the following 3 key items on this point. 1st, research and development and clinical development spend will decrease over 2024 due to the wind down of our positive Phase 3 CLARITY studies. While prioritizing the financial support necessary to enable a successful mid-twenty 24 NDA submission.

Speaker 1

2nd, we plan to allocate more emphasis and more capital toward the ramp up of our commercial infrastructure and pre launch activities over the balance of the year. And third, eliminating for the non recurring nature of our transaction related costs, we will aim to maintain discipline in managing our general and administrative costs associated with being a newly publicly traded company. We look forward to executing on what is a clear path forward for the company towards NDA submission in mid-twenty 24 and the potential approval and commercial launch of LNZ-one hundred in the second half of 20 25. With that, I'll turn the call back over to Yves.

Speaker 2

Thanks, Dan. Operator, we're now happy to take questions.

Operator

Thank you. The floor is now open for questions. Your first question comes from the line of Joseph Contanzaro with Piper Sandler. Your line is open.

Speaker 3

Hey, everybody. I appreciate you taking my questions. Maybe 2 quick ones for me. First on the NDA submission, can you maybe just help us better understand some of the gating factors there to getting that filing done? Is it mostly paperwork or are there sort of other things going on in the background?

Speaker 3

And is there any risk to maybe timelines slipping there as you wait for some of those things to get done? And then second, maybe as we look towards the KOL event, are there any sort of additional analyses that you're performing within the CLARITY data sets and sort of maybe some new things we might expect to see, at that June event and what could be important there? Thanks.

Speaker 2

Thanks, Joe. Great questions. Let me take them. So first 1, as we work towards the NDA submission in the middle of the year, so like I said, we believe that with the CLARITY trials, we've completed now our full clinical program and we have the final pieces of the clinical data in our hands. Over the years, we've been very well aligned and we'll continue to be very well aligned with the FDA.

Speaker 2

So we have high confidence in the fact that we have a complete data set. And therefore, the team is now really fully focused on compiling the NDA. So to paraphrase what you were saying, it is paperwork from here on out. Doesn't mean that it's not a lot of work and therefore the team is really focused on that. We have the right people in place.

Speaker 2

So we're very confident that we will meet that submission time line that we've guided to in the middle of 2024. So second question as to the KOL event. Again, as we've mentioned on the call, we now have the full data sets of all our 3 studies and teams on both sides are analyzing them for additional insight. What we're looking for and what we're starting to see is really interesting and exciting data around efficacy, how does this product work for the different groups that are in the study? Does it work for mild, moderate, severe presbyopes?

Speaker 2

Any difference in response on age, how the LASIK patients respond. So those are some of the things that we're excited to share at the upcoming KOL event. And secondly, it's a great opportunity for people outside of Lens to actually share their view on the data, how they see this work in the market. And as I've mentioned, we'll also have lead investigators from the CLARITY trial that have true firsthand experience with our product and potentially also with other products that will share their views on how it performed in their patients.

Speaker 3

Okay, great. That's all super helpful. Appreciate you taking my questions. Thanks.

Speaker 2

Thanks, Jaap.

Operator

Next question comes from the line of Yigal Nochomovitz with Citigroup. Your line is open.

Speaker 4

Hi, Ethan. Thank you so much. As you mentioned some of the pool data that you're looking at with the full data set, is any of that potentially something that could make its way into the label language? Or is that more going to stay with the on the marketing claim front?

Speaker 2

Great question, Yigal. Thanks for joining the call. So looking at the label, the label that we actually expect to be fairly broad to begin with. So if you look at the VUTA label, it basically states for the treatment of presbyopia. So it's hard to expand that label.

Speaker 2

Now in the label itself, you'll actually have data cutouts and that's where the marketing team will continue and we'll be able to point at that. So we feel that this is very important data to ultimately commercialize our product, but also for our healthcare professionals to look at and continue to gain confidence in

Speaker 5

how the

Speaker 2

product performs. So again, very excited to see some early data cuts of that data. And as we continue to validate that, we'll start sharing that at our KOL event in June.

Speaker 4

Thanks. And then with regard to the filing of the NDA, I believe you were also on track for completing some of the stability studies for the product. Given that you're not taking LENS-one hundred and 1 forward, but rather 101, is that any faster to finish that stability? Or were both of those basically on the same timetable?

Speaker 2

Yes. No, both were and are on the same timetable. As hard as I sometimes try to move times faster, that's impossible obviously. So what's really bound by the severity clock and that is going into our filing timing.

Speaker 4

And then just the last 1 on the distance vision, you had some interesting data suggesting a potential benefit on distance. How much of that is going to be emphasized in your marketing pitch or that's not going to really be the focus?

Speaker 2

I think again that that's going to be a great additional benefit. So while it's likely not going to be a label claim, it's not always striving for. It is data that we will aim to have included in the label and therefore the marketing team can highlight that. We do feel it's a very substantial benefit. 1 of the additional data costs that we're looking at is, is there a certain population that noticed this more than others or feel the benefit more?

Speaker 2

And 1 of the things that, again, anecdotally, we hear is that especially people that previously had LASIK and know what 2020 distance vision looks like over time may have lost a little bit back to 20 25 or 2030 appear to feel that benefit. So while it's not a label claim, we feel it's definitely a benefit that is additive to the near vision effect. That's obviously the main driver of the label.

Speaker 4

Okay, great. Thank you very much.

Speaker 2

Thanks, Ygal.

Operator

Next question comes from the line of Tim Lugo with William Blair. Your line is open.

Speaker 5

Thank you for the question and congratulations on all the progress in the quarter. I know it's a very pivotal quarter for the company. My question is, can you talk about the transient nature of the adverse events that were observed in Clarity? I know I've heard some questions around the headache rates. But also when I look at maybe can you talk how it's anything you're seeing from the market because when I've seen some other successful eye care products like dry eye and then also maybe the other presbyopia products.

Speaker 5

The adverse event rate didn't compare well for clarity. So can you just maybe speak to that a bit?

Speaker 2

Absolutely. Thanks, Tim, for that question. So I think 1st and foremost, and then I'll get to the other adverse events. The big thing that we're very pleased with to see in our AE data is that across 30, 000 patient treatment days, there was 0 series of those events. So I think that first and foremost speaks to what we believe the safety of the product and the profile of the product and is obviously different than some of the other products that we've seen out there.

Speaker 2

And that's really truly because of the difference of the mechanism of action of acyclinib and how it does not stimulate the ciliary body.

Speaker 5

So if

Speaker 2

you then look at the non serious treatment related AEs, headaches and some of the other ones that we've noticed. Again, importantly, there 100% or close to 100% are classified as mild. So in general, we see and the feedback that we get from patients is that this is a very highly tolerable product, very comfortable with very minor AE issues. To your point, if you compare that to some of the other very successful products, our AE profile is the same where you're going to argue better than those products. You're asked whether they were transients.

Speaker 2

So everything that we're seeing suggests that they are. So we obviously have done our Phase II trials, have a lot of data there and we're going through data on our Phase III trials now. So if you look at the what's called insulation site irritation, that's basically if you put an eye drop in your eyes, some people feel a mild, very brief sting. Think of that as a blink or 2, and that's gone. So that's definitely transient.

Speaker 2

The other ones as well, they all go away very, very quickly. Same goes for the headaches. So if you're 1 of the few people that actually notice a headache and again placebo corrected that was about 7.6% in our efficacy trials. So if you're 1 of those few people that feel that, they classify that's very mild and something that goes away very quickly. So that may range patient to patient from 10 minutes, 20 minutes to 30 minutes or maybe slightly more, but it is transient.

Speaker 2

So it goes away quickly. The data that we're trying to gather now is to see is a tachyphylactic. So over time, as you continue to use the product, that is not even occurring more after, for example, a week. So this is interesting data to look at. The interesting thing is that we only have very few patients, which is good, that had a headache.

Speaker 2

So it makes it interesting to look at data and see if we can find any trends. If we do, we will make sure to bring those again to the KOL events in June.

Speaker 5

Okay, great. Thank you for the all the detail. And maybe can you just speak to the issues with retinal detachment for some of the other products? And I know it's that's not something we're keen about in clarity. So hopefully, if you just talk about potential label implications?

Speaker 2

Absolutely. So let me answer the label and I'll hand it over to Marc to explain how our product is different and why we feel we see the, again, very good lack of retinal attachments with a cyclodine. But from a label claim perspective, currently, we expect that the FDA will treat this as a class label effect. I think important is that the data that we have, we can obviously share with healthcare providers. We'll definitely have that discussion with the FDA.

Speaker 2

But again, currently, we believe that we might have the same general label or class label effect as the other Miotics. But again, the product is a very different Miotic. And Mark, feel free to jump in and add to that. Thank you, Abe. Thank you for

Speaker 6

the question. The unique feature of acyclidine is that it spares the ciliary muscle for the most part. And that means it doesn't cause constriction during a critical part on a critical part of the eye. And that constriction can cause a small amount of traction at something called the vitreous space. So while this is very, if you will, inside the eye and inside baseball, if I can use that analogy, This is something that this particular drug does not do.

Speaker 6

And therefore, this has a very low likelihood of causing the same kinds of problems that you would see with the drugs that were more popular than this drug, such as pilocarcin and carbocol, which in fact stimulate this stiliary muscle, so that there is traction on this area. So it's a fundamental difference in our mechanism of action. We are a very specific myotic, which is pupil selective and avoids the ciliary muscle as a mechanism of action.

Speaker 5

Fantastic.

Speaker 2

Thank

Speaker 1

you for that.

Speaker 2

Thanks, Tim.

Operator

And last question comes from the line of Marc Goodman with Leerink Partners. Your line is open.

Speaker 7

Hi, this is Basma on for Marc. We would like to ask a question about the survey results performing CLARITY trials where you mentioned that 75% of the respondents mentioned that they will continue using LENS-one hundred. Do you know why 25% what was the factor that drove 25% to discontinue the drug? And along the same lines, do you think that this 25% is kind of an indicator of the discontinuation rates that you expect in the real world? Or do you expect from the use of the drug?

Speaker 7

And do you actually have any data from market research or analysis from long from this ongoing long term safety data trial, I'm sorry, that can give you insight on the discontinuation rates? Thank you.

Speaker 2

Thank you. Thank you for your question. Very insightful. Let me kick that off and then hand it over to Sean for some additional detail. So first, just to make sure that or to clarify.

Speaker 2

So the question was asked after the study was completed. So patients had their last day of use of the product. We then asked them, if this were commercially available, would you want to continue to use the product? So this is not a discontinuation rate in the study by any means. In fact, the vast majority of the patients or the participants completed both the efficacy and the long term safety studies.

Speaker 2

And again, that plays to the product being very comfortable, but also very effective. So the 25% that you referenced of people that say, yes, I noticed this effect, but I might not use it going forward if it's in the real world, we feel can have a couple of different reasons. Maybe those are people that actually are happy with their current near vision solutions. So these people are on bifocals and they feel that that's the right solution for them and they don't want to change that. That's maybe 1 reason.

Speaker 2

Another reason is maybe they feel that this is a cost that they cannot afford. Those are some of the things that you can think about. But again, these are not reasons of discontinuation of the product per se, but really if this product were to be commercially available, would you use it?

Speaker 8

Yes. And when I think commercially about this, I find this very encouraging to see there is results. And we also see it in line with generally our market research. In our corporate presentation, we highlight the interest in this drop. And generally, depending on the age, the amount of people that would seriously consider an eye drop like this, rose all the way up to about 68%.

Speaker 8

So seeing 75% continues after the study is exactly in line what we expect from our market research. And again, very encouraging data. It's great to see such high numbers. And it also confirms that 81% of those people would expect to use this 4 to 7 days a week. That's from the PROs.

Speaker 8

That is almost exactly aligned with our market research, which came between 79% to 80% of those people being 4 to 7 days a week. So what I find really encouraging is we actually see that our actual outcomes from our Phase 3 trial mimic what we're finding in our market research as well, which highlights the huge opportunity in this market. And I think as we go towards commercialization, if you think of the sampling strategy that will really play into that refill rate, which I think is a better thing to focus on is that refill rate. Because we're going to have a strong sampling plan upfront, that's going to allow people to try this product, make sure this is for them, which we expect the vast majority to do and then move on into that fulfillment and repeat buying of the product. So we see that strategy is very important in actually improving this refill rates.

Speaker 2

Thanks, Sean. And maybe just a last point to add to that. If you were to pluck these percentages in against the 128, 000, 000 population of presbyopes in the U. S, you end up with a market that's about 15 to 20 times higher than the $3, 000, 000, 000 that we already forecast. So the $3, 000, 000, 000 that we talk about as the market potential really takes a very conservative approach on which part of the 128, 000, 000 population is ultimately we feel going to use it, How often are they going to use that?

Speaker 2

It also, I think, indicates the very significant upside over the $3, 000, 000, 000 market that you could see.

Speaker 7

Thank you. That's very helpful. Thank you.

Operator

Thank you. There are no further questions at this time. Mr. F. Shimalpennink, I turn the call back over to you.

Speaker 2

Thank you, Dimi. Thanks, everyone. Thank you for taking the time to join us today. We look forward to keep you updated. And we'll see you hopefully at the June event.

Speaker 2

Thanks, everyone.

Operator

This concludes today's conference call. You may now disconnect.

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