Bausch + Lomb Corporation (BLCO) Earnings Call Transcript & Summary

Good evening, and welcome to Bausch + Lomb's R&D Update Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Brent Saunders, Chief Executive Officer. Please go ahead.

Great. Thank you, operator. Thank you, everyone, for joining us on such short notice. We really appreciate you getting on the call today. I'm joined with my colleagues, Yehia Hashad, our Head of R&D; and Mayssa Attar, Head of Pharmaceutical R&D. and we're looking forward to taking you through the presentation and more importantly, taking any questions you have. So Allison, if we could jump to the next slide. Perfect. So today, we're sharing results on 2 first-in-class programs that further reinforces why we believe in our pipeline. First, on our dual action dry eye medicine, this is the first therapy designed to address both inflammatory and evaporative drivers of dry eye in a single treatment, and we will be moving it into Phase III. As you'll learn later throughout this conference call, Phase II showed a strong statistical significant effect at day 15, much faster than we expected, and that gives us a clear primary endpoint and a focused design as we advance. Second, on BL1332, our lead ocular surface pain candidate, just delivered convincing clinical validation of the TRPV1 mechanism in humans. The result strengthens our confidence heading into Phase II readout, which we expect coming in a few months, and it opens the door to a broader franchise in ocular pain beyond postsurgical indications. When taken together, these 2 first-in-class assets represent more than $2 billion in combined potential peak sales, meaningful upside for us beyond 2028. I'll let Yehia and Mayssa walk through the data, but I think the headline is simple. Both programs are going to move forward with conviction. Yehia, I'll turn it over to you.

Thank you, Brent. Good afternoon, everyone. We are really excited to report about these 2 programs. We will start with the dual actions. And before we dive into the details of the data, I really would like to lead with some of the key takeaways for this program. Obviously, dry eye disease is a multifactorial disease, yet today's therapy generally address one of the driver at a time. This study validates our goal to bring complementary mechanism together in a single treatment through a novel differentiated formulation that can deliver a high therapeutic effect with less dosing concepts. The study have revealed a highly encouraging insights. The dual action eye drops demonstrated a superior effect earlier than what we anticipated with a strong result at a prespecified day 15 assessment. Those effects were achieved with lower lifitegrast volume and reduced dosing frequency, supporting the differentiated profile we envisioned. We are advancing to Phase III with greater conviction, a clearer endpoint strategy and a focused development path. With that, I would like to hand over to my colleague, Mayssa, who will walk you through the details of the study results. Mayssa?

Great. Thanks, Yehia. Hello, everyone. I am thrilled to share our clinical results for our novel dual-action dry eye drop. So let's first start with our program strategy. Dry eye is a complex multifactorial disease. Patients experience similar symptoms but with different underlying causes. Cure evaporation and ocular surface inflammation are 2 important disease drivers. At Bausch + Lomb, we have 2 therapies whose pivotal trials each demonstrated treatment of both the signs and symptoms of dry eye. But their active ingredients work through different mechanisms. We believe in combination, they will deliver superior results. Miebo forms a monolayer that reduces tear evaporation, while lifitegrast, the active ingredient in Xiidra, penetrates tissue to act as an anti-inflammatory. Combination products face deep formulation and clinical development challenges. And that's why dry eye patients and eye care practitioners don't have one on the market today. It's for this reason. We see a clear opportunity to change that, combining the Xiidra and Miebo active ingredients into the first dual-action dry eye therapy, simplifying treatment for eye care professionals and delivering better outcomes for patients. So our scientists have cleared the first hurdle by formulating the proven active ingredients in Miebo and Xiidra together in a single eye drop, and they've demonstrated those benefits of that combination in nonclinical models. On the left, you see nonclinical pharmacokinetic data comparing how much better lifitegrast, the active Xiidra penetrates ocular tissues when formulated with the Miebo active ingredient. This matters because lifitegrast needs to penetrate ocular tissues to work as an anti-inflammatory and drug development breakthroughs often come from finding a way to deliver the lowest effective dose. With this formulation, lifitegrast reaches the cornea and conjunctiva to ocular surface tissues damaged by dry eye far more efficiently. This drug delivery efficiency is what led us explore in this current clinical study, reducing both the total lifitegrast dose relative to Xiidra and the dosing frequency relative to Miebo, aiming to deliver 2 complementary mechanisms of action in a single, safe, well-tolerated product. So before we get to the results, it's worth pausing on how we dose this novel drug product. The dual action drop delivered lifitegrast in about 1/3 of the drop volume used in the lifitegrast alone arm. So that's 12 microliters of dual action drop versus 35 microliters of Xiidra. And we dosed the dual action drop twice daily, so half as often as the PFHO alone arm since Miebo is indicated for use 4 times a day. So everything you're about to see, we achieved with meaningfully less drug and less frequent dosing relative to the recessive monotherapy. Okay. On to the study design. This was a 4-week randomized, double-masked, active controlled study and the first time we tested our assumptions regarding the dual action drops performance in humans. 443 patients were randomized across 6 arms. The design included 3 active arms for statistical comparisons and 3 matched vehicle controls for masking. Our prespecified primary endpoint was change from baseline in total corneal fluorescein staining at day 29 versus lifitegrast alone. We chose day 29 because with no prior human data on this dual action drop, we set our primary time point earlier than the sign endpoint used in either monotherapy's own pivotal trial. We anticipated that combining these 2 mechanisms would produce a faster effect. And so before looking at outcomes, it matters that patients enrolled across the study arms started in the same place. Corneal staining and symptom scores were well matched at baseline, and patients came in with moderate to severe disease, consistent with a registration quality dry eye patient population. Additionally, other baseline characteristics and demographics were assessed and found to be consistent across arms. Okay. So now to the exciting part, the efficacy data. Let's start with total corneal fluorescein staining, a sign doctors use to evaluate the health of the cornea. The lower the staining, the healthier the ocular surface. So to begin, the study did not meet its day 29 primary endpoint versus lifitegrast alone. While numerically better, it was not statistically significant. I wanted to leave with that because what we learned is the superior effect of the dual action drop is actually faster and evident much earlier than day 29. And so here's why we're confident. As early as day 8, the dual action drop was already pulling ahead of both monotherapies. At the prespecified day 15 time point, it showed a significant reduction in corneal staining versus lifitegrast alone with a p-value of 0.0007. That gap narrowed by day 29, but not because our effect went away. The dual action drops results held steady between the 2 time points. It narrowed because lifitegrast alone kept improving, which isn't surprising. Xiidra is itself an approved efficacious drug. Ultimately, what we learned was that the dual action eye drop had a rapid onset of effect, and now we have data to guide when to look for that effect in future studies. So now let's further evaluate the meaningfulness of this improvement in corneal staining through a responder analysis. We see 41.6% of dual-action drop-treated patients achieved a clinically meaningful 3-unit improvement in corneal staining by day 15, more than double the 18.8% treated with lifitegrast alone and ahead of the 31.6% treated with PFHO alone, even though PFHO was dosed twice as often. This result translates the group averages you just saw on the previous slide into individual patients and more of them experienced a meaningful improvement in corneal health with the dual action drop than with either of the monotherapies. Again, this was at a fraction of the dose of Xiidra and less frequent dosing than Miebo. So now let's examine another responder analysis that tells us how patients feel on day 15. We know it's the symptoms of dry eye that bring patients into the eye care practitioner's office. A pattern emerges across these individual symptoms we tested using complete symptom resolution. So on a visual analog scale, a score of 0, which for a dry eye patient equates with total relief, the dual action outperformed numerically lifitegrast alone on every symptom listed in this table, itching, light sensitivity, blurred vision, irritation, burning and foreign body sensation. Now against PFHO alone, the active ingredient in Miebo, results are more mixed, better on some measures, comparable or slightly behind on others, but that's still a meaningful result. PFHO is a highly effective treatment and a tough to be active comparator. There's a reason we don't see active comparators in dry eye trials. And in this trial, we are getting to our results against PFHO while dosing the dual action drop only twice daily versus PFHOs 4 times daily. This head-to-head comparison is exactly the kind of data that will inform the design of our next clinical study. So with respect to safety and tolerability, there are no new safety signals that were observed with the dual action drop or the monotherapy. Overall, adverse events rates were consistent with the established profiles of these 2 approved medicines. And on 2 specific measures, the dual action drop looks favorable relative to lifitegrast alone. Installation site irritation was 11.9% versus 21.2% and Dysgeusia, the altered case some patients report with lifitegrast was 10.9% versus 15.2%. Okay. So how do these findings inform our next steps? This first-in-human study didn't meet its day 29 primary endpoint against lifitegrast alone, but it showed that the dual action drop works even faster, a significant improvement in corneal staining at the prespecified day 15 time point with a p-value of 0.0007 with the highest responder rate among any arm. That early effect extended to symptom resolution across multiple measures, and we achieved all of this with roughly 65% lifitegrast drop volume than Xiidra and half the dosing frequency of Miebo, meaning we still have room to optimize our dosing paradigm. This clear fast effect on corneal staining, one of the most important signs of ocular surface health, was achieved at the fraction of the dose and frequency of the 2 proven drugs, Xiidra and Miebo, respectively. That's why we have high conviction to advance into the next stage of development with a well-defined path to demonstrate superiority over both individual therapies. With that, I'm going to hand off to Yehia Hashad again.

Thank you, Mayssa. Let me transition to the ocular surface pain, a significant and often underrecognized condition across ocular diseases and procedures. BL1332 was built around a powerful scientific premise, selectively blocking TRPV1 receptors, one of the primary sensors of ocular pain may interrupt pain signaling at its source. This Phase Ib study that we are reporting results met its primary endpoint and demonstrated a statistically significant reduction in pain intensity. This validates the mechanism moments and strengthen our confidence in BL1332's potential as a first-in-class neurosensory therapy of ocular surface pain with unlocking the potential for multiple indications in the future. I'll now turn it back again to Mayssa to walk you through the results of the study.

Thanks. Okay. So the ocular surface and particularly the cornea is the most densely innovated tissue in the body. That means it's one of the areas most sensitive to pain. On the cornea and conjunctiva in the terminals of sensory neurons, the TRPV1 nociceptor is a primary sensor of ocular pain. By blocking also known as antagonizing TRPV1, we stop the signaling cascade that leads to pain. This is in contrast to the activity of a recently approved dry eye neurosensory agonist, which activates neural signaling. Bausch + Lomb has 2 distinct TRPV1 antagonist molecules. BL1312 is a first-generation molecule that achieved clinical proof of concept in reducing ocular pain in postsurgical patients, and BL1332, which is 100x more potent water-soluble molecule. Now let me share with you data that informed our development strategy. BL1312's clinical experience directly shapes how we develop BL1332. The graph on the far left simulates human corneal drug levels from 2 BL1312 dosing regimen. The higher regimen effectively relieved postsurgical pain, but a lower exposure regimen depicted by the lower red line tested in a chronic pain population did not. That taught us 2 things. First, we need a more potent molecule to guarantee sufficient tissue exposure, which is exactly what BL1332 is being roughly 100x more potent. Second, we needed to test that potency beyond the postsurgical setting. Immediately after surgery, the cornea's natural barrier is temporarily compromised, which makes drug penetration easier. But outside that setting, with the barrier intact, penetration is harder, which is exactly the scenario a more potent molecule needs to prove itself in. So starting with potency. The center chart here shows why it matters. In a nonclinical capsaicin-induced pain model, BL1332 block the pain response significantly better than both Vehicle and BL1312. And to derisk the second issue we just discussed, we needed to test BL1332 in human subjects who hadn't just undergone surgery. Those are the clinical data we're going to share today. So this was a 2-part Phase Ib study in healthy volunteers. Capsaicin-induced pain was rated on a 0 to 10 scale, where 0 is no pain and 10 is the worst possible pain. Part A and 6 healthy participants identified the capsaicin concentration that reliably produce a target pain response between 5 and 8. Part B then randomized 22 participants into a double-masked 2-period crossover. So each person experienced both BL1332 and Vehicle on separate occasions, a within subject design that gives us strong statistical power from this small sample size. And this is the most precise proof of mechanism study design that can be achieved in humans. Okay. And the result was unambiguous. Our primary endpoint, pain intensity, 5 seconds after capsaicin challenge showed a highly significant difference favoring BL1332 with a mean score of 0.6 versus 6.1 per vehicle. This is the first clinical confirmation that BL1332's potent TRPV1 blockade meaningfully reduces ocular pain in humans. And importantly, this pain was induced directly on an intact ocular surface, not a postsurgical eye. Next, I will go through the exploratory endpoints that all tell the same story. 68.2% of participants on BL1332 had complete resolution of pain, a score of 0 compared to none on vehicle, again, with a p-value of less than 0.0001. Now looking at severe pain, not one participant on BL1332 reported high pain, a score of 7 or higher compared to over 1/3 reporting high pain on Vehicle. And even looking at the worst moment across the first 30 seconds, not just a 5-second mark, the result holds. The same magnitude of difference, still significant. And now this graph brings it all together. It tracks pain intensity from before capsaicin through 10 minutes after. Pain in Vehicle-treated patients spikes sharply and takes minutes to fully resolve. BL1332, the blue bottom line stays essentially flat the entire time. In practical terms, mean pain duration was 1.6 seconds on BL1332 versus 37.8 seconds on vehicle. Pain that would otherwise last over half a minute was essentially eliminated. Every time point from 5 seconds through 2 minutes was significant. This is the clearest single picture of what target engagement in humans looks like. So in my career spanning more than a quarter century, I rarely see efficacy results like this. like a Botox or an EYLEA with such powerful pharmacology that translates to patients. This is where you look to expand to multiple indications where a drug can help patients. BL1332 is that type of drug. So on to safety. Zero treatment-emergent adverse events were measured in either arm. No serious events, no discontinuation. And at this potency level, that's about the best safety readout we could ask for. It's worth noting that earlier systemic TRPV1 antagonists developed for pain were discontinued due to hyperthermia. Given that history, BL1332 completed a Phase I study specifically designed to evaluate systemic exposure and thermal regulatory safety, and it was well tolerated with no hyperthermia observed. And that's consistent with what we'd expect. Topical ocular dosing produces ultra-low systemic BL1332 concentrations, well below what would be needed to engage the thermal regulatory pathway responsible for hyperthermia in those earlier systemic programs. So now what does this study add beyond the Phase II we already have underway in postsurgical pain that will read out later this year. Capsaicin is a deliberately etiology-agnostic pain challenge. It isn't tied to any particular disease or injury process. It tests whether blocking TRPV1 reduces the nerve pain signaling pathway itself. So unlike steroids and NSAIDs, which treat inflammation to indirectly reduce pain. And that's exactly why this result is so strategically useful. Every endpoint we measured, primary and exploratory was significant, which gives us real confidence this mechanism generalizes across pain indication. It supports evaluating BL1332, not just in postsurgical pain, but across other pain conditions where patients today have limited options, including pain associated with dry eye disease and other acute and chronic ocular surface conditions. This study in combination with the upcoming Phase II data readout is what will give us the conviction to pursue that broader opportunity and fully realize BL1332 and TRPV1 antagonism potential across the full range of ocular pain conditions patients face. I'm going to hand it off to Yehia again.

Thanks, Mayssa. Just stepping back, these 2 programs share a common theme. Each addresses a significant unmet need through differentiated science. The dual action program has generated clinical evidence that supports a rapid treatment effect and a dose effect relationship that we can build on it with confidence in the next stage of development. BL1332 has delivered clinical proof of mechanism, demonstrating that targeting TRPV1 can significantly reduce ocular pain. Together, these assets reinforce our strategy of translating differentiated science into a value for patients, eye care professionals and the shareholders. We believe they can become important future growth drivers and further strengthen our leadership in eye health. Next, before we open up for questions, I really would like to recognize the patients that participated in both clinical studies. They really committed to advance science, especially in the first-in-human 2 molecules. Second, I really would like also to acknowledge our investigators, with all what they have done in efforts to recruit these patients and keep them in the study for the duration of treatment. Actually, their efforts have allowed us to come up with the results about 4 months ahead of the schedule. And lastly, but not the least, I would like to thank my colleagues in R&D and clinical development for a well-designed and executed study that we were able to give us answers and inform us about how we can move to the next step of development. With that, I would like to actually open up for the questions. Operator, up to you.

[Operator Instructions] And the first question today is coming from Patrick Wood from UBS.

I've got 2 I'll just ask them upfront. Firstly, I guess, how are you thinking about 15-day response times as it relates to patients and marketing and that go-to-market on that side? How critical that speed of relief is relative to 29-day efficacy? That's question one. And then question two, you sort of hinted in dual action for you might be able to tinker with the dosing plan. Any thoughts around strategy around that as you move forward and how you're thinking about dosing?

Sure. Thanks, Patrick. So maybe I'll start, and then I'll turn it over to Mayssa and Yehia to weigh in at least on the first part of the question with how it stacks up commercially. So day 29, which was the primary, was an ambitious time point for an anti-inflammatory. As you know, the 2 significant anti-inflammatories are lifitegrast and cyclosporine and both can take a month or months to show effect. And so when you see a statistically significant effect at day 15, which was surprising to us, that is important. And that's the results, I think, that matter most to patients and eye care professionals. If you think about dry eye patients don't want to wait around for months to decide if a drop is working. They tend to quit early if they don't feel relief. And so a therapy like what we're demonstrating here that shows real measurable benefit at 2 weeks solves an adherence problem that's plagued the category for years. And so I think as a patient or an ACP, this would be a very valuable tool in the toolbox with rapid relief. Mayssa, or Yehia you want to.

I think I just -- a couple of things, Patrick. I think, one, we need to recognize that the corneal fluorescein staining is, as Mayssa mentioned, indicating the health of the corneal surface. The more inflammation and the more damage to the corneal surface, the more is the fluorescein staining. So less fluorescein staining is meaning that the cornea has started to get back to the healthy condition. With the effect that's happening at day 15, that's great achievement, meaning a very rapid onset for healing of the cornea back to its normal state. Obviously, this is supported as well with the responder analysis that we have seen at this time point of day 15, 3-point change in the cornea fluorescein staining give us, again, another great confidence that this is a great news for patients that they can actually be treated and have a simple and signed relief at an earlier stage. The second important part clinically, you have to remember that the anti-inflammatories in particular, take time until they work. I'm speaking now about the monotherapy, the single agents. So we know from the data on Xiidra, and we know the data from other anti-inflammatory that they could start to work starting from 4 weeks and they could have a peak effect at a later time point. This actually have resulted in many -- sometimes patients can drop off the treatment if they are just waiting for 1 week, 2 weeks, 3 weeks and they still don't see a response, some of them could be dropping off from the treatment. Having this now that we can see this effect at day 15 will be, again, another good reason that the patients have a good compliance on this type of treatment and continue on it. So clinically, it's a very relevant and it's a very good endpoint. And actually, for our positive surprise, it did even earlier than what we have anticipated in terms of onset of action.

Mayssa, do you want to talk about...

The FDA.

The strategy around formulation, yes, the dosing.

Sure. Happy to do that. So let's take a step back. It's important to remember, and this is why you have -- it's a great question. The results we shared today, we achieved with roughly 1/3 the dose of Xiidra and half the dosing frequency of Miebo. That's what the dual action drop was able to do. So if you look at the clinical evidence that's been generated in this study, if you just look at corneal staining, in the first 2 weeks, numerically, the dual action eye drop is numerically better than both these approved medicines. And for the first month, it's numerically better than Xiidra. So that's a fantastic result. And then we showed additional efficacy results that give us high conviction with the performance of the dual action drop. Another point is that when you look at the tolerability, it's very acceptable. In fact, in some numbers, we're numerically better than Xiidra. So when we look at that evidence, we know that moving forward, there's many levers we can pull. We can think about the dose of lifitegrast and would we want to optimize for that and there's also the dose frequency. We have a lot of flexibility to amplify those efficacy results that we saw. We'll share that final Phase III study design at a later date. Right now, we're taking these data as well as previous clinical experience and using a modeling and simulation strategy to optimize the dose and dose frequency we'll take into Phase III.

The next question will be from Larry Biegelsen from Wells Fargo.

This is Simran on for Larry. Maybe just to kind of go along the lines of the prior question around how you're thinking about commercialization. As you move into Phase III, how are you thinking about differentiating this combination from Xiidra and Miebo individually in the eyes of both physicians and payers? And does that positioning give you added confidence in the program?

Yes, it does. And I think, obviously, we have to produce more data. But with the data we have today, I think it's quite clear to me how we would position this initially, which is against the anti-inflammatory category, both Xiidra and the cyclosporine medicines that exist out there. If you think about the rapid onset, you think about the tolerability and then you think about the combination, that would be the best place for us to promote to patients because they would get the most immediate and rapid benefit from this type of medicine. I think over time, as managed care and access is built and remember, by design, these are superiority studies or contribution development studies. So payer discussions should be more straightforward, but that will still take some time. I think our goal would be to make this first-line therapy and standard of care. As a health care professional in this space would tell you, they'd love to have both an evaporative and anti-inflammatory on board with compliance and persistence. And this medicine should be designed to give them exactly what they want.

The next question will be from Joanne Wuensch from Citibank.

Two quick questions. It was unclear to me what the control arm was in the BL1332 you described as vehicle. I was hoping you could clarify that for me. And then I'll give the second one upfront. A very elaborate analyst meeting in the fall talked about a 3-year plan. How do each of these products sort of fit into that? And is -- are those contributing before the 3-year plan supportive of it? Or is this how is that plan?

Yes, absolutely. So maybe I'll take the second part first and then ask Mayssa and Yehia to talk about the control in 1332. So Joanne, you're right, we did put out our 3-year plan last November at Investor Day. And to be fair and to be clear, these programs won't launch until after we have achieved or exceeded that plan. And so the only real impact during that period of time is the cost of the clinical development, which we anticipated and had planned for success. And so this changes nothing in our 3-year plan. But more importantly, I think it shows that beyond the 3-year plan, there's strong durability in our pharmaceutical business and big upside of growth with these 2 assets coming soon after the plan is completed. Does that answer your question, Joanne?

Yes.

Control arm...