EyePoint, Inc. (EYPT) Earnings Call Transcript & Summary

Great. Thanks, everyone, for joining the EyePoint fireside chat. Really happy to have both Nancy and Dr. Duker here with us today. Also joining me are my colleagues, Stacy and Georgi. So we really appreciate the team for taking the time. We just initiated, on Monday, real exciting year coming up for you. Been a lot of work happening and now, hopefully, real accelerated development. And I just knocked on wood, all good news, hopefully, as we get through the balance of the year. But Nancy, why don't we start it off, and I'll turn it over to you? I know I think you have a couple of slides you want to take us through.

Yes. Thank you, Ken. Really appreciate it, and welcome, everybody. I'll give a quick overview of the company, and then Dr. Jay Duker and Ken will have a discussion all the time where necessary as well. So EyePoint Pharmaceuticals, we are a drug delivery company focused on delivering innovation of the eye. We're obviously publicly traded. Quick overview, we've got what we believe to be a very compelling pipeline focus on retinal eye diseases. Most exciting is our EYP-1901 product, which is a potential twice yearly treatment for the treatment of wet AMD, diabetic retinopathy and retinal vein occlusion. And then we've got our YUTIQ 50. We have YUTIQ on the market today, which is our 3-year treatment. Our YUTIQ 50 is our potential twice yearly treatment for posterior uveitis and that we expect to head into the clinic this year as well. And then we have several R&D collaborations, leveraging our Durasert technology. I'm going to quickly talk about Durasert, that technology and why it's so compelling. Most importantly is that, that Durasert technology is FDA validated. There's been 4 drugs that have been approved using that technology on the market already. The other nice thing about it is we have sustained 0-order kinetics, which allows not only for local delivery but also provides consistent daily microdosing of a drug without peaks and valleys that you see with a lot of other types of drug delivery platforms. The last thing is if you look at Durasert, that technology between ILUVIEN, YUTIQ, Retisert has been injected and used in -- well, we've already calculated probably 50,000 to 75,000 patient eyes over the years, and it's got a remarkable safety profile. And then, as I mentioned, we've got 2 drugs on the market today, YUTIQ and DEXYCU, both of which are now nicely recovering from the COVID pandemic. All right. Let me talk a little bit more about Durasert. As I mentioned, it's proven sustained-release intraocular drug delivery. You can see it off to the left there. It's a very, very, very small insert. I already mentioned that we've got 4 drugs that have already been approved using this technology. It's a single intravitreal injection, and it provides that continuous 0-order kinetics to the back of the eye. And it's a simple administration in the doctor's office. As I said already, YUTIQ is on the market today that uses this technology, ILUVIEN is on the market today that use the technology. Retisert is still on the market today. That is a surgical procedure that's still available. However, YUTIQ with the advancement beyond that because it's just an administration in the doctor's office. And then Vitrasert was the first one that was developed and really the first intraocular drug delivery many, many years ago that's no longer on the market today. And then in development, using the same technology, is our EYP-1901, our YUTIQ 50 and several partnered programs. Now let me talk a little bit about our pipeline. As I mentioned, most exciting is our EYP-1901. That's our anti-VEGF, using a bioerodible form of Durasert. We are studying it right now in wet AMD, and we plan to initiate studies hopefully soon in diabetic retinopathy and retinal vein occlusion. YUTIQ 50 will go in as an sNDA to YUTIQ, so we only need to do one small pivotal study, probably about 30, maybe 45 patients, uveitis patients. We hope to get that started this year. And then as I mentioned, we've got a couple of collaborations already ongoing in ophthalmology with other partner companies. We get approached quite frequently from companies because as they look at ocular drug delivery companies out there, they like their odds with Durasert. Okay. Turning to 1901 real quickly. We really believe this could be transformational. It's an intravitreal delivery of a tyrosine kinase inhibitor, a small molecule anti-VEGF molecule in our bioerodible formulation. It's using vorolanib, which was originally studied as oral therapy for wet AMD and went all the way in humans through Phase II, saw a good clinical signal of wet AMD and no significant ocular adverse events. The other thing about vorolanib is, as a TKI, it blocks all 3 isoforms with a VEGF receptor, which, as we know, is the main driver of wet AMD. And then just quickly, and I know Ken will ask more questions about this. But the Phase I study, we have dosed our first patient. We remain on track with that. It's a very basic Phase I, open-label design, 13 patients. These patients are previously responders to wet AMD -- to anti-VEGF. Open label, dose escalation. We do have 3 doses. We're dose escalating in a staged fashion, and then we'll have a 6-month and 12-month report out. As I mentioned, first patient has been dosed, and we expect to report out a preliminary efficacy result in the back half of 2021. And then just turning quickly to our approved commercial products. As I said, we have YUTIQ on the market. YUTIQ, I like to think about it as the Eveready Bunny. It's just -- it's a small therapeutic area, which is posterior segment uveitis. It's an orphan disease, very high unmet need. What we like about YUTIQ is it's our own drug delivery technology. We don't pay royalties We've got very nice COGS on that, good margins, and we expect to turn profitable with that brand this year. It's rebounding very nicely from the COVID pandemic, nice patent protection out a long time and highly efficacious in this devastating disease that it treats. DEXYCU is our drug primarily focused for the treatment of prevention of inflammation following ocular surgery, but we focus on cataract surgery. And that's a very simple injection at the very end of cataract surgery. You don't have to make a new incision. It reduces the need for steroid eye drops, which can be quite cumbersome for patients. Particularly, the average age for cataract surgery is about 75. It prevents inflammation very, very nicely. We had excellent Phase III results of this, and we're seeing in real-world practice continued excellent results. We've put in place a co-promotion with ImprimisRx, a well-established cataract surgery field force. We're seeing some very, very nice uptick now. We're quite pleased with the results that we're seeing post the -- coming out of the COVID pandemic, and we expect 2021 to be a nice year for both those brands. Okay. And that's my overview, Ken.

Great. Nancy, it's really helpful. I thought maybe what we were -- where we would start is with Dr. Duker, who -- long-time friend of ours, and I think many folks know your background, Dr. Duker. It might be helpful to talk a little bit, though, about your background. And I know you don't like to brag, but it would be good for folks to understand it. And then for you to maybe talk about the process of -- as you were looking at companies, why you joined EyePoint. And maybe talk about the differentiation, at least in your view, of the Durasert technology. I think that would just be helpful to -- for folks to understand your evolution and how you ended up working at EyePoint.

Sure, Ken. I'm not sure that we have enough time for all that, but I'll put in an abbreviated form, but it really is a pleasure to chat with you again. So I'm a practicing retina specialist. I've been in practice for 30 years. I practice at Tufts Medical Center and the Tufts University School of Medicine. I'm Chairman of the department. There, I've been Chairman for 20 years and had research interests of drug delivery to the eye and ocular imaging, in particular OCT. I was actually involved with this technology at the beginning because I was one of the first to put a Vitrasert implant into eyes of patients with CMV retinitis, and I ended up probably putting more than anybody in the world. So I knew this Durasert technology from 25 years ago. I have started a couple of companies and have gotten involved on that commercialization of products, and I was asked to be on the Board of EyePoint almost 5 years ago. I actually joined the Board just a couple of months before Nancy joined as CEO. And I got to know the company well. I knew the technology already, and it was pretty clear as time went on that the importance and the excitement about EYP-1901 was really palpable. And Nancy said, "I think you can help us more by actually joining the company as opposed to being a Board member." So last summer, I joined as a part-time member of the team here, and I'm helping them with EYP-1901 development and also the pipeline development. But I think it just shows you, again, how I feel like this is a winning technology, and I'm happy to be involved with it.

Okay. Without saying anything, I get about the other technologies out there. Can you -- and Nancy did a good job of giving us the highlights of Durasert. But can you talk about compare and contrast, maybe why...

So first of all, Nancy -- I get I'm going to be a little repetitive here, but Nancy hit the high points. We have a drug delivery system that's been FDA approved in 4 different products. Now granted those delivery systems were nonerodible. What we're doing in EYP-1901 is an erodible form of it, but we didn't add any excipients. In fact, all we did was remove the polyamide tube. The polyamide tube was nonerodible and what -- it controlled the drug release and slowed it down, and that's what enabled ILUVIEN and YUTIQ to last 3 years. I don't think anybody in my field really wants a 3-year anti-VEGF. The sweet spot is 6 months to 1 year. And we want to be sure that we could get drug levels, and we want to be sure that we didn't accumulate little pieces of plastic in the eye when patients might need 2 dozen of these in their lifetime. And so for all those reasons, we made it nonerodible, but yet the safety record and the record in patients is really impeccable so that we've got a derisked drug delivery system. The drug delivery system also, it doesn't migrate, doesn't go to the front of the eye, stays where it's injected, and it's 0-order kinetics. And the beauty of 0 order kinetics, again, is you can get away with, we believe, relatively microdosing of the drug because it's a steady state over the 6 to 9 months that we expect these implants to last. And then we do believe that's likely to give us excellent efficacy. So the second derisked part of our program is the fact that we're vorolanib. Other companies are using TKIs, but vorolanib is the only TKI that's actually been studied in humans for wet AMD. It was previously called X-82 as an oral drug. It went through Phase I and Phase II trial. With -- actually, if you -- both the trials have been published. And if you look at the results of the studies, pretty good results. The Phase I trial was a 6-month trial. And in the patients who ended the trial on the drug, 60% went to full 6 months with no rescue injections on the oral drug alone. The Phase II trial, they had very strict rescue criteria. Any new fluid prompted a rescue. And it was double masked, so the investigators didn't know whether their patients were getting the drug at all. And in the control group, placebo, there was over 9 injections, on average, in a year. which is a lot of injections for this type of population. Yet in the high-dose X-82 vorolanib arm, there was just slightly over 4 injections rescue per year, and 20% of those eyes went the whole year with no rescue, and that's with any new fluid. So that's very strict criteria. So based on that, we believe vorolanib has shown a very potent anti-VEGF effect in humans. And we think with 0-order kinetics in our delivery system, we should be able to have good safety and efficacy results.

Okay. And as we think about the market evolution, Obviously, longer-acting anti-VEGFs seem to be ruling the day. And I think most would assume that's going to become still frontline standard of care, if they can be developed. But can you talk about the role for a TKI kind of percent of patients that maybe don't dry enough or would benefit from a different option? Or how do you see this being used in practice?

Yes. So that remains to be seen. And I think there's a couple of different ways that these -- this class of medications as sustained release can be successful. I mean, at a minimum, if you have eyes that are dry with the currently available treatments but require injections every month or 2 to remain dry and you can take that group out, and even in 50% of those, you can control them 6 months, 8 months, 9 months with a TKI. You have a $1 billion drug. The market is huge. And so even at a minimum, if you're a maintenance-only drug and you get a good percentage, dry and stable, that's a very successful drug. On the other hand, we have reason to believe that our delivery system may be potent enough and efficacious enough even to treat newly diagnosed, previously untreated patients, and we expect to find that out. In between, you could envision a TKI sustained delivery system that requires a load of a anti-VEGF molecule. There's nothing wrong with that. You load the eye, 3 monthly injections then put in a maintenance TKI in the majority of patients. And again, that would be a life-changing treatment for a lot of patients. And we do think with this type of sustained release, the visual acuity results may be better. Because we're all aware, in the real world, patients are relatively undertreated, and there's drop-off of visual acuity. And so the sustained release that we can achieve may result in improved vision in the long term as well.

Good. Very helpful.

Dr. Duker, this is Georgi. I wanted to, I guess, throw down a little -- a few more questions about specifically vorolanib as a TKI. We -- it's our understanding that, structurally and potency, it's a very similar compound to sunitinib. So what we were trying to understand is, according to ClinicalTrials.gov, the dose that you guys are going with the high doses for milligrams, which is about 4x higher than the Graybug. So can you just talk about your confidence in actually seeing efficacy, the dose selection and how your approach is very different from what Graybug is doing.

So that's a complicated question. It's an excellent question, but it has a lot of different parts to it. And so from the perspective of dosing, in general, you want to have the highest dose. It's efficacious and safe. And so that we are all limited by our delivery systems. The good news about our delivery system is it's very flexible in many ways. We can change the bore of the needle. We can do 25 gauge. We can do 22 gauge. We can change the length of the implant. We can change the way the implants are created to alter their release rate. So dosing is important, but the reason we need -- we're going to higher doses in the extended-duration drugs, like brolucizumab or faricimab, they have higher doses because they need to extend the action out. If you've got a true sustained release with 0-order kinetics, the dose then is not so much important for the efficacy. Once you've achieved efficacy, the extra dose gives you longevity. So there's a balance we're trying to strike between the right longevity and the right tissue exposure to damp down VEGF to a level that's acceptable in this disease. So I think there's a bit of a sweet spot that you're going for, and we expect to be able to achieve it. The other issues that are around, the way the drugs are developed, you've got to show the FDA in an animal model that your tissue exposure is safe, and you can't really go above that until you prove it. And so there are limitations in these animal models that we all have, size -- lens size and things like that put a ceiling, at least initially, on how high you can go. It doesn't mean we couldn't possibly go higher if we choose to, but we don't believe we're going to need to. We think that we should be able to show efficacy with the doses and the exposure that we have. And again, talking about specifically Graybug, if you look at the Graybug data, there's certainly an anti-VEGF effect there. And I think it is hopefully a class effect that our TKI will do at least as well and with we believe to be a delivery system that won't show problems like migration into the anterior chamber.

Got it. This is very helpful. And I guess something you alluded to that. But during your preclinical studies, can you just quickly summarize the results in terms of safety and what you have observed and your confidence that you're going to translate in the preclinical studies?

Sure. So in the preclinical studies, it was a rabbit model, a GLP tox study for 6 months, and there was no systemic toxicity. There was no significant ocular toxicity. Those of you out there who may know about the rabbit model and intravitreal injections, the rabbit lens is, relatively speaking, 4x larger than the human lens. And therefore, when you do injections into the rabbit eye, it's not unusual to hit the lens. And so there were some focal cataracts created at the beginning of the treatment in some eyes. They didn't progress and assumed to be by us and we assume by the FDA as well to be injection related. With experienced injectors, as most retina specialists in the world are right now, we just don't think that's going to be an issue. And other than that, there was really no other toxicity shown. There was clinically very mild inflammation at the beginning which was self-limiting and really nothing at the end and nothing histopathologically and nothing that caused the FDA to have any pause in granting us a safe to proceed with our IND. I'd also like to add in the oral vorolanib studies, there are approximately 130 patients who received oral vorolanib for a minimum of 6 months, and none of them showed any oral toxicity -- I'm sorry, none of them showed any ocular toxicity from oral delivery.

Ocular toxicity.

Yes. Thanks. Yes. We're not developing a dental drug.

I'm not sure if Jay is breaking up, but there was no. [Audio Gap] Can you hear me?

Yes, yes. I said oral, I meant ocular.

Yes. No. That is great. And obviously, very important that we're seeing that. And I guess just very quickly about the oral vorolanib study. Is -- do we have any information on the actual levels of the TKI that actually were in the eyes of those patients? Is that at all possible to measure that?

And so it was never measured in the eye in that study. It would be necessary to do aqueous humor taps or vitreous taps that wasn't done. There were serum levels taken in a limited number of patients in that study, and they were taken prior to the oral delivery and at 4 hours and 8 hours. But it was a very small number, and it wasn't all the doses. But there is some systemic PK data based on that, which, again, I'm not sure really applies to a 0-order kinetic delivery system because we're not getting peaks and troughs. And I think the -- I would be safe to say that I don't think we were much informed by that because of the difference in the delivery systems.

Yes. That makes sense. So I guess maybe we can just pivot to the development plan for 1901, starting with the recently initiated Phase I study. What are -- how is enrollment going? And I guess, also, if you could then comment on what are the studies that will be required for regulatory approval and the plan for that?

Sure. So first of all, we got our IND last month in -- actually, now 2 months ago in January. We enrolled the first patient exactly 1 month ago. Enrollment is going very well. We have no COVID-related slowdowns in enrollment, and we're happy with the way it's proceeding. It is an open label, dose escalation. 3 doses, as you know, low, medium and high dose, and that's proceeding well. With respect to a Phase III pivotal trial, how that might look, I can talk in general because I think I know the answer in general, how it might look, but we haven't had specific talks with the FDA yet about that. But in general, I would expect it to be a noninferiority study with visual acuity as the primary endpoint and against placebo -- sorry, against the control group that would not be placebo, that would be standard of care, which whatever on-label, anti-VEGF we would choose to do at the time.

Got it. That makes a lot of sense. And I guess in terms of the trial, the Phase I trial and the results that we expect to see later on this year, would you be providing -- would those be internal updates? Would you be providing updates similar to other companies? And I guess one question specific to that Phase I trial is what is the criteria that you would have for rescue?

So I'll answer that second part first, since that's straightforward. We chose the rescue criteria essentially the same as what's been the standard for other TKIs in the space: 75 microns of new fluid on OCT over baseline, any new hemorrhage attributable to wet AMD or a drop in 10 letters off baseline due to wet AMD progression. So that's pretty much standard.

Jay, let me take that other one.

Sure.

Right now, our plan is not to give interim updates, just because we want to just see how things progress. And frankly, it's going to be somewhat dependent as well on how we enroll right now. As we said, we're on track. But right now, we're not anticipating to give interim updates.

Georgi, if I could answer kind of a general statement about rescue also because if you talk to some of my colleagues and they hear these kind of rescue criteria, they'll say, "Oh, that's not strict enough. I would never let a patient go to 75 microns." The issue, though, is what we're used to is an injection of a drug and the drug lasts 2, 3, 4 weeks in the eye, and then it's gone. And so when -- at 6 weeks or 7 weeks, if we see new fluid, there's no drug onboard. So we know where that eye is going. You have to reinject. When you've got a true sustained-release device, if you see a little new fluid at 3 months, there's still drug onboard. And that drug may be enough to control that fluid, so it doesn't progress or maybe even fluctuates and gets better. And so we're all, I think, in the same -- this class of medications and class of sustained release of the same opinion that the parameters for what it means to be successful and what it means to be failing may just have to change a little bit because of the truth of the fact that there's still drug onboard at 3 months, 4 months, 5 months. At least with our implant, there will be.

Got it. No, that makes a lot of sense, the fact that you have discontinuous dosing doesn't really provide that worry to physicians. So I guess just a couple of final questions. Once -- I guess if everything goes on track and you do have a product with a 6-month duration, how do you feel like it's going to kind of slot into the treatment paradigm, considering the fact that we have multiple competitors coming in that will be both but also anti-VEGFs? How do you think of the competitive space?

So the first thing, as you well know, the market is huge. And so by the time we're approved, it can be an $8 billion or $10 billion market. And so there's room for more than one new drug in this market. And I think that physicians like choice, and I think the ability to give them choice on duration of action and the type of patient who might be successful and perhaps side effect profile, that's all going to be important to give them that type of selection. In saying that, there's a couple of different ways one could envision a sustained-release system being successful from, on one end, completely supplanting what's being done right now. If you have enough anti-VEGF effect at the beginning, you could treat newly diagnosed, previously untreated patients perhaps with a sustained-release device solely. On the other hand, there's nothing wrong with a sustained-release device that's just for maintenance. So if you have a group of patients who you treat with an on-label, anti-VEGF and get them under control and get them dry but they require treatment to stay dry every month or 2, you could then transition them to a 6-month or a 9-month TKI sustained-release implant, and that would represent a great deal of the market as well. So there's a wide variety of what might constitute success here. And ultimately, it's like everything else, it's safety and efficacy. The safety bar is very high in our field, and the efficacy is relatively easy to measure, it's visual acuity and OCT.

No. That's great. It makes a lot of sense. So I guess, just final question on my end. In terms of just thinking more broadly about the Durasert technology and its applicability, do you have any plans? And you mentioned that there are some partnered programs but developing it for -- I guess, there's a huge unmet need in ophthalmology and having these sustained-release technologies that would provide limit the amount of, for example, eye drops similar to DEXYCU that is being used. Do you have any plans going into indications like glaucoma or dry eye?

Nancy, do you want to answer?

Yes. Let me take that one. So we're certainly looking at other indications and more than likely that we'll stay within the glaucoma and additional retinal indications. Right now, we're not going to go after the dry eye market. That could change down the road, But right now -- and part of that is we want to make sure we're staying relatively focused. Dry eye is, as you know, a very, very large market and requires very large clinical trials, plus in a completely different commercial infrastructure to launch. So glaucoma is under active consideration, and then we are always looking at additional retinal drugs, that actually we could put into Durasert.

That's great. And with that, I'll turn it into Ken.

Yes. Thanks, Georgi. Thanks for the discussion. Nancy and Dr. Duker. I guess just to wrap it up, obviously, you have the commercial organization working hard on making YUTIQ and DEXYCU the products we hope them to be. On the flip side, there's just massive potential value creation from the pipeline. So just wondering, Nancy, as your shareholders as they think about the potential capital needs to be able to support what could be truly transformative kind of pipeline value versus a lot of the effort, and I would call them quids that you have and your near-term products, can you just talk about the strategic value? Do you -- are you wedded to hold these products? Is there thought about monetization of them potentially? Or are we going to let -- obviously, you have to let the pipeline play itself out a little bit, just as how you think about these things organizationally.

Yes. I think, Ken, right now, we're very committed to our commercial products, and we do expect that they'll start to turn profitable this year. So we want to evaluate given that you could end up where that starts to fund some of the pipeline growth. We are really pleased with what we're seeing in the first quarter so far with these drugs. And as you know, tomorrow, I believe, we'll be having our fourth quarter earnings call. But right now, we're going to continue to promote those products and then continue to develop our pipeline. Of course, as things evolve down the line, we're always evaluating our next steps. So we'll always continue to evaluate our strategic go-forward plan.

Good. Okay. Well, with that, let's end the conversation here. We're really happy to be working with you both. It's exciting times, and looking forward to data at the end of the year. And I just knocked on wood, so everything's going to be okay.

Thanks, Ken. Thanks for having us.

Thank you.

Bye-bye.