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

Welcome, everyone, to the 43rd Annual JPMorgan Healthcare Conference. My name is Tess Romero, and I'm one of the senior biotech analysts here at JPMorgan. I'm pleased to welcome to the stage our next presenting company, EyePoint Pharmaceuticals. And presenting on behalf of the company, we have President and CEO, Jay Duker. Jay?

Well, thank you so much, Tess, and it's really a pleasure to be back here at the JPMorgan meeting, and thanks for the invitation. So EyePoint is a publicly traded company. As such, we have these legal disclaimers to show. And if you'd like more detail, please go to our website. EyePoint Pharmaceuticals is the leader in sustained release drug delivery for retinal diseases. Our lead product, DURAVYU contains patent-protected vorolanib, which is a small molecule tyrosine kinase inhibitor, featuring a new mechanism of action that's delivered by our best-in-class technology, which we call Durasert E. We have the most robust data set of all the wet AMD programs doing sustained delivery, and we have 2 ongoing global pivotal trials that are noninferiority in wet AMD. We're the only sustained-release TKI program that is active in diabetic macular edema, and we are recently bolstered that with very encouraging interim Phase II data. Our balance sheet is strong, $370 million in cash and cash equivalents at the end of last year with a cash runway into 2027. This is our pipeline. And again, lead product is called DURAVYU, vorolanib in the intravitreal insert. It was formerly known as EYP-1901, and I apologize if I slip back into calling it that occasionally. We are in 2 Phase III pivotal trials. Diabetic macular edema, we're just completing a Phase II trial with positive interim data. And our pipeline contains EYP-2301, which I'll briefly touch on at the end. Because we are a drug delivery company at the back of the eye with a unique delivery system, we also are continuously evaluating additional pipeline opportunities. Durasert E is a completely erodible, solid, small insert that's injected into the office in a standard intravitreal fashion. The insert provides continuous dosing featuring what's called zero-order kinetics, which means once a steady state is reached several weeks after the insert is injected, the drug is released at that steady state essentially 24/7 until the drug payload is really -- is gone. This allows what's been referred to as microdosing, which means relatively small payloads can give extended effect with relatively small tissue exposure. So again, the insert is solid. It's heavier than water. After it's injected, it sinks to the bottom of the vitreous cavity and basically stays there. It's designed to dispense the drug payload prior to the matrix completely going away. And why is that important? We want to control drug release till the end. If your matrix goes away while there's still drug in the eye, you're going to get free drug floating in the eye, and you really have no idea what your drug delivery is at that point. We have a very favorable safety profile across multiple indications. We think vorolanib is the best-in-class tyrosine kinase inhibitor in this space. It's potent and selective. It works at the receptor level and works against all VEGF receptors, meaning it should theoretically be a pan-VEGF blocker, A, B, C and D. In addition, we block PDGF, which theoretically could result in antifibrosis, which could decrease the rate of visual loss in wet AMD in the long term. We have composition of matter patents into 2037 that we think could be extended into 2042 with other patents pending. In animal model, we've shown that vorolanib demonstrates neuroprotection, and we hope to show similar data in our Phase III trials in wet AMD. It also, again, as I mentioned, because of the effect on PDGF should be antifibrotic. And at doses used in humans, we do not block TIE-2. And the reason that's important is if you block TIE-2, you will upregulate angiopoietin-2 and downregulate angiopoietin-1, which causes vascular instability. The inserts are each about 1/5,000 of the vitreous cavity. And in the latest iteration, our higher payload insert, which contains approximately 1.34 milligrams of drug, that means these inserts are 94% drug. This is the insert that's used in our Phase II VERONA DME trial, the insert that's being used in our 2 pivotal wet AMD trials and presumably are -- if we are approved, will be our go-to-market insert. We feature immediate bioavailability. We've shown that in animals and now have back-end clinical data to show through the DME trial that it's true in humans as well. The constant zero-order kinetics I mentioned already, no free-floating drug. And from a safety perspective, our inserts contain no PEG. There is some evidence in other retinal drugs that PEG antibodies may play a role in vasculitis. We have no PEG. We also have no PLGA. PLGA is used in FDA-approved products for sustained release in the eye. And while it's effective, results in acidic environment as it goes away, we do not contain PLGA. We come at a preloaded syringe injector, very simple. There's no mixing involved. The physician opens the package, takes off a tab, takes off a cover, takes out a wire and it's ready to go. And interestingly, we are the only sustained release or anti-VEGF even on the market that shipped and stored at ambient temperature. Everyone else needs to be refrigerated. And while that may seem like a small advantage, a retina specialist's office has to have more and more refrigerators given all the FDA-approved products and all the biosimilars that have now been approved. And we think from a marketing and commercial perspective, that actually will prove to be advantageous. So we've done 4 trials. DAVIO was a Phase I wet AMD trial. DAVIO 2 was the Phase II wet AMD trial. The PAVIA trial was in NPDR, nonproliferative diabetic retinopathy. And the VERONA trial is just coming to an end, and that's the DME trial. We've treated over 190 patients with our drug and have no reported ocular or systemic SAEs. And you can see some of the efficacy outcomes on the right side of this slide. The wet AMD Phase III program was based around the Phase II DAVIO program. It was a noninferior trial versus an on-label aflibercept control. We reported the top line just over a year ago. This is the structure of the DAVIO 2 Phase II trial. It enrolled previously treated wet AMD patients. Everybody got reloaded with EYLEA day 1, week 4, week 8 and 30 minutes after they got their EYLEA at week 8, they either got their dose of DURAVYU or they got sham. Patients were then watched monthly, every other month, the EYLEA eyes got another EYLEA and the DURAVYU eyes got a sham. The primary endpoint was change in visual acuity non-inferior to the EYLEA control, and that was measured at a combination of week 28 and week 32. This slide summarizes the Phase II results. We hit all the primary and secondary endpoints. Primary endpoint, change in visual acuity. And just if you don't know visual acuities, if you go to your eye doctor, there are 4 letters on the line. We were less than half a letter worse than EYLEA. So essentially both statistically and certainly clinically equivalent. We had no DURAVYU-related SAEs, as I mentioned. Reduction in treatment burden was about 80% any way you measure it. About 2/3 of the eyes were able to be supplement or rescue-free up to 6 months after the insert went in. And we had excellent anatomic control. That's measured on OCT, optical coherence tomography. In the central fovea or central macula, the normal thickness is up to about 300 microns. Standard deviation is about 10 microns. So we were under 1 standard deviation difference than EYLEA. This slide shows the visual acuity changes over time. The primary endpoint is boxed there at 8 months, the combined endpoint. And you can see everybody gained about a letter in this trial. But look at the 12-month data, which is the endpoint for the pivotal trials. And you can see, again, excellent visual acuity results in both DURAVYU-treated arms that was 2 milligrams and 3 milligrams. This is the anatomy measured on OCT. A couple of things to note here is, first of all, the green line is the EYLEA control and notice how after the loading period, there's a sawtooth. What that tells you is every other month EYLEA in this study was not enough to completely control the anatomy. In every 2 months, the retina started to gain a little fluid. This is exactly what we saw in VIEW 1, VIEW 2, which was the Phase III trials that got EYLEA approved. And what this tells you is at least anatomically, these patients behaved just like the patients did in VIEW 1, VIEW 2. It also tells you that this was a group of patients that absolutely needed treatment. And of course, we're looking at the prior treatment going into the trial, on average, the eyes received 10 injections normalized over the year prior to enrollment. In the United States, on average, patients received about 6 injections. So this was a heavily pretreated group. And again, that sawtooth green line reassures you that that's true. Now while the 2 DURAVYU arms gained a little more fluid between month 3 and month 4, look how stable they are with no sawtoothing, very stable right up to the end. And at the end of 1 year, noticed the higher dose in magenta was exactly like EYLEA. This is the supplement-free rates by month in the study. A couple of things to note, I mentioned this already at month 8, which was 6 months after the drug went in, 2/3 of the eyes were supplement free and half the eyes went out a year with no supplement. But look at the EYLEA arm. Despite getting every other month EYLEA, 6% of the eyes still got supplemented at month 8 and about 14% got supplemented at week 12, again, showing that this was a heavily needy group for anti-VEGF. So based on these positive results, we initiated 2 pivotal trials, they're called LUGANO and LUCIA. The goal of the trial is to show that DURAVYU, when dosed every 6 months, is noninferior change in visual acuity. We plan on enrolling approximately 400 patients. We have 2 arms in the trial, 2.7 milligrams of our drug, which is delivered with these higher payload 94% drug inserts against on-label aflibercept control. The primary endpoint is approximately 1 year for both safety and efficacy, but we'll carry the trial out 2 years because we want to get a label for reinjection in the long term. The most important secondary endpoints are safety, of course, and reduction in treatment burden. This is the schematic of the Phase III trials, and it looks an awful lot like what I just showed you in the Phase II. Big differences I mentioned already, we're using this higher payload insert, 2.7 milligrams, which is achieved with the injection of 2 inserts, and we do it with a single injection with our syringe injector. We're reinjecting DURAVYU every 6 months in this trial. And in this trial, we're enrolling both treatment-naive and treatment-experienced patients. We expect to roll the ratio about 75% naive to 25% previously treated. Here's the time line. And we had a PR come out yesterday, which showed this. We're exceeding expectations in enrollment. In about 2.5 months, we've enrolled 1/3 of the patients in the LUGANO trial. Originally, the second trial, the LUCIA trial was scheduled to start 3 to 6 months after LUGANO, and we managed to get it started about 6 weeks after LUGANO, and it is also ahead of schedule. So we are guiding to complete enrollment in both trials by the second half of this year. On to diabetic macular edema. That's called the VERONA trial. It's also a Phase II trial, and we reported interim 16-week results. This is an open-label trial, and we reported the interim results, frankly, because things look so good. We wanted to get it out. And since our community following this knew it was open label, we thought it was the right thing to do. So it's a 24-week final endpoint, and we showed 16-week results, so approximately 4 months. All of the patients had achieved that visit, 3 arms, 1.3 milligrams, which is a single insert of DURAVYU, 2.7 milligrams, again, this is a higher payload insert, 2 inserts versus aflibercept control. Everybody on day 1 got a single shot of EYLEA. And 30 minutes later, they either received their dose of our drug or they received a sham. And then they were watched. This is what you might refer to as a PRN study. There was no other required injections, but there was supplement criteria that was applied to all 3 groups. This is the demographics of the enrolled patients. This is the first trial that we enrolled patients who are 100% with active disease. So all the patients had DME, they're all previously treated and they're all active, meaning they had thick retinas and decreased fluid. I already mentioned that normal is up to about 300 microns. On average, these patients were between 400 and 420 microns. This graph shows change in visual acuity with green being the control EYLEA, magenta being the low dose and blue, the high-dose, go-to-market dose. A couple of things to note. First of all, we had a significant difference between our drug and EYLEA at week 4. That is only explainable by our drug. So our drug, I mentioned already, we have immediate bioavailability, and we showed a significant improvement in visual acuity versus a single shot of EYLEA in 4 weeks. In the higher dose, it was sustained through week 16 with 9 letter improvement over baseline. 9 letters is almost 2 lines on the eye chart. And if you were to look back at the approval for EYLEA, the studies that were done on naive patients with DME, they approved about 9 letters, but it took about 4 to 5 shots to get to that level. We did it with 1. The OCT anatomy matches, and this is again something that's quite striking. It's almost a mirror image of the visual acuity. So it's not often that you see structure function and retina go this close together. But what does it mean? Well, we drive the eyes immediately and we dried them well, and we kept them dry through 4 months with a high dose. This drying effect, again, is really important to physicians because they believe that if you dry out an eye and get it to normal thickness, eventually, the visual acuity will follow even if there's a delay, but we [ don't ] really have a delay here. Now you might say, well, okay, but what about the supplements? Couldn't you supplement these patients? Well, we could, and they did get supplemented, but the supplement-free rate was higher in the DURAVYU arms, and you can see 82% at week 16 versus 50% in the control. So in summary, what we've shown is our go-to-market dose of DURAVYU 2.7 milligrams shows early and sustained best corrected visual acuity improvements in DME, and we dried them out. We improved their central subfield thickness. A greater proportion of the eyes were supplement-free. No safety issues again in this trial. There were no ocular or systemic SAEs. So we have been assessing this drug really is what we call maintenance therapy. And that's what we would hope to get on the label, if approved, maintenance therapy in wet AMD after a 3-injection load of an anti-VEGF. This study, however, brings up the possibility that not only can we maintain patients with a single injection for 6 months or longer, but we may be able to improve DME patients better than the standard of care. And if that proves to be true in the pivotal trials, then obviously, we will have a great success with this drug. Speaking of the pivotal trials, we are -- for DME, we are underway in planning them. We do need to get the full results and meet with the agency and get agreement, but we have quite -- some optimism that we may be able to get approval with just a single pivotal trial in DME. We are really thinking about the future at EyePoint, not just the next readout in the short term. And about 4 years ago, we came to the conclusion that if we were going to be successful in DURAVYU, we were probably going to have a multibillion-dollar product, and we need to make a lot of inserts. And we couldn't do that in our home base in Watertown. So we did a national search for a new site to build a commercial facility. We ended up in Northbridge, Massachusetts, just outside of Uxbridge, Mass., if you were wondering. Northbridge is about 45 minutes west of our headquarters, and we built a greenfield facility or landlords built it for us, ground up, 41,000 square feet, 8 large clean rooms, completely state-of-the-art. And at this facility, we would expect to be able to meet the commercial demand should we be FDA approved, both in the United States and globally, able to make over 1 million inserts a year here. I mentioned EYP-2301. This is the small molecule razuprotafib, which is a TIE-2 agonist in Durasert E. Razuprotafib was formerly known as AKB-9778 and had previously been tested as a subcutaneous injection for diabetic retinopathy in DME, had very good anatomic results. Visual results were borderline. But again, it was given subcutaneously daily. We believe the zero-order kinetics constant dosing of the retina using our inserts will improve the results. And we are still preclinical here, but hope to be in patients by next year. So to summarize again, we believe we're the leader in sustained release for the reasons that I mentioned. Best delivery system. Again, we've had 4 FDA-approved products using non-erodible Durasert. Durasert E has been shown so far to be safe and effective. Most robust data set in wet AMD, only sustained release TKI with a DME program bolstered by very positive data, currently in 2 global Phase IIIs for wet AMD and a strong balance sheet. Thank you.

Great. Thanks, Jay, for the presentation. So we're going to hop right into a little bit of Q&A. I thought I would talk with -- start with a little bit of a bigger picture question. What do you think the market may be missing or misinterpreting about the emerging clinical profile of DURAVYU and/or your platform overall?

Well, so I think one of the big things is the impact of the DME trial. I think that NPDR, if you recall, we did a trial in NPDR. And while we showed a biological effect, it missed the primary endpoint, and we're not going forward in NPDR. But I think it raised some questions about would our drug work in DME? Do all the patients need to be fully loaded with 3 injections? How bioavailable is it? But I think one of the things investors are missing is how positive the DME data is and how it refutes some of the negative hypotheses that came out of the NPDR data. We are immediately bioavailable. We do work in DME. We can dry a wet retina. We don't need a full load to work. DME is another potential billion-dollar opportunity. And the unmet need in DME for maintenance therapy, frankly, is probably even greater than wet AMD. These are typically patients who are younger, they're working, they have multiple doctors to go to, and the first-year burden of treatment in DME is very high. In the patients, many of them just don't come in. Having what we've referred to as forced compliance with a sustained release insert, I think, will be very attractive to physicians and patients, especially if we can show the type of visual acuity results that we got in the Phase II.

Okay. And maybe you've had -- well, you have at least had the DAVIO 2 data for, I guess, more than a year now I think it's been. Can you talk a little bit about what the physician feedback is currently, how it's evolved over time? Are there any key questions that you're fielding still about the product's profile in wet AMD?

Yes. So a really good question because this is a bit of a paradigm shift. First of all, wet AMD is one of the first -- the only chronic diseases that you can think of where there's only one MOA. That same MOA has been around for 15 years. So we're introducing a new MOA with the possibility that attacking the disease with 2 MOAs may even give you better results. That may be what we're seeing in DME, frankly. Secondly, the idea of maintenance therapy. This is a chronic disease that's being treated acutely with injections. And not that the injections aren't effective, and not that they're not safe. They're just hard for patients to do in the long term, and therefore, patients drop out and patients miss visits, and therefore, they lose vision. One of the analogies you can think about is it's like, frankly, like treating diabetes. It's as if we're treating diabetes with short-acting insulin. Well, you can do it, but you got to do it 6 times a day. There's long-acting insulin. Do some of the long-acting insulin patients need some short-acting insulin, too? Yes, they do, but that might be the best way to treat those patients. That's the analogy here. Because remember, supplementing a patient, if we're approved, and we're safe and effective and tolerable, and we have a 6-month label and a doctor needs to supplement on top of a DURAVYU with an EYLEA or biosimilar or anything, at 3 months or 4 months, there's nothing wrong with that, especially if that was a patient who was getting treated every 2 months or every 6 weeks before they got DURAVYU. So doctors don't mind injecting. They just don't want to inject as often. And so, one of the things we've been telling them is, look, we're not just another anti-VEGF. We're not trying to replace what you're using. We're going to work with them. And it looks like maybe up to 2/3 of your patients could be controlled long term with us alone, but that doesn't mean you have to do that. We're going to give you and your patients' flexibility to determine the right interval of coming in and being injected. And if we do, in fact, show that 2 MOAs is better than 1, I think a lot of doctors will use us. I'd also like to add, if we can show neuroprotection, like we did in the preclinical and where we can show antifibrosis, which is one of the primary reasons patients lose vision in wet AMD long term, I think doctors will be hard-pressed not to use us.

Can you talk a little bit about the design -- well, you framed the designs of LUCIA and LUGANO for us, but how these compare to other pivotal trials for TKIs in wet AMD?

So first of all, we're taking what I would call the tried and true result pathway to get a result here, which is the last 5 approvals in wet AMD have all been done with a noninferiority trial. Noninferiority trials, the docs understand them, the patients understand them, the recruitment is relatively easy. As a result, everybody is getting treated. Treatment is not being withheld. If a patient gets randomized to control, they're going to get standard of care. And, of course, if they get our drug but needed, they will get supplemented. So it's comforting to the doctors and the physicians and the patients. How it compares? Well, there's only one other company in pivotal trial. That's Ocular Therapeutix. And they're taking a bit of a different approach. They have a noninferiority trial that they call SOL-R, which is, I think, similar to what we're doing with some important differences, but noninferiority nonetheless. And they also have SOL-1, which is a superiority trial. And so, they've taken a slightly different approach.

Okay. What do you think represents positive data? And can you just frame that in a little bit more detail for us, specifically for each of the Phase IIIs? And also, Jay, how do you think about key risks and ways to mitigate those?

Sure. So first of all, positive data, I think, is really straightforward. We need to be statistically noninferior with the primary endpoint in the intent-to-treat group. And so, that the difference in visual acuities that we showed in the Phase II of 0.3 and 0.4 letters. We don't have to match that to be noninferior. We could be slightly worse. And in fact, I'd like to remind people that high-dose EYLEA, 8-milligram EYLEA was 1.4 letters worse than 2-milligram EYLEA in the wet AMD trial, but they were noninferior, and nobody remembers that. They're just saying, yes, high-dose EYLEA, going to use it. Part of that is physicians know that a letter or 2 is not noticeable by patient. They don't notice that. So that would we give up a little bit of vision like that to get more durability? Well, the answer is clear, yes. Look at the promise of more durability in a drug like Vabysmo, a $2 billion drug, and the real-world data suggests people are just getting another week or 2 out of the treat and extend protocols. So back to it, I think we've got to be noninferior. Numerically, frankly, I don't think it matters where we come up noninferior as long as we are statistically. We will test for superiority if we meet the non-inferiority margin and statistical superiority would be something then we could put on the label, and that would be obviously very nice. The safety record needs to continue. We have no reason to think it won't. 190 treated patients. We also have a database of about 150 treated patients who received vorolanib orally in a wet AMD trial. At the time, it was called X-82. Tyrogenex was the company who had it. They didn't complete the trials because of systemic toxicity, but there was no ocular toxicity in those trials. So we have quite a good database for vorolanib. And preclinically, we've tested doses of vorolanib in rabbits that are 10x scaled higher than what we put into humans. We have not found a maximally tolerated dose in the rabbit. We've also had rabbits with 6 inserts in their eyes, and we've not found any toxicity from that. So we're quite comfortable with toxicity issues and the fact that we haven't seen them. And finally, we need to show a significant reduction in treatment burden. That's the secondary endpoint I mentioned, it was important. Why? If we don't, we don't have a viable drug. 80% reduction in treatment burden was terrific in the Phase II. Do we need to match that? Not necessarily. It doesn't have to be as high as 80%. But we need to show some of the significance of the reduction in treatment burden is we can then go to doctors and say, for example, if we have an 80% reduction in treatment burden, again, you can trade off approximately 3 EYLEAs with 1 DURAVYU. That's a concept that I think is easy to understand. The risks? We're running pivotal trials. And so, I would like to think that we are derisked based on the positive history of DURAVYU in patients. Tens of thousands of patients have received the DURAVYU insert, although be it in a nonerodable form. We got a lot of data on vorolanib, and we've got 4 trials that don't show a safety issue. But again, something could come up, don't anticipate it. And I think the reduction in treatment burden, again. We expect the percentage of eyes that are supplement free to go up. And the rationale behind that is, first of all, we're reinjecting our drug. If you look at the Phase II trial, we ran it out a year for safety, and we have about half the eyes make it a year with no supplements. We should do better because we're reinjecting at month 8. So presumably some of those supplements that occurred later in the study was because the inserts ran out of drug. Number 2, it's probably the biggest thing, is that we're enrolling naive patients. When we enrolled the Phase II, I alluded to this, and I'll repeat it, we enrolled a really tough-to-treat population. These were eyes that were getting a lot of shots, and we did really pretty well. Maybe up to 1/3 of the wet AMD population, they don't need a lot of shots. With any drug, you can get them out 10 or 12 weeks. It's the nature of their disease. We got very few of those in the Phase II. And the way to get them, of course, is enroll naive patients and get them from the outset. So we think that will also account for a decreased rate of supplement or rescue. And finally, about 20% of the rescues that occurred in the Phase II did not meet criteria. We gave the doctors the ability to rescue in Phase II if they wanted to, and some of them took advantage of that. We are not allowing nonprotocol rescues in the pivotal, and we have some changes in the criteria to really ensure that only the patients who are going to benefit from a rescue or supplement injection get them. One of the other things I'd like to point out is this was true in our Phase II. It's also true in the Phase III. The doctor who determines whether an eye needs a supplement or rescue is masked to which group the eye is in. And therefore, technically, an EYLEA or it could get rescued. And in fact, I showed you that some of them did get rescued in the Phase II. So one of the other advantage we have by the study design is we won't just have a rescue rate or rescue-free rate in our arm. We'll have a similar one in the EYLEA arm, and we're going to be able to compare them to see how much different they are. And we think that will be of statistical importance in the future.

How are you thinking about the overall market opportunity in wet AMD?

Well, in a word, big. It's a $10 billion market now. Now, I've mentioned Vabysmo's success based on some more durability. No changes in visual acuity, just more durability. So we think there's certainly room for that more flexible dosing that we might be able to offer. We actually have done quite a bit of work to prepare the market. And prior to the Phase II readout, we did a quantitative study with retina specialists where we presented them with a TPP that was worse than our results in Phase II. And in that study, the retina specialists who were queried said, they would use it between 25% and 40% of their patients. We're repeating that with the TPP we got in the Phase II, and we fully expect that to be higher, and we fully expect more doctors to now be aware of the TKIs and what their potential is. So this is a big market. And having, frankly, a second competitor in it is a good thing because we're both able to raise awareness in the doctors, the patients, and the payers, and the potential for sustained release.