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

Good afternoon, everyone. My name is Balaji Prasad. I'm the senior analyst for the specialty pharmaceutical sector. Continuing our spec pharma track for the day, we have with us the management team from EyePoint. So we have Jay Duker, the CEO; and George Elston, the CFO. Jay and George, thank you so much for joining us today. I know you had multiple meetings since morning, and I hope it's been a productive day for you.

It has, yes. Thank you very much for the invitation.

Great. Maybe just to kickstart the proceedings, could I request you to provide an overview of the company and background -- a bit of a background on the technology?

Sure. So EyePoint is the leader in drug delivery to the back of the eye with 4 FDA-approved products using our Durasert technology. Our lead product is called DURAVYU. DURAVYU is the small molecule tyrosine kinase inhibitor vorolanib in our Durasert E technology, E for erodible. Unlike the 4 prior approval products, the products in Durasert E are fully bioerodible. DURAVYU has been in 4 trials so far, including a very positive Phase II wet AMD trial that was called DAVIO 2. That trial and its success and trial design has really guided our current Phase III protocols. We have 2 active Phase III protocols, identical global trials that are near simultaneous and are actively enrolling in wet age-related macular degeneration. In addition, we have data from diabetic macular edema Phase II that we recently reported that we're very excited about because our drug DURAVYU showed excellent visual acuity improvement, concomitant anatomic improvement. And interestingly and most exciting is the improvement occurred very early, within 4 weeks of administration of the drug. So we're very excited about the potential of DME, which is another potential multibillion-dollar indication.

Thank you, Jay. Great to hear that. Maybe starting with wet AMD, the larger market. Help us understand the design of the wet AMD registrational trials, both the LUGANO and the LUCIA studies, and what are the primary endpoints you're looking to demonstrate?

Sure. So wet AMD is about a $10 billion market currently in the United States and growing. There are multiple ligand blockers that are biologics that are approved. And longevity is important to both patients and doctors. The ability to successfully go longer between visits and injections without risking vision is important. And that's really our value. DURAVYU should last a minimum of 6 months in virtually all patients. And studies indicate that by 9 months, the drug is really fully eluded from our insert. So the pivotal trials are designed around a noninferiority endpoint. Noninferiority is the way the last 5 approvals in wet AMD have been achieved. And so, it's a tried-and-true approach to FDA approval. The primary endpoint is noninferiority change in visual acuity against an on-label EYLEA 2-milligram control group. So the study is enrolling, both previously treated wet AMD patients and treatment-naive wet AMD patients. The ratio is going to be, at the end, about 75% naive. All patients have to have active wet AMD, which means they have to have decreased vision. They can't have perfect 20/20 vision to be enrolled, and they have to have signs of exudation, which means they have to have fluid on this OCT examination that's done. Patients are then randomized on day 1 to either DURAVYU 2.7 milligram dose or the EYLEA control. All patients then receive a full load of EYLEA, which means monthly injections starting on day 1, week 4, and week 8. At week 8, 30 minutes after the EYLEA, they either receive their first dose of DURAVYU 2.7 milligrams, or they receive a sham injection for masking. Patients are then evaluated monthly. Every other month, the EYLEA arm gets another EYLEA. And at that same time, the DURAVYU arm will get a sham injection for masking. At 6 months after the initial DURAVYU, the DURAVYU arms will get a second injection. The primary endpoint is noninferiority change in visual acuity between day 1 and weeks 52 and 56 averaged. That will be sufficient at that point for us to put in our NDA. The FDA has allowed the 1-year submission of the data, but our studies will both go on for 2 years for safety. And in the second year, nothing changes in the sense of the treatment protocols. They will be the same. So the first trial is called the LUGANO trial. The second trial is called the LUCIA trial. And again, they're essentially identical trials. First patient dosed in the LUGANO trial was dosed in October, and we are now 60% enrolled in the trial. First patient dosed in LUCIA was about 6 or 7 weeks later, and that trial is ramping up nicely and the curve of enrollment looks very similar to what we've been achieving with LUGANO. So there's been really outstanding patient and investigator interest in this trial. We set very high bar for enrollment, and we're breaking through the bar. And so, we're literally enrolling at rates so far in LUGANO that we haven't really seen before in wet AMD trials. So we're guiding to have full enrollment in both trials by the second half of this year, which gives us data -- top line data in the second half of 2026, both trials. I certainly think as you look at our enrollment, it's possible that LUGANO will finish enrollment prior to the second half of the year, but we will certainly keep updates going to inform when we have a little more daylight on exactly when the enrollment will be complete. So the feedback has been great from patients and from the investigators, and we're just very pleased about how these trials are enrolling.

Got it. Great. Those are excellent updates. And as you commented upon the enrollment, let's start there. So yes, we saw that we announced a 30% enrollment in January, 50% in Feb, and I wouldn't have asked you if you had not mentioned it as to what it is at mid-March. So we're at 60% now.

We are.

So what's driving this rapid enrollment?

So a lot of things, and I don't think I could name them all, but I'll name some of the big ones. I think the primary thing is that we did a very large Phase II trial, and it showed both safety and efficacy. And that's really what gives doctors comfort in getting a patient to enroll in a trial, that there is a good chance that the drug, if assigned to that drug arm, will work. And also, there's been really no safety signals at all. We've injected over 190 patients with our drug so far, with no ocular or systemic SAEs reported due to the drug. And there really are no trends of any kind of AEs that will be not unexpected from an injection. So the safety looks really good. The other, in general, reasons why we're doing well is that we did a very comprehensive Phase II trial. We had 70 centers in that trial. So we had a great deal of doctors who knew about our drug and knew about the trial, and were very easy to get them to roll into the Phase III. But we learned a lot of lessons about how to enroll a wet AMD trial in the Phase II. And we got a lot of good feedback, and we've taken a lot of those lessons to heart, and I think that really has made the trial very attractive to both doctors and patients. I think the historic enrollment that you're seeing, though, I'd like to say it's all due to our great drug and great data. But there's another reality out there, which is there are a lot of very professional retina centers throughout the United States and throughout the world that know how to enroll trials now. I don't think that was true 6, 7 years ago, but it's certainly true now. And I think there are a lot of very high-volume enrolling centers that we're taking advantage of.

Got it. And as you speak about the retina centers, remind us how many clinical sites have been activated across the trials versus your overall target?

Yes. Across the 2 trials, it's about 130 centers now have been activated. They're all currently just in the United States. We would expect OUS centers, the first ones, to come on in another 1.5 months or so. But this has all been done in the United States so far.

And as for the trial protocol, how many do you plan to activate OUS?

We could activate up to 220 sites worldwide. The way things are enrolling, we may not get there because we may be fully enrolled before we have a chance. And it is a competitive trial. There's no preset numbers on where the patients need to come from, region or country. And so, that when we're done, we're done.

Got it. And help us understand what the noninferiority margin as endpoint is.

Yes. So the noninferior margin for wet AMD trials in the United States has been traditionally minus 4.5 letters as the lower limit, which means statistically, when you do a noninferiority trial, you have an actual numerical difference between your drug and the control group. In addition, there's margins, superiority and noninferiority margins above and below that are determined by the size of the trial in the standard deviation. And as long as your lower limit of the noninferior margin doesn't cross minus 4.5 letters, then your trial has been successful to the primary endpoint. We have that minus 4.5 margin given to us by the FDA at our end of Phase II meeting.

Got it. Assuming things proceed well this year and next year, between the enrollment and the top line, and eventually, we see a commercial product, what kind of market opportunity or revenue opportunity are you looking at from the drug particularly?

Yes, it's a great question. And we've started to do, and have been really for the last 2 years, doing early development of the market. We have a pretty good idea now, if we were to roll the drug out now, how that would be. We've queried doctors with a TPP that actually was worse than the TPP that we got from the Phase II trial. And in that initial querying of doctors, we got between 25% and 40% market penetration with our drug. Now, our TPP from the Phase II looks even better than that. We're repeating that quantitative data to see. But I would say that last week, we heard at a couple [indiscernible] meeting say that if the TKIs are approved, they would use it in 80% of their wet AMD patients. So I think the idea that doctors are getting comfortable with is having a sustained release option that's safe, effective, repeatable, running in the background in most of their wet AMD patients. And if occasionally a patient gets fluid and needs a ligand blocker in between, there's nothing wrong with that to supplement them. I think, based on our Phase II data, it looks like we should be able to take at least 2/3 of the wet AMD population out 6 months or longer with our drug alone. But again, it's not an either/or situation. And because we're a second mechanism of action, I think you can look at our DME data especially and say that may be advantageous. And doctors may want to take advantage of 2 MOAs in this disease. And again, I think that would be acceptable to patients, doctors, payers, especially if we can show advantages in using both an MOA of a ligand blocker extracellularly and a receptor blocker intracellularly.

Got it. And I remember hearing on your call -- one of your calls earlier that you mentioned that you have around $370 million, $400 million in cash and cash equivalents. So clearly, it looks like you have cash runway until 2027. And so, what is embedded in the guidance now other than DURAVYU and wet AMD [indiscernible]?

No, go ahead, George.

Yes. So our cash guidance includes the completion of the ongoing Phase IIIs in wet AMD. That's really our focus. And when we had our earnings call last week, we guided that, number one, we're not going to the equity capital markets this year. We're really conserving our cash and focusing the organization on completing those Phase IIIs in wet AMD, which are really critical. As Jay noted earlier, we'll complete enrollment second half of this year, and we'll have the data readout roughly 13, 14 months later. And our cash guidance is well into '27, approximately a year on the other side of data.

Got it. And also, could you talk about whether you currently have a plan to initiate a Phase III in DME at this point or at some point in 2026?

Yes, it's going to be a 2026 event. We are preparing, certainly from a regulatory perspective, to meet with the FDA in the second quarter of this year to gain alignment on the details of the DME pivotal program. And we will be doing some things behind the scenes. We have that in the budget to do that. But as George said, we have no thoughts and interest in tapping the equity markets this year. And therefore, we're planning on initiating the pivotal trial or trials. We'll see what the agency says for DME in 2026.

Got it. And also, as I look at the top line data and the Phase II results from the VERONA program, I think this is something which, discussing with the team, seems like you removed one outlier in your supplemental analysis and the BCVA improvement at 24 weeks was 10 letters now. So help us understand the rationale of this.

Well, I wouldn't say we removed the patient. We showed all the patients in the trial, with 27 patients finished the trial. And so we showed the complete dataset. And at the end of the trial, week 24, all 3 arms of the trial, the high dose of DURAVYU 2.7 milligrams, low dose of DURAVYU 1.3 milligrams, and the EYLEA control, all ended up with a 7-letter improvement. Embedded in that, however, was a single outlier. At week 20, the DURAVYU arm had about a 10-letter improvement, but at week 24, it dropped to 7 letters because of this one outlier lost 23 letters. Turns out the outlier actually missed the 20-week visit, and what should have been their 20-week visit ended up being a 24-week visit. So we didn't eliminate from the full analysis, but what we wanted to show was without that outlier, our drug did really well. 10 letters improvement in the studies that got EYLEA approved for DME, there was about an 8-plus letter improvement. So without that outlier, the improvement in our group in the high dose was terrific. And the improvement was seen right away at week 4, unlike EYLEA in DME, which takes months to show the improvement. And by month 8, it was a full 10 -- week 8, sorry, it was a full 10 letters, and that remained throughout the study. There was no drop off towards the end, showing again that for most patients, we do have a 6-month plus drug. The other important thing in this evaluation was the anatomy, how drying effect did we show, what kind of drying effect on OCT. And so, even with the outlier, the drying effect on OCT was superior in the 2.7 milligram arm to the control group. We also did a subgroup analysis of the eyes that made it the whole study in all 3 groups without any supplement. And again, without supplement, the unsupplemented eyes in the 2.7 milligram arm gained over 10 letters compared to just 3 letters in the control group. So more evidence that when our drug worked in DME, it worked really well, and that potentially showing visual improvements perhaps, even a little bit better than what you might see in EYLEA on label. Now, if, in fact, we do a noninferiority trial design, we don't have to beat EYLEA. We only have to tie them or come close to tying them for the noninferiority margin. But obviously, if we can show rapidity of action, if we can show the same visual improvement in 4 weeks that it takes 4 or 5 months for EYLEA to achieve, I think that would put us in a very, very good spot in the marketplace.

Maybe it's a good point, a good time to also just remind our audience as to what were the results with high-dose EYLEA or VABYSMO in similar studies and what their noninferiority looked like versus what you saw?

Yes. So the noninferior margin for high-dose EYLEA versus regular EYLEA in their wet AMD trial, the high-dose EYLEA was 1.4 letters worse than regular EYLEA. It's not something that, obviously, the company or even the KOLs make a big deal about. And the reason is noninferiority is noninferiority. The drug is approved. But there is an important point there, which is patients don't really notice 1 or 2 letter loss. And as a result, doctors for more longevity are willing to sacrifice that level of vision, hence their use of -- for VABYSMO and high-dose EYLEA, where clearly, if you use these drugs monthly, you're going to get a little better visual result. But it's just not practical to bring patients in that often. Even within every 2-month regimen, too many patients are lost to follow-up, too many patients lose vision because they can't complete what they need to do. And therefore, a sustained release option with forced compliance over 6 to 9 months, we think will be a really, really good innovation.

Got it. And you helped me understand the noninferiority and the endpoints on the LUGANO side. So with the VERONO study, so at least 43% of patients had achieved absence of DME by week 24. So help us understand, how do you define the absence of DME here?

So lack of DME for that study was defined as 325 microns on the OCT or less. So a normal spectral-domain OCT thickening of the macula is about 300 microns. Anything more than 2 standard deviations, which is about 320 would be abnormal. So anything below 325 was considered to be no DME. That was a prespecified endpoint. And so, as you said, for the eyes that had no rescue, about half of them in the DURAVYU arm ended with no DME. None of the unrescued eyes in the control group had no DME.

Got it. So with this data that you have on hand, how are you thinking about the path forward in DME? And what are your plans to meet the regulators, both in the U.S. and ex-U.S.?

So the path forward, I think we know what we'd like to see. And again, that would be a single trial, and I think we have some precedent to now suggest that in the second indication of DME, the agency may be agreeable to just 1 trial. Traditionally, it's been 2 trials after the first 2 indications. That would obviously be very helpful to us. We are still internally debating the structure of the trial that we want to run, whether it would be a noninferiority trial or perhaps even a superiority trial based on the results. The other thing that we learned is our drug, we knew in preclinical that our drug worked fast. But I go back to the 4-week results with a single injection of EYLEA and our drug, we got excellent results within 4 weeks. So we could consider doing a noninferiority trial against on-label EYLEA 2 milligrams, but not do a full load in the DURAVYU arms, maybe just one injection. And that would again highlight the rapid improvement if it's there, which we would think it should be, and also allow us to do a shorter trial.

Got it. The other thing which is happening in the world of both AMD and DME is many of these will see waves of biosimilars.

Correct.

So how does that influence your program and both commercially and also as you speak to payers, how does it influence it?

It doesn't really influence us at all because we can do something none of them can do, which is last 6 months or longer in the majority of eyes. So that, in some ways, the more, the merrier. Again, for doctors out there who are doing these injections, it gets very confusing. How many anti-VEGFs can you stock in your refrigerator? And so the biosimilars right now are less than 5% of the market.

Right.

And with the price they're charging, without rebate, and the prices now of Lucentis and 2-milligram EYLEA approaching those, it's not clear in the end how much of a market biosimilars will have in the space. That's really up to the makers of those other branded drugs. Regardless, we've had meetings with payers and the payers are clear that if, in fact, we get a label, they will pay for our drug. And that certainly, the mathematics around reduced injection frequency, reduced costs related to that, I think, will add into what our average selling price will be. I think if we show that we're neuroprotective, which is possible, if we show we're antifibrotic, we have improved visual acuity, not just tie but do better, those are all reasons why we'd be able to get even more of a premium price. So we think we're going to be in a very good position with both the market and payors.

Got it. That's an excellent update. Jay, thank you so much for your responses. Look forward to future updates on this and wish you the best.

Thank you.

And hope you have a productive day at the conference, too. And George, thanks very much.

Thank you. Bye-bye.

Thank you.