Kodiak Sciences Inc. (KOD) Earnings Call Transcript & Summary

Thank you, everyone. My name is Gena Wang. I'm mid-cap biotech analyst at the Barclays. I first hope everyone stay healthy, and I would like to thank all the participants, investors, companies and especially our event team and corporate access team who made this virtual health care conference possible. With that, I would like to introduce our next speakers from Kodiak. We have Victor Perlroth, Chairman and the Chief Executive Officer. We also have Jason Ehrlich, Chief Medical Officer and Chief Development Officer. Victor and Jason, I will hand over to you.

Thank you, Gena. This is Victor Perlroth, the Chairman and CEO of Kodiak Sciences. So we'll walk through some of the slides for about 10 minutes, and then we'll move into some questions from Gena at Barclays. On Slide 2, please review the forward-looking statements. On Slide 3, a quick summary of the company. We're working on developing what we call Generation 2.0 therapeutics for the high-prevalence retinal diseases, okay, of wet AMD, DME, RVO and, in the future, deeper in our pipeline, dry AMD as well. Our lead program is called KSI-301. We're generating data in a Phase Ib clinical study and announcing that data on an ongoing quarterly basis. We've initiated a pivotal study in wet AMD called the DAZZLE study that's enrolling very well. And we're looking to start 4 additional pivotal studies this summer. We've recently completed several financing events or royalty financing as well as an equity financing, and we're very well capitalized with access through the royalty and equity financings to north of $500 million to further our development. On Slide 4, as a company, we're focused uniquely in ophthalmology in retina. As I mentioned, our goal is to develop what we call Gen 2.0 medicines, which is really the concept of working towards first-line agents, even in complicated sectors like retina. And we're focused on being very thoughtful, creative and patient with our science. On Slide 5, a quick view into the ABC Platform that Kodiak invented and that we're developing. It's an antibody-based platform. We've developed proprietary biopolymers that are made out of phosphorylcholine. Phosphorylcholine is a substance that's on the external surface of all of our cells in our body. The phospholipid bilayer of cells, the phospho part is phosphorylcholine. It's a very special material with a very special biophysics and a special biochemistry. We've designed biopolymers that are made as GMP drug substance that are conjugated sites specifically into novel antibodies that we've designed to form conjugates that are very large, and they're highly potent with very high bioavailability after injection into the eye, to the retina and the choroid, which are really the tissues of action for the retinal diseases of interest. They're injected in the same way as today's LUCENTIS and EYLEA into the eye, and there were over 25 million intravitreal injections last year. But what's important is they're different where it counts in terms of really bringing a durability to the medicines, and the concept is to really push the distribution, okay, to -- substantially to the right, so that patients will be able to be treated with medicines for ophthalmology via injection, but to be treated, say, just several times a year as opposed to monthly with LUCENTIS or every other month today with EYLEA. So moving into Slide 6. We have a pipeline, okay, of single inhibitor ABCs, dual inhibitor ABC medicines and our new triplet inhibitors, and we're developing medicines across all of the retinal diseases of interest, all high-prevalence diseases. On Slide 7, we talk a little bit about the utility of anti-VEGF agents in retinal disease. They're very powerful mechanisms. On Slide 8, we see that actually they don't last very long in the eye. And as the physicians spread out the injections, not on label, but less frequently, the vision gains deteriorate. So Regeneron calls it a bit of an epidemic of preventable blindness, just bring patients in every 4 to 8 weeks per injection. Our objective is to say you can't bring the patients in that often, so let's develop a medicine that allows them to stay on mechanism for 3, 4, 5 or even 6 months between injections to really solve the problem. Slide 11 is just a little bit of a repeat of the design. Our conjugates are very large, so they stay in the eye longer, but we formulate them at a very high strength. So we're injecting 5 milligrams of antibody into the eye, which is the same as 3.5x more anti-VEGF binding capability than EYLEA, and we have a much longer half-life in the eye. So over time, our concentration advantage over EYLEA or LUCENTIS becomes 10, 100, 1,000 decks, for example. And we have had very interesting preclinical data over the years. The company was founded in 2009. And so over 10 years, we've built, designed, optimized, iterated and improved the platform, generated very interesting preclinical data. And clearly, now, with our clinical data, we're really seeing a translation of these design elements into the clinical benefit for patients. On Slide 14, let's remember that anti-VEGF agents for retina, you really have to think about the 4 major diseases a little bit differently. Each one is sort of a vertical or a disease, wet AMD, diabetic macular edema or DME, retinal vein occlusion or RVO, and non-proliferative diabetic retinopathy or NPDR. Each one of them has, say, aflibercept, EYLEA, maybe as the current best agent with a certain loading dose schedule and a certain dosing regimen. So in general, it's 3 loading doses in wet AMD, 5 loading doses in DME and monthly actually for RVO. And then in wet AMD, it's every other month. In DME, it's every other month, and in RVO, it's monthly. And our objective with our agent is to have what we would consider to be this Generation 2.0 or the sort of disruptive kind of element in terms of durability with the same safety and the same efficacy. So DAZZLE, our pivotal study in wet AMD, is now recruiting. We're approaching 175 or close to 200 patients now enrolled in DAZZLE, so it's enrolling very quickly. And our objective this summer is to get our DME, RVO and NPDR pivotals going and also to have -- in DAZZLE, we're looking at every 3-, 4- or 5-month dosing as opposed to EYLEA on its every-other-month label. And in DME, we're looking also to push out to 3-, 4-, 5- or even 6-month dosing versus EYLEA on its label; and then in RVO, looking at a variety of different regimens; and in NPDR, looking at, say, every 4 or 6-month dosing. So in each one of these cases, an agent that has a superior kind of science in its design and putting it into pivotal studies with what we hope will be seen as very disruptive outcomes in the context of hitting the primary end points of non-inferiority of vision with significantly improved durability. So our vision, on Slide 15, what we call our 2022 vision, based on the very promising data that we've been generating in our Phase Ib study, and we can talk more about that with Gena. But looking at running pivotal studies in the major indications of wet AMD, DME, RVO and NPDR essentially in parallel and having those -- the DAZZLE is already ongoing in wet AMD. Initiating 4 additional pivotals in the summer is currently on plan. And then to have all of those readout in the '21, '22 time frame targeting actually a single BLA for wet AMD, DME and RVO certainly in 2022, okay? That's in parallel kind of vision. We think getting all of that data across the finish line at the same time provides the community, ourselves and investors all of the information to move forward towards licensure and also to understand the real benefit of the medicine. So we have a series of catalysts and milestones through 2020, 2021 and 2022. Certainly, from a data standpoint, we announced data at Angiogenesis retina meeting in February. We're also planned to be on the podium at ARVO, I think, in early May. And we're also planned to be on the podium at the American Society of Retina Specialists in July, also on the podium. So we'll be able to announce incremental new data sets that we think will be material on a quarterly basis. And of course, we have execution in DAZZLE and also execution in our additional pivotal studies in getting those started. We also have our pipeline for KSI-501 and our new triplets for dry AMD. So if you look at Slide 17, it will show you our estimated number of patients in terms of protocol synopsis for the pivotals and our first pass view into patient enrollment and treatment duration towards our 2022 target for the single BLA across these various diseases. That's on Slide 17. Slide 18, a quick view into the financing of the company. We're very well financed to service all of the studies on Slide 17 that we've talked about as well as the manufacturing towards pre-commercial scale-up and BLA validation and licensing activities. As for the clinical data, I think we won't take the time to go through that. We've gone through that a number of times at Angiogenesis up on the IR website at Kodiak. I think on Slide 19, we've dosed over 130 patients in the Phase Ia/Ib study. The vast majority, 121 of those, are treatment-naive patients with wet AMD, DME and RVO. And we've also enrolled more than 150 patients in DAZZLE masked one-to-one versus EYLEA. So many patients, close to 200 patients on drug, north of 500 injections given to patients through these data cutoffs. And we have the design of the Ib, the retreatment criteria, the baseline characteristics, Slide 22. Important data in terms of vision retention on Slide 24 and OCT, the imaging of the eye for these treatment-naive wet MD patients, very appropriate for a strong agent. And on Slide 25, looking at the swim lane plots for the retreatment through the loading phase and then beyond of the wet AMD patients. I think we can talk a little bit more about what success means. Our objective is to be the new first line, right, the only Generation 2.0 agent, which really mean to disruptive profile. I think the durability data that we're seeing, where we're taking more than half of the patients to 6 months, basically, 72% of them 5 months or longer after loading phase, and 84% of them 4 months or longer, so in only 14% at or before 3 months. So if you thought brolucizumab, for example, was the best next-generation agent, it was really taking 40% to 50% of patients to 3 months. So we're taking, let's say, 85% or more are going beyond that to 4 months, 5 months or even 6 months. And we apply -- yes. So that's in wet AMD, and we can talk more about that with Gena. We've also looked at what we may achieve in our pivotal on Slide 27. We can fall down quite a lot from there and still be definitively differentiated agent. And in DME, the data is as impressive. Durability is pushing perhaps even a bit further, which is quite impressive in a disease where EYLEA usually has 5 loading doses Q 8 weeks. We're just going 3 loading doses and bringing almost 2/3 of the patients to 6 months or longer. So very impressive there as well, and it's helpful to put the DME data in context of the wet AMD data. And then RVO is the disease that has very high VEGF load, and the data that we're generating in terms of Slide 34, vision retention, OCT and also retreatments, bringing more than half the patients to 4 months or longer when existing agents are labeled for monthly dosing is very impressive as well. And our safety, of course, very important now in the current era. We announced some new data recently that we have continued to do ADA, or antibody -- anti-drug antibody analysis. And what we're seeing, we continue to see is no preexisting ADA in any patient and very, very low treatment-emergent ADA; and transient and/or mild in all cases, a very different pattern than some of the other new biologics that are being developed, and continue to have seen a very -- a pattern, a very, very favorable safety forecast. I think I'll stop there and move into questions and discussion with Gena. Thank you.

Thank you, Victor. You had quite a year last year. Congrats on all the progress with KSI-301. First question is a Phase Ib update. For 6 months update, your OCT benefit seems like did not bring down to the upper limit norm. I think other treatment show the reduction of OCT close to 300 microns. Any thoughts there?

Jason, would you like to discuss some of the details of the vision on OCT across the 3 indications?

Yes. Sure. So Gena, on the wet AMD patients are -- we're reporting the average height of -- the average thickness on the OCT, and that includes the height of the pigment epithelial detachment, which is common in some patients with wet AMD, and then some of them can be particularly high. And when you have a very high PED, that pulls the average thickness value up because the effect of anti-VEGF in those patients is not so much to flatten the PED part, but to remove the intraretinal and subretinal fluid, for instance. And so we're very happy with the result that we're seeing there. I think it's just difficult to compare it across different studies because the reading centers use different techniques. And then in the publications of the other data, they don't say whether or not they're including the height of the PED. But then I think, more importantly, it's sort of looking at the OCT here in the wet AMD patients, along with the vision there, which is, I think, right on spot for where it should be for patients with vision as good as it was in our cohort starting vision, but then also looking at the OCT improvements in the DME and RVO patients where this phenomenon of the pigment epithelial detachments doesn't occur because that's specific for wet AMD. So if you look across the 3 different diseases in terms of the improvements in macular edema, I'd say that we're -- clearly, we have a very potent anti-VEGF effect, and it's also quite durable.

Yes. So how many patients with high PED was in the wet AMD program?

Yes. I don't know if -- I don't think we've broken that out specifically for this most recent view of the data at Angiogenesis. If you go back and look at some of the data that we reported in the fall, I think we showed including and excluding the patients with a high PED. But it's not in this slide set, but it's available on the IR website. It's maybe -- I don't want to give the number right off the top of my head. There was a handful of patients who had like PED heights of over 500 microns that would drive the average thickness value up in the small cohort. And then that earlier data set that we reported in the fall, you could see, if you took those couple of patients out, what the OCT values were excluding those patients, which was closer to that 300 value that you talked about.

Okay. And then regarding the DAZZLE data, the -- you did have an optional interim analysis in treatment interval. So what is your latest thoughts on reporting that data? And what will be the key factors to decide if there should be an interim analysis?

Right. Thanks, Gena. Several things have changed since we proposed the optional interim. It's in the protocol, so it's at Kodiak's option. At the time that we proposed that, we hadn't generated such the attractive data that we have in the Ib, number one. Number two, we were not nearly as well capitalized as we are, so the thoughts around an interim would be maybe a catalyst to drive a financing. That need no longer exists. I think -- I guess, I would say, at a high level, we're leaning against doing the interim. It doesn't go to the primary end point of BCVA in vision. And really, the concept was to look at durability proportion, right, what percent of patients were on 3 months, 4 months or 5 months in DAZZLE. What we're seeing in the 1b data is that we're driving so many patients so far on the durability. And furthermore, even if we had 100% of patients on Q 12 weeks, that's still definitively better than EYLEA, right, which is really maybe having 1/3 of patients on 10 to 12 weeks, right, and the other 2/3 on less frequent -- yes, on more frequent dosing. So our business requirements are a bit different today than they were 6 to 12 months ago. That doesn't mean we've thrown the idea away, but we're not locked on the idea of doing it. In fact, if anything, we're probably leaning away from it. We're going to have so many pivotals reading out in such short increment from each other. That -- really, that's the focus of the company, drive those pivotals with the right designs, do it with excellence, be manufacturing for the commercial marketplace. And that's happening really in the 2022 time frame, which is really not very far away.

Okay. So will we know the definitive answer some time mid this year?

I don't think we're going to lock ourselves any particular way. I mean one of the things is I think we try to be an agile company in terms of our thinking. If there's really a utility for doing it, we can pull the trigger on that. We don't want to surprise anybody and do it overnight. So as our thinking evolves, just like it is now, we'll try and be very transparent.

Okay. Good. And also for the trial design -- DAZZLE trial design, the enrollment of retreatment criteria seems a little bit more stringent compared to the Phase Ib. Just wondering what is the rationale there. And also any differences in terms of practice in U.S. versus ex-U.S. in terms of the measurement of the OCT, macular hemorrhage and BCVA.

Right. I can get the first one. And then if we need to, we can get into some specifics with Jason on some of the differences between how retina has practiced in Europe versus the U.S. I think the rationale for the retreatment criteria being different between the Ib and DAZZLE makes a lot of sense. The Ib study is a little bit more open. So we wanted to explore what the drug can do across the different indications in an open-label setting. In DAZZLE, which is our pivotal study, we're using retreatment criteria that are a bit closer to the HAWK and HARRIER criteria used by Novartis in their study and which we discussed at length with retina doctors. So to tighten it up a little bit, recognizing that all we use it to do was to group patients between 12, 16 or 20 weeks, right, 3-, 4- or 5-month groupings. And still, our worst grouping, say, the 3 months is still 100% of patients are going to be on 3 months or better in our study. So tightening them up and moving some patients down drives, perhaps, the best long-term vision outcomes and doesn't really hurt us. At the same time, it's important for patients to see the utility and the benefit for being dosed with KSI on 4 or 5 months as well. So it's a bit of a balance. Having them a little bit tighter in the pivotal versus Ib makes a lot of sense and is consistent with practice of other companies previously. Jason, do you have a quick view on any differences between some of the technical assessments in retina in Europe, vis-à-vis the U.S., as we expand from the sites in the United States that we had [ to be ] into a global set? And what do you expect, Jason, for kind of the breakout between U.S., say, vis-à-vis, Europe in DAZZLE and our other pivotals?

Yes. Thanks, Richard. So Gena, in terms of the clinical trials, all of those procedures or examinations are standardized across the trial sites globally, right? So the OCTs and the colored photos and so forth are all captured by photographers who have been certified to follow a certain set of instructions by the reading center, and then all the images go to the reading center for evaluation. And so the data that come out at the end are reviewed at the reading center in a consistent way. It's an independent reading center, and that's typical across all of these global retina trials. Likewise, the best corrected vision is the examiner has to be certified in terms of how to do the process, and it's done the same way across all of the different study centers. In terms of the breakdown of patients, our expectation would be that roughly 20%, plus or minus, will be patients from Europe, right, because we want to make sure we have enough patients to support European approvals. That's always an important consideration is how many patients you have from each country to make sure the data are representative.

Okay. Very helpful. And another thing is regarding the regulatory strategy. In the past, our understanding is you have one BLA filing first and then you have a supplementary for the other few. Now you're all grouping to a single BLA.

Right.

Yes. So wondering, what was the reason due to that change? Is that because of the enrollment speed?

Yes.

And also related question is if one of the trial -- one or the other, if not all trial was positive, how would you moving forward?

Right. So on the first one, just quickly, as we move to operationalize the studies, the new pivotals, and also as we see enrollment rates in the DAZZLE study, that educates what we think realistic time frames are going to be. So RVO is a 6-month treatment duration end point. So in theory, that could be faster. Having said that, RVO is a lower incidence, right, compared to wet AMD and DME, and so it may take longer to enroll. Furthermore, there appear to be some competing studies for enrollment in RVO. But in wet AMD and DME, we have what is perhaps the most interesting molecule out there. So DAZZLE, if anything, is enrolling very, very quickly. In order to ensure 20% to 25% Europe, we may need to slow down at some point in the United States to allow Europe to achieve that, especially given where we are kind of with the coronavirus in Europe. And in DME, we also expect that study to enroll very quickly. So actually, the RVO, which, in theory, out of the gates, we thought may come in earlier. It may come in right around the same time. And so if that's the case, that they come in right around the same time, it makes a lot more sense to include all of that into a single BLA, and that's our current plan. We think regulators will like that, the safety database of overall, say, between 2,000 or 2,500 patients overall in our pivotals will be very powerful, and it gives us the broadest overall view from a global standpoint in terms of the data set that we have.

Yes.

And Jason, do you want to have a quick -- just quick comment around like the concept of our regulatory strategy and whether there are risks there in terms of the number of studies that we're doing in the different indications?

Sure. So I think all of the studies are going to be -- are or will be very highly powered in terms of the number of patients and the statistical power to show non-inferiority versus EYLEA for the ones that are non-inferiority studies. And so they'll all be somewhere between 90% and 95% powered, right? So I think we have good confidence going into that. Now hypothetically, if one study were to be unsuccessful, what would the regulatory strategy be? I guess it, of course, would depend on which study and what the implications are. I think there's pretty strong scientific arguments for the connectiveness or the relatedness of the different indications. But I think, obviously, that's a situation you'd have to cross that bridge if you got there. And then I think it would be, ultimately, a negotiation with the regulators as to, for instance, which of the other studies -- can those support the approval of the other indications. I think that they could, right? So for instance, if you had 2 RVO and 1 DME study that were successful, could you get approval in those 2 indications? I think you'd have a strong basis, and it would obviously have to take that up with the respective agencies if and when that occurred. But I think the number of studies that we're doing, the 2 RVO, the 1 DME and the 1 AMD is a smart strategy. And I think it reflects kind of the evolution of thinking across the industry and of the regulator based on their understanding of how the drugs work, the anti-VEGF mechanism works, right?

Right. Thank you.

Okay. And last question regarding the pricing. What are your latest thoughts on pricing strategy?

Right. Well, I mean, at a high level, we've run independent interviews with payers and health systems globally. And they really recognize the importance of durability. They're receptive to reimbursing for a differentiated novel agent at parity with current branded agents on an annual basis. So in other words, if you need 12 injections of LUCENTIS or, let's say, 8 injections of EYLEA to form an annual cost, they're open to pricing disruptive or other agents with fewer injections, let's say, at a higher price per dose. So we know that our KSI-301 profile were -- is likely to be highly differentiated from current agents in context of durability. And although we don't provide any guidance on pricing, we hope that would be able to be factored into where we come out on pricing as a superior agent.

Great. Fantastic. Thank you so much. I think that we run overtime. That's very helpful. Thank you.

Thanks, Gena.

Thank you. Thank you, everyone, for dialing, listening, and this concludes our call.