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

Good afternoon. Welcome to the Bank of America Health Care Conference. I am Tazeen Ahmad, one of the senior biotech analysts here at the firm. It is my pleasure to have our next presenting company, Kodiak Sciences. Presenting today for Kodiak is Chief Executive Officer, Victor Perlroth. Hi, Victor.

Hello.

I think you have a slide deck uploaded. So I will let you take it from here and give us an overview of Kodiak.

Thank you. Thank you very much. I have together with me, Jason Ehrlich, our Chief Medical and Development Officer; and also John Borgeson, our Chief Financial Officer, as needed if we have time for questions. Thank you so much for the opportunity. Just move quickly into our second slide, forward-looking statements. So we'll make a number of forward-looking statements, and they're all subject to the risks and uncertainties that what we do may differ substantially from what we hope, what we believe we can achieve, and that's especially true in the current context of the COVID-19. Let's move into Slide 3, and we'll provide some high-level key messages about Kodiak, and in particular, our lead candidate, KSI-301. So we'll just take these a little bit slowly. So our goal at Kodiak is to develop clearly differentiated what we call Generation 2.0 therapeutics for high-prevalence retinal diseases using new medicines designed on our antibody biopolymer conjugate, or ABC Platform. So KSI-301 is our lead candidate, and clinical data that we're generating suggests a best-in-class profile for it to be used as an intravitreal, right, or an injection into the eye, like EYLEA or LUCENTIS or Avastin, other agents being used in these diseases. But our data that we're generating in our Phase Ib study, in particular, in 120 treatment-naive patients with wet AMD, DME and RVO, the major retinal vascular diseases, suggest a best-in-class profile in those indications. And we're generating very promising clinical data for efficacy, durability and safety in that study. So our KSI-301 Clinical Program -- capital P, Program -- is 5 pivotal studies planned to all be running in 2020, all in serious vision-threatening diseases. And even in the context of the COVID-19 pandemic, patients in our Phase Ib study and in our ongoing pivotal study, the DAZZLE study, in wet AMD treatment-naive patients, patients are continuing to seek treatment. And we're also continuing to enroll that study based on the feedback from the clinicians. And that's currently enrolling in 50 sites in the United States. So with our KSI-301 clinical program in terms of manufacturing and clinical, we believe that we're on track to continue the DAZZLE study and to initiate these 3 to 4 additional pivotals for KSI-301 this year, and that keeps us on track with our expected enrollment figures and the treatment durations to file a single BLA for KSI-301 in parallel in wet AMD, DME and RVO and potentially non-proliferative diabetic retinopathy as well in calendar year 2022. So not that far away in terms of biotech. In addition, we continue to deepen our pipeline of high-science retina medicines on top of our ABC Platform to address significant unmet need in areas such as dry AMD and glaucoma. So we have our KSI-501 molecule, which is a bispecific, also targeting retinal vascular diseases. And then we have our new areas of emphasis from the discovery medicine standpoint in terms of our new triplet therapies that are also built on the ABC Platform, and that's a very interesting, very powerful new drug platform where we can actually bring 3 different biologies together. And we think that's very important for the high-prevalence diseases of dry AMD and glaucoma really focused on the retinal pathology in those diseases. So we have a strong balance sheet in the company following dual fundraising efforts in the fourth quarter of 2019, a royalty financing, selling future -- royalty on future sales of KSI-301 if it's approved. And then also we followed that with an equity financing as well. So we have over $430 million as of quarter end in the bank. We're not burning a lot of cash on a monthly basis. We had our 10-Q and the quarterly financials out this week. So we have a very strong balance sheet and overall, I believe, are feeling well positioned for -- as a company and also in terms of our planning, even in the context of what we see today in the COVID-19 pandemic. So gearing up for manufacturing-related activities towards the BLA, gearing up for the broad clinical development program and beginning to better appreciate what we need to do from a pre-commercial standpoint as we transition the company and are transitioning it to sort of this next stage of running these multiple pivotal studies in parallel. So that's a high level introduction into the company. Moving into Slide 4, just a high-level summary of -- or view of patiently building on science. We were founded in 2009. So there is, in this business of biotech, a real benefit to being thoughtful and creative in the application of science and the design of our medicines. Our focus on the second vertical here, really on -- within these high-prevalence diseases, how do we generate medicines that when we turn the data cards over in our pivotal program, that it's very clear, right, that there's a lot of white space between our profile and the profile of the nearest other medicine. In this case, that's really EYLEA. And the goal is to run pivotal program and pivotal studies so that when the data cards turn and we're compared against EYLEA, that it's very clear that we're the best medicine. And we're doing everything we can in terms of our design and our execution in the pivotal study design such that when those studies read out, that we have a high probability of success of hitting the primary end point as well as really showing very differentiated durability. We call that the Gen 2.0 profile with EYLEA, say, being Generation 1.0. And we're focused in retina and ophthalmology. That's a hard area, but there's increasing returns to focus over time. Slide 5. The introduction to our ABC Platform. So we build and have protein engineering in-house. We build full antibodies. In general, they're IgG1s with inert immune effector function. We link conjugate into those antibodies through what becomes a stable permanent linkage of our biopolymer to create the conjugate, which doesn't fall apart, right, the polymer is conjugated to the antibody through the stable linkage. The antibody is active with the polymer conjugated to it. And so it's really an integrated conjugate that has an integrated set of properties that are driven both by the potency of the antibody itself, but also by the special nature of the phosphorylcholine that we use as the monomeric element in our biopolymers. And that phosphorylcholine has a number of very special properties, driven by the special biophysics of that phosphorylcholine, which is what the body uses as the external part of our phospholipid bilayer, that's what makes up the membranes of all of our cells in our body, this phosphorylcholine. And we use that phosphoryl part, okay, phosphorylcholine in our biopolymer. And the reason the body uses it, I guess, and the reason we use it is that it has a permanent positive and negative charge. It's called a zwitterion, and it binds and traps water in a really special way, a permanent way. And it turns out in the body that it's quite special. So we had the hypothesis many years ago to build multi-arm branched, very large biopolymers using what's called the controlled living polymerization approach that we pioneered for therapeutics. We manufacture both the antibody and the biopolymer separately. Their GMP materials, we release those according to the regulations, and then we conjugate them using industry standard ADC, antidrug -- antibody drug conjugate chemistries to form the stable linkage at scale in GMP scalable manufacturing approaches. And we're really working through all of that from a scale up and towards the BLA manufacturing towards that -- the BLA filing date. So we've designed this platform for retina from the beginning and really optimized it for intravitreal. And we call it the same where it matters, different where it counts, right, clinically proven targets, full antibody-based biologic, intravitreally injected, like the 25 million other injections that happen annually, increasing maybe as much as 10% or more per year. And our drug product, our conjugate, our product is optically clear. It's a liquid. There's no falling apart in the eye. There's no residues. This thing is active. It's large. It diffuses slowly through the tissues like a LUCENTIS or an EYLEA. And yet we see very fast and very potent clinical responses. At the same time, it's different where it counts. So we've designed in that durability. It's large, okay, but the polymer doesn't just bring dumb mass into the eye. The polymer is large, but it also brings this water structuring, and it's really a macromolecular water. So we bring the special nature of that like phosphorylcholine in and around the active site here of the antibody and how it binds its target, how it engages, how it distributes and kind of noodles its way from the vitreous where we inject it through the different tissues of the eye, into the retina, in the choroid. So we actually get more of our drug, say, on a percentage basis into the tissues that matter than, say, an EYLEA, even though we're 8x larger than EYLEA. Okay. So it's really an amazing platform. And once we exit the eye because eventually, like LUCENTIS and EYLEA, you traverse through the different tissues then you get into the systemic circulation. Actually, even though we're very large, right, as a conjugate, we're actually cleared very quickly because we don't recycle like an antibody does. We're actually -- the polymer binding site blocks that recycling zone, and so we're actually cleared from the body quickly, which is really what you would want for a retinal therapeutic. So a really interesting platform, which is focused for now with the majority of the effort on KSI-301, our lead. But of course, as I mentioned on Slide 6, we have a deepening pipeline of these monospecific, bispecific and even triplet inhibitors merging biologics with small molecules and really focused on addressing major causes of vision loss beyond retinal vascular disease. KSI-501 is our bispecific conjugate, and then KSI-601 is our first triplet inhibitor. Very special. And the triplets can hit both small molecule targets intracellular as well as the extracellular targets through the antibody bispecific. So Slide 7, just a very quick reminder on, say, KSI-301. That intravitreal anti-VEGF agents can improve vision and maintain vision when dosed per label for many years, okay? So in theory, what's the unmet need, right? On Slide 8 though, in practice, in the real world, visual acuity gains when you're diagnosed with the disease are actually minimal and they're not maintained over time. So without continuous high-intensity treatment, vision loss in patients can begin after only 3 months of anti-VEGF therapy. So in theory, you can get dosed, get a nice gain and sustain that for many, many years. But in reality, in the United States and in Europe, you have an early benefit and you begin to lose that benefit right away. What the physicians tell the patient is, look, you're a newly diagnosed patient, you're going to need to come in on an intensive regimen for the first year, and then it's going to kind of mellow out. But actually, that's not the label of those agents. And even patients in the first year can't really come in often enough to meet the label of, say, LUCENTIS or EYLEA. And so in the real world, the doses are spread apart, right, overextended. The patients have these drug holidays between doses. And during the drug holidays, the disease is recurring and leading to permanent damage of the photoreceptors, and so patients are losing vision, and this vision loss is, by and large, permanent. So it's like this epidemic of preventable blindness. And preventable means force the patients to come in on an unreasonable, unachievable schedule. So that's shown here on Slide 9, just that the drug basically -- the disease is sort of recurring when you have undertreatment, okay? So Slide 10, what is it that -- now what? So today's Gen 1.0 anti-VEGF agents aren't good enough. The patients and the physicians and the health systems struggle with the limitations of these Gen 1 medicines. It's like trying to put a square peg in a round hole. You just can't chain people. You can't force them to come in, whether it's the patient, their family that has to drive them, whether it's the physicians to find time and the schedule to see them. A new class of Gen 2.0 intravitreal therapy is needed. So Slide 11 is a bit of a summary of KSI-301's design and some of these design choices that I kind of mentioned previously versus, say, brolucizumab, the new Novartis medicine that's under fire; ranibizumab or LUCENTIS, really, which was a miracle therapy approved in 2006; and then EYLEA, which came in, in I think it was 2011, by and large, which I think is really the dominant medicine in the space. So we're much larger, okay, 950,000 molecular weight versus EYLEA at 115,000. We also come in at a high molar dose, right, a high formulation strength, our clinical dose at 5 milligrams by weight of antibody, which is 3.5x the molar dose, that is the dose of drug in terms of its binding sites to bind VEGF, 3.5x more binding sites in our dose than EYLEA. And what we call the equivalent ocular PK that is how long we basically -- the difference in how quickly we exit the eye versus, say, EYLEA. So it takes us -- we have a 3x longer half life, so we exit, let's say, 3x more slowly than EYLEA once injected. And then over many months, that flatter slope of the curve translates into many tens, hundreds or thousands full higher amount of drug in the eye, which translates into sort of durability of effect, okay? And you can run that analysis versus LUCENTIS or brolucizumab, which is actually much smaller. So they give a high dose, but it's smaller. And so brolucizumab exits more quickly and ends up with a fairly low concentration over time. So we've tried to optimize the size, which drives durability and slows the exit, but also increasing the molar strength. And that's really the benefit of coming in a bit later because you can take a look at the landscape and try and do the best in each category and be uncompromised. Slide 12 is just a review of some of the KSI-301 properties, right? These special features from this ultra-hydrophilic phosphorylcholine biopolymer conjugate that I mentioned earlier, right? So a remarkable half-life, okay, when you compare KSI-301 versus EYLEA and LUCENTIS, aflibercept and ranibizumab. Also that bioavailability or that access to the retina that I mentioned versus EYLEA, quite amazing, given that we're so much larger, and it has a lot to do with this fundamental lubricity, the ability of our biopolymer to noodle in and to feel comfortable in these extracellular matrix environments, right, these cellular environments that are dominated by that phosphorylcholine. And then even though we're much larger than, say, an EYLEA or a bevacizumab, Avastin, once we get into the systemic circulation, we're actually cleared very quickly, which is what you want from a safety standpoint. So again, a number of very interesting scientific features that looked promising. Of course, now we're transitioning into clinical data. So our objective with KSI-301, okay, is to educate our -- to have -- first have the best design that we can, put that into the clinic in this Phase Ia/Ib study design that's open-label in treatment-naive patients to learn, right, and then to be using the design ideas and the data from the Phase Ib and the capital that we now have available to think about our pivotal program in terms of clinical and manufacturing to be developing it as a meaningfully differentiated first-line agent in each of the retinal diseases in parallel and then to think when we would fall into the market, right, which we hope to be in 2023 on top of BLA filing in 2022. When we come into the market, we want to have all the information and all the pieces such that each of these individual stakeholders, right, makes a go decision for KSI-301 versus, say, a LUCENTIS, EYLEA or Avastin, right? The patient and their family, the retina specialists and the care team, the practice owners, the payers and the health systems, everybody has these complex incentives, trying to do the best for patients and also make sure that they're making money as well. And I think what we want is to be developing KSI. So on the margin, there's an incentive for each one of those to choose KSI, which we hope also will translate into better long-term vision retention on a global basis. Moving into Slide 14, all of these pieces kind of come together. This is what I call the 4 pillars, right, the 4 sort of markets and disease opportunities for retinal vascular disease for KSI-301. We want to be generating data in our Phase Ib study in each of these 4 verticals, right? And that data should educate the design of our pivotal studies in each of these 4 verticals. And as we think about these studies, the Phase Ib should give us a high confidence, right, a high probability of technical and regulatory success of achieving the primary end point in these pivotal studies and which, in general, is vision -- visual acuity versus EYLEA on label and having the best durability. So like what I call the white space. If EYLEA is dosed, say, maybe 1/4 of patients every 4 weeks in the real world, maybe 40% to 50% or something, let's say, 1/2 of patients on their q8-week labeled regimen and maybe 1/4 of patients on q12 weeks. Let's say that's the distribution that EYLEA achieves in the real world. Well, we want to be achieving a distribution that shifted substantially to the right. So where is that -- where should that be? Well, we're running a pivotal study, DAZZLE, where we have every 3-, 4- or 5-month dosing, okay? And then in diabetic macular edema, EYLEA's label is 5 loading doses in an every other month. So we want to run a pivotal, and that's -- we're gearing up for that, 3 loading doses and looking at every 2, 3, 4, 5 and 6 months. And then in RVO, the labels are generally monthly, and we're looking at every other month. And then in non-proliferative DR, we're looking at, say, every 4- and every 6-month dosing. So we believe that the Phase Ib data that we're generating gives us very high confidence to hit these end points and to really have durability profiles that are shifted substantially to the right. For example, in the Phase Ib in wet AMD, we're taking a majority of patients to 6-month dosing. So we don't allow that in DAZZLE, but we believe we can if -- we believe that we can fall down quite far from where we are on the Ib and still have more than a majority of patients on every 4 months, maybe even a majority on every 5 months dosing, and then with DME can do very, very well also. So we can fall down quite a lot and still have tremendous target product profile or a tremendous profile for the medicine, executing on the pivotal programs for all 4 of these diseases in parallel in that when we drop into the market, there should be important incentives for physicians to want to go with KSI at every level, okay, for the benefit of patients and themselves. So that's summarized in terms of our plan on Slide 15, our 2022 vision. Despite COVID-19, we believe we're on track for the 2022 vision, which is to file a BLA in wet AMD, DME and RVO and potentially the non-proliferative diabetic retinopathy indication in 2022, to file the IND and have first-in-human for KSI-501 in 2021, and also to initiate the 601 clinical program in 2022. So that's really our core vision, and it's a blocking and tackling thing here based on the data that we've -- the very attractive data that we've been generating with KSI-301. On Slide 16, we take a little bit more detailed look at catalysts in the company in terms of data over time, data and events. We had a very successful 2019 last year, and we're focused now, obviously, on 2020, additional data readouts of the Phase Ib data, and as we put in our press release earlier this week, we're looking at the next important data release on the Phase Ib data -- Phase Ib study in July, where we move into what we call sort of the durability of the durability. Earlier, it was around the patients going through the loading phase. And then it was the patients moving into how long is it before they have to be retreated. And now we're moving into, well, they were retreated before, right, what is the next retreatment? And is that getting less or longer and looking across these treatment-naive population? So that will be, I think, important. And in addition, we want to initiate 2 more DME studies, one more RVO study, these additional pivotals, and also initiate our non-proliferative DR study. And we're planning to initiate the 2 DME and the RVO in the September, October time frame in terms of first patient in, that's our target. And then moving into 2021, completing enrollment in the DME and the RVO studies, and depending on the time line for finalizing enrollment in DAZZLE in the context of COVID-19, right, things are a little bit slower. The U.S. is still going fairly well, but the rest of the world, and we'd like DAZZLE to be a global study, potential pivotal study readout in the end of 2021 or early 2022. And then some work on 501. And then 2022 is really a seminal year for the company. That will be unbelievable, right, submitting the BLA in these indications, the pivotal study readouts, progress on the pipeline. So I think -- and in 2023, based on the 2022 BLA submission and the broad indication set, potential regulatory approval on a global basis. So I think when you look here, the real thing is, well, there's a tremendous amount coming out in 2022 and a lot of blocking and tackling between now and then with additional data readouts on the durability of the durability in the Ib as well as continued safety. Of course, we'll see safety through the pivotal program on a mass basis. So a lot to focus on in terms of company between now and the next few years. Slide 17 is just a summary based on current best information for the size of the pivotals and on our potential view into length of enrollment and when we may see top line data and BLA filing on Slide 17. Slide 18, as I mentioned, we are well capitalized with a good amount of capital today and additional royalty payments in the future based on progress of the RVO planned program. So that's a summary of the company at a high level. And if we have a little bit of time, happy to take a few questions.

Just one. So how are you thinking in terms of a COVID environment that we're in about any contingency plans that you would need to make for studies? And just in general, we'd like to hear your thoughts about any of the changes that you've made to address the pandemic to run your business, whether any of those you expect to become permanent even when we do return back to some level of normalcy.

Right. Well, the COVID environment, we initially were thinking to pause enrollment in DAZZLE in the United States, for example. But actually, we engaged with our clinical sites and the principal investigators and engaged with some other companies in the retina sector. We engaged directly, as well, with FDA. I think we made the decision not to pause enrollment. Of course, we ask sites to really focus on existing study participants, in particular, in DAZZLE as it's pivotal. We've had very low missed visit rates, low single-digit percentages overall, say, less than -- fewer than 5%, less than 5%. And we've continued to enroll patients. So we were enrolling at a rapid clip in February, say, around maybe 60 patients a month in DAZZLE. That's now dropped into, say, maybe 25 or 20 to 30 patients per month. But we see that picking up. And we're -- although we were site activated in a number of European countries with CTAs having been accepted and we were ready to be enrolling, we paused Europe for now back in March. We're looking now to reopen that to begin patient enrollment in Europe into DAZZLE. So we see enrollment picking up. We paused or delayed about 1 quarter the initiation of the pivotal program, the RVO and DME studies. That allowed us to kind of upgrade the overall program, I think, and to feel like there should be good predictability for new patient enrollment in that program in the September, October time frame. So we feel like the overall pivotal program that we've articulated around the 2022 vision is still live, and we feel good about that. Our labs continue to be operational, and noncritical in-house employees are working from home. We're looking at surveillance-type ongoing testing of employees that we may be able to do to create a safe perimeter for people who come into our facility and expanding that beyond, say, near-term essential employees, to all employees and/or employee families or community members. So there's some additional interesting concepts that we have that we're executing on to try and bring up predictability to our people and our communities so we can push that predictability into KSI-301 and our pipeline. So we have a good amount of capital. If there continue to be perturbations, right, and real complexities as the economy reopens, I think we have the financial wherewithal and the overall agility to respond and to stay focused on these vision-threatening diseases in these patients. Luckily, we're working in really serious disease, and that's, I think, helped us.

Okay. Great. Thanks for that color. With that, I think our 0.5-hour slot is now complete. Victor, thanks so much for taking time to tell us about what's happening with your company, and we look forward speaking with you again soon.

Thanks so much. Goodbye.

Take care. Bye-bye.