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

Great. Well, good afternoon, everybody. Thanks for joining us for the next session at this year's health care conference. I'm Matthew Harrison, one of the biotech analysts here at Morgan Stanley. Very pleased to have with me the team from Kodiak. Quickly before we get started, I need to read a disclosure statement. Please note that this webcast is for Morgan Stanley's clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley representatives. So with that, very pleased to have Victor Perlroth, who's the CEO; John Borgeson, who's the CFO; and Jason Ehrlich, who is the head of -- the CMO and the CDO at Kodiak.

So I thought maybe just a broad question to start off, Victor. A lot of development in retina these days. You obviously have a very interesting molecule. Maybe you could just talk to the strength of that molecule as you see it in the key factors of differentiation?

Right. Thanks, Matthew. Thanks for having us, and thanks for having Kodiak at the conference. We are aware, certainly, of all of the other molecules and the other developments in retina. It's obviously a wonderful area for drug development and for patients. So our lead agent, KSI-301 is very useful in being developed for the leading cause of blindness in older people in the developed world, which is macular degeneration, and the data looks really phenomenal there. And it's also being developed for the leading cause of blindness in working-age people, which is diabetes, and it's being developed there as well and the data also are phenomenal in DME. So it's a molecule with a tremendous potential. And everybody knows that this is an area where there is a lot of patients, and there's a lot of potential impact for patients and a lot of economic opportunity. And people have been trying to develop new technologies and new agents, right, for 20 years. And I think people have found it very difficult. And LUCENTIS and EYLEA are wonderful medicines to the extent that they're very safe, and they have good efficacy, right, when dosed on their intensive regimen. People have been looking for different ways to design and develop molecules that would decrease the intensity of the treatments while having the same safety and the same efficacy. And not needing to bring in kind of new complexities, right? So intravitreal injection, right, 25 plus million done every year globally, very safe. And allowing these medicines to help millions of people. But nobody has really solved the problem of how you take an intravitreal injection, especially with the biologic, right, that's very safe. And allow those doses to be made much less frequent and yet still deliver the same safety and the same efficacy. That's a puzzle that nobody has solved yet. Now people have moved to very exotic approaches like indwelling medical devices, that potentially open a channel from the outside to the inside of the eye. And I think we've seen data readouts recently with the Genentech Port Delivery System shows some of the challenges there. And people have also moved to other exotic solutions like genetic kind of technologies and approaches. And I think also recently, we've seen some of those data cards turn, both in terms of subretinal that's shown some recent dose-dependent kind of toxicities that are not awesome for patients or the more intravitreal genetic-based approaches that are showing also some complexities, right, in terms of inflammations and safety things that seem durable beyond 12 months. So I think the genetic approach is also challenged and maybe not poised yet. When you get to more near-term approaches, say, high-dose EYLEA or maybe the faricimab, those are new efforts. High dose EYLEA, I think everybody in the field generally knows what you get with that, which is sort of marginal increase in durability, assuming you have safety. But it's not really a game changer. It's more potential evolutionary. And faricimab in wet AMD failed to show superiority with its second biology, right, the [anti-interleukin] bispecific in the Phase II. And so that's going into Phase III and noninferiority, and we expect that it will show that. And they're trying to show a little bit, maybe, some durability. But it's an antibody, and it's not -- doesn't have a designability for durability. And there's a high intensity of treatment, and they'll be telling maybe a more incremental durability story in wet AMD. In DME, maybe they'll show some superiority. But of course, it's a very high intensive loading regimen, many loading doses and then fairly intensive treatment regimen in DME for faricimab. So we see that, as you know, an important molecule and really a commercial play, I guess, for Roche and Genentech to have a follow-on to LUCENTIS, given the pressure of biosimilars and also for them to access ex U.S. commercialization, right? Because as you know, LUCENTIS is currently commercialized ex U.S. by Novartis. So a commercial play. And then with KSI, we've really spent 10 years to design a whole new platform, right, the ABC platform, where we really can design in that special durability by bringing the phosphorylcholine that special kind of material, that special biophysics that sits on the external surface of all of our cells, and to manufacture these biopolymers using a controlled living polymerization approach that we pioneered and to build antibody conjugates, that let our molecule be very large in the eye. So it has a very long dwell time. And yet that special nature of that science of the phosphorylcholine lets us have very high potency, lets us have very high tissue access into the retina. And interestingly, once that large biologic, right, intravitreally injected and all that optically clear, once it penetrates through the retina and gets into the systemic circulation for exit, right, the design of our platform basically causes that molecule to be cleared very quickly. So in some way, and we're dosing at a very high molar dose, right? We're already at our 5-milligram dose, which is our pivotal study dose, essentially the same level from a VEGF binding standpoint, I think, as the high-dose EYLEA. So we're trying to be skating to where the puck is going to be. And that's been part of our plan from the beginning. And I think today, we continue to be very pleased with really a pristine safety profile of the molecule broadly. Strong efficacy into key indications and the durability profile that we've shown in the Ib, in which we've translated into the design of our pivotal studies across all 3 of the major indications and also NPDR, the durability profile that really is beyond our own expectation. And I think as you look at the pivotals, we have, I believe, a very high probability of technical and regulatory success across both safety, efficacy and durability. And then, of course, we have an aggressive, but also, I think, very interesting and achievable regulatory plan to bring all of these key indications together into 1 pivotal program and into a single BLA, and we're still continuing to be on track for a 2022 BLA filing in the indications. More immediately, as we've said before, DAZZLE is nearing completion of enrollment. We're getting closer to last patient in. So that's very exciting on the wet AMD pivotal. And as we've said before, we're very close now to first patients in for the RVO BEACON study pivotal and also for the 2 DME, GLEAM and GLIMMER studies. So we should hopefully be very close and be able to talk about that very shortly. So that we'll have essentially those 4 pivotal studies ongoing. And then those will be targeting top line data readouts in Q1, 2 and 3 of 2022 with wet AMD, RVO and then DME. So our data cards are looking good still, and our execution is strong. And we think we have a real differentiated molecule that can be important for the field. Whether you call it a first-line agent or a disruptive agent or we try and think of it as what do we need to do in terms of our design now and execution so that it could be sort of like a first off-the-shelf, right? We want to be in all the refrigerators of all the retina docs, and we want them, why wouldn't they put all their patients on KSI across the major indications. And that's the development plan that we're trying to put together. And of course, that's going to be predicated on continued safety, good efficacy and durability that can fall substantially from what we showed in the Ib and still be, by far, the best and have a lot of white space between the profile that we're showing in our pivotals and in our patients versus the next best thing, be that EYLEA or high-dose EYLEA or faricimab, whatever it is. So that's a bit of a long answer, but hopefully, it gives you a little bit of breadth.

Great. Maybe a good place to start then is you just had 10-month data from Phase Ib, what do you think about the durability signal that you've been able to achieve there? And in particular, if you could frame that with regards to your confidence about being able to continue to achieve that in these larger studies that you highlighted.

Absolutely. Jason, maybe you want to spend a couple of minutes to talk about that, the Ib, the durability of the durability that we talked about following this recent ASRS, the goals of the Ib and how that translates into the designs of the pivotal studies and our confidence around the outcomes, right, in the pivotals?

Yes, sure, and happy to. Victor and everyone, Jason Ehrlich here. And maybe I might also point people to -- on the Kodiak Investor Relations website, there's a slide presentation from R&D webinar that we did earlier this summer. That has all of the data because I know we're not all looking at the same slides right now on the phone line. So we look at in the Phase Ib study, we give every patient 3 initiating doses, and then we follow them and these are treatment-naive patients with wet AMD, DME or RVO, 3 different cohorts. And we follow them, and they're each -- each patient is seen monthly and then retreated when different protocol-specified criteria, both objective or subjective, are met. There's different criteria for wet AMD and DME versus RVO. So for instance, in wet AMD, what we've seen is that 92% of the patients had a time to first retreatment of 3 months or longer, 82% were -- had a time to first retreatment of 4 months or longer, and almost half of them, 49% had a time to first retreatment of 6 months or longer. So that meant they went from -- they got their 3 monthly doses upfront, and then half of them went 6 months before getting an additional dose that was mandated 6 months later. And in fact, over 2/3 of the patients have -- 68% have achieved that 6-month treatment interval, a treatment-free interval, at least once during their follow-up period. So on the presentation on our website, you can see these swim lane plots where we're using different color bars to represent the different durability intervals. You can see the time to first treatment, time to second, third and so on. And I think we're being like really very transparent with that information, which I think has been really helpful for the field in understanding the consistency of the results over time as well as also understanding the inherent variability that exists between patients and even within a patient over time in the course of their wet AMD therapy -- treatment, in particular. But what we see is that the essentially, almost all, like 92% of the patients are going 3 months or longer for the first retreatment. And that's -- this is an open-label study, but that's a pretty dramatic difference from what you would expect with LUCENTIS or EYLEA based on all of the real-world data on how those medicines are used. And then moving into some of the other diseases. If we look at DME, for instance, the data in DME are also quite striking. So again, we give all the -- to treatment-naive DME patients, we give them the 3 initiating doses and then 97% of those patients have gone 3 months or longer before they met the criteria to receive their first retreatment. And almost half of them, even patients who have been followed for 52, 60 weeks or longer, 45% of those patients haven't required a single retreatment after the loading doses, 2/3 of the patients have gone 6 months or longer. There's no mandated retreatments in the DME patients, whereas wet AMD, if you haven't gotten retreatment every 6 months, you have to get one in that protocol. So when you think about like the collaborative group studies in diabetic eye disease, where they show with LUCENTIS and EYLEA and Avastin, you need 9 or 10 doses in the first year to achieve treatment success in a way that they define it, it's -- I think it's pretty clear that there's something special going on, something unique going on with how we're controlling the disease in DME. So overall, Matthew, as the data have continued to mature, I think we see very nice consistency over time. We see results that are even beyond, I'd say, what we felt -- optimistically hoped for at the beginning of the study. It's an exploratory study, and we're very pleased with what we've seen so far. And so both the initial durability and then the consistency of that durability over time, and then some of, I would say, maybe even some of these upside surprises in terms of how few DME patients have needed retreatment, those are all things that we're starting to really learn more about with the Phase Ib study as the data continue to mature. And we're going to follow those patients for up to 3 years in the current protocol. So we've extended that protocol to continue to get patient -- long-term data, which I think will be really useful over time.

Right. I mean, I think to jump on top of that, I think our data are actually very provocative in some way. And as we continue to share data that's emerging from the Ib and as we reach top line data in each of the 3 major indications, it's a complex market that we'll drop into, right, with LUCENTIS, EYLEA and biosimilars to those as well as, say, Avastin. And I think the provocative nature is to say, with this kind of data and the pivotal studies have slightly different designs, but they're educated from the Phase Ib and have a high probability of success and are likely to show, let's hope, very compelling durability profiles as well given that it's 80% U.S. in these pivotals, which is the same as this treatment -- this Phase Ib population. So the data are provocative in the sense of with a molecule like this available to physicians, how would they use it, right? How much better than EYLEA, right, does a molecule need to be or an EYLEA biosimilar to really be a first off-the-shelf molecule? It's really an interesting question, and I don't think it's resolved. But certainly, there's tremendous potential as long as we continue to see nice safety, continued efficacy and even a fairly drop down on the durability, which we don't expect, to be honest, based on what we're seeing.

Okay. I guess the follow-up, 2 questions I get a lot. One are the impact of retreatment and the criteria for retreating on this Phase Ib versus the criteria you're using in your pivotal studies? And any impact you think that could have on the potential outcomes?

Right. So if you go to -- which deck is this John? The corporate deck that's on the website, and this is Slide 37. For example, we have a slide for each of the different disease indications. In this case, on Slide 37 for DAZZLE. And then there's a similar slide in the DME section for DME and 1 also in RVO, where we show the Phase Ib specific criteria for retreatment. And then in DAZZLE, in this case, remember, it's not really a retreatment criteria. What it does is it's a regrouping that moves the patient into, say, from a 5-month dosing to 4 months or 4 months to 3 months, right, the DAZZLE criteria and then a little bit of a change. We see the benefit of these changes to be incremental and on the margin. And we don't see, based on the data that we have available to us, much of an impact. You'll remember that in the Phase Ib, as Jason mentioned, patients can be dosed really at any time after the loading phase. In DAZZLE, they're allowed to be dosed at 3, 4 or 5-month intervals. So there's no 6-month interval. And we've tightened slightly the OCT criterion from 75 to 50, which we think will be nice and helpful. And then we've also removed the investigator discretion in order to have a tighter study. But in both kind of DAZZLE and DME and RVO, the criteria are edited, but our view is that those edits will only have marginal impact on the durability groupings and will serve to, perhaps on the margin, improve vision and OCT components of the study. You agree, Jason?

Yes. Absolutely, Victor. And again, it's always trying to strike that right balance there between maximizing probability of success, likelihood of noninferiority, right? That's the primary outcome of the study going up against EYLEA, head to head. And also working to ensure that we're demonstrating the durability of KSI-301. And I think that those small changes really maximize that.

Right. And to incorporate that, we have specific slides that talk about a table, like 37 is a table of the changes and then 38 puts those changes into context, right, ensuring a high probability of success in each one of the pivotals based on the Phase Ib data, the edits to the protocol there and into the pivotal protocol.

Okay. I guess 1 other important question is around inflammation and risk for inflammation. Maybe just talk about exposures and your view on what you've been able to achieve there in terms of safety and tolerability profile.

Right. Certainly, safety is critical. To date, we continue to track with LUCENTIS and EYLEA safety profile. And that's really important. That involves a very high transparency right into our Phase Ib study, where we've dosed 130 subjects and given well north of 550 injections. And it also tracks with the prior update, which we mentioned where when you look into the DAZZLE database, you also have another view into masked safety, which is informative, obviously, because when you're looking at absolute events and total event number. So we believe with 150-plus patient years of exposure, in fact, more than that, that the molecule is behaving phenomenally well, certainly from a safety standpoint. And we think our view is we were looking at a pristine safety record with KSI-301 to date. Obviously, we don't control the future, but I think the science suggests that we are tracking with at or better than a LUCENTIS or EYLEA profile to date. We're obviously continuing to enroll new patients all the time and to bring new studies online. And the evidence and the data that we have across these same patient populations, in these same indications, right, in the Ib and also a bit of a view into DAZZLE suggests that we're in very good shape there. So we're very pleased with that. And we also think -- for other molecules that have seen more serious safety events than we've seen and that are traditionally seen with LUCENTIS and EYLEA, we also think it's important to remember that those safety events with those molecules were seen from the beginning, right, even within the first 100 patients, it was clear. Now we're -- what are we north of 400 patients and going to be approaching 1,000 patients. So we'll continue to keep our eyes open on this, but we believe that we're in good shape here.

Okay. Helpful. And you've obviously got a lot of pivotal trials that you're enrolling through right now. Maybe just for everybody's benefit, can you walk through what you've said about time lines for data and enrollment completion as well as any updates from the Phase I study that we might see over the course of the next 1 to 2 years?

Right. Thanks, Matthew. Certainly, we have a large execution effort ongoing here at the Kodiak and building the company to be able to service the -- essentially the BLA that we want to be preparing right in 2022. The Phase Ib study, as Jason mentioned, and this is also Slide 19 on the corporate deck shows a nice view of our accelerated development strategy. So the Phase Ib will continue to generate data, and we're planning to continue to share that. I think our next fundamental update from the Phase Ib, we expect will be at the Angiogenesis Meeting early next year. And a certain view into the data may be available at the American Academy of Ophthalmology as well. So that will be nice to see the continued progression. I feel, and I think we feel internally that we've really -- with the Phase Ib data, the key was to look at ongoing safety, very good; efficacy right through the durability phase, very strong, and the durability of the durability in a way, right, which we presented kind of at the ASRS and discussed at that webinar. Fundamentally, the Phase Ib has delivered on the promise and given us in the community, I think, the information about the medicine. We'll continue, of course, to update the community on the data. But it's fundamentally served its purpose, and we can feel comfortable with the molecule in all of the indications, and it's helped to educate the design of the pivotals. So it's a bit less important at this point. The focus is on the pivotals. So DAZZLE, as we said before, we have a plan to have last patient in this year. In DAZZLE, that's what we're executing towards. We're not going to fall on this order, get [indiscernible]. If that pushed into early next year, that would be fine. But it would be nice, we think it'd be nice if we could complete enrollment and have last patient in by the end of this year. We're working hard to achieve that, and we'll see if we can. U.S. enrollment has essentially been shut off because we would like to have close to 20% of the patients in DAZZLE come from ex U.S. So the preponderant, the remainder of the patients are coming out of our ex U.S. sites. And that enrollment has picked up nicely actually. So we're feeling very good about DAZZLE, and that means that by the end of this year, plus or minus, will be within 12 months of top line data, plus a month or so, a couple of months for data cleanup and database lock. So that takes us into Q1 of 2022 for DAZZLE's top line data readout. Now for GLEAM and GLIMMER, the 2 DME studies, and BEACON, the RVO study, as we said before, our objective will be to have first patient in the third quarter. So there's not a lot of weeks left in the third quarter. We will let you know whether we achieve that, but we'll either achieve that or we'll be very close to that. So that's very exciting. Then, in terms of enrollment duration, remember that RVO is a 6-month endpoint, and DME is a 12-month endpoint. So we believe our internal aspirational targets will be to complete enrollment, right, to have last patient in those 3 new pivotals, let's say, by the end of the third quarter, so say, within the next 12 months, okay. That's our target, and we'll see whether we can achieve that. And that will allow us to have, say, RVO top line data in the second quarter of 2022 and DME top line data in the third quarter or close to it, in 2022. So we believe that we're still on track with these time lines, and we're also beginning to focus a bit more on the GLOW study, which is diabetic retinopathy without DME and beginning to finalize there. We're in different stages of feasibility on the operational side for that study, and it would be nice if we could start that study before the end of this year. So the Slide 19 sort of showcases a little bit our view on our overall clinical program and when it kind of comes together. So it's pretty exciting, and there's a lot of operational activities, obviously, associated with that. And we're also expecting the new pivotal programs, RVO and DME, to get Europe activated a bit earlier, right? Because in DAZZLE, that was slow down a bit due to COVID. But we're now -- now that the European sites and countries are activated in DAZZLE, it will be a bit easier to drop them into the DME and RVO studies, more from the beginning.

Okay. Perfect. Well, that's a helpful overview. Then, I guess, maybe to finish this off here as we're coming up on time. John, just remind us in terms of how the company is capitalized to prosecute this pipeline and what you've said about your runway?

Sure. Yes, we continue to be well capitalized from the transactions we did at the end of last year with the royalty deal and the offering. So we have over $400 million, and we still have access to the second tranche of the royalty deal, which is an additional $125 million. So we're well capitalized. And our burn will take us into 2022 through top line data on DAZZLE. And the extent of our runway is really determined by our conviction around the molecule and how much we really want to push our pre-commercial activities, especially with respect to manufacturing.

Okay. Well, perfect. Well, thanks for joining us this afternoon. I appreciate it. And I appreciate the thoughts.

Well, thanks a lot, Matthew. I appreciate it.

Thanks, Matthew.

Okay. Bye.