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

Good afternoon, everyone. I hope you all joining the virtual conference here at UBS. And I -- and I'm exited to host this fireside chat with the Kodiak management team. And I'm joined here by Victor Perlroth, CEO; John Borgeson, CFO; Jason, Ehrlich, as Chief Medical Officer; and John Kim, who is the Director or of Corporate Development. Welcome, gentlemen, and thank you for your time today.

Thanks a lot, Esther. We're very pleased us to be at the conference and to participate and to share a little bit of the Kodiak story and our progress.

Great. Sounds great. So why don't we maybe, Victor, if you could just give us an update on where things are? We've had your press release with the quarterly update, and just kind of want things stand on the clinical front, and then we'll jump into Q&A.

Cool. Great. Thanks a lot, Esther. Well, It's a busy time at Kodiak. We have a large number of registrational studies that we're running. We're running with our early molecule KSI-301, that's our antibody biopolymer conjugate. Right? It's built out of our ABC Platform. So we were founded in 2009, and we've been diligently and thoughtfully building the design of our platform and our lead program and now we're progressing it in our DAZZLE study for wet AMD and BEACON, our pivotal for retinal vein occlusion, and we have GLEAM and GLIMMER, our DME pivotals. Those 4. And then we recently announced 2 more pivotal studies that will begin imminently our DAYLIGHT study also in wet AMD, and then our GLOW study in earlier sort of a prevention type study in earlier diabetic retinopathy. So really 6 pivotal studies. So we're quite busy on the execution of those, and we're planning to read out 5 of those really within 2 of them within the next 12 months. The DAZZLE study and BEACON. And then towards the end of 2022, the GLEAM and GLIMMER and presumably also our DAYLIGHT study. So it'll be an exiting time between now and the end of 2022 in terms of our clinical execution. And we're very pleased with the very compelling data that we've been generating and have generated in sort of our Phase Ib study with the KSI-301 molecule in the same indication set as our pivotal base, right, treatment naive wet AMD, treatment naive, retinal vein occlusion and treatment naive DME. Our molecule is really built for durability as an antibody conjugate with a really special design with this kind of wider ionic phosphorylcholine AMD that we've designed and patented and built into our novel platform as a conjugate. And we are on track following the data from the Ib and having built pivotal studies that are educated from the Phase Ib. We're on track, we believe, to have safety in line with, Snellen and EYLEA our LUCENTIS, efficacy also in line with those agents and the durability that's fundamentally differentiated versus all other agents. And that's really the core unmet need in this area for retinal vascular disease. And remember, macular degeneration, the leading cause of blindness in older generation and diabetes and diabetic retinopathies are leading cause it of the working-age generation in the developed world. So we have an amazing science, an amazing design of our lead molecule, an aggressive clinical plan. That's really our strategy. We're coming in with molecules, LUCENTIS and EYLEA that work well, but where there's a critical unmet need that still exists, and we're sort of in a pre-commercial stage as a company. So over the last couple of quarters, we've taken stock of where we are with KSI-301, which is a really exciting data package, an exciting molecule and a tremendous amount of cash in the bank, over $900 million. And we have the opportunity to design a pivotal program and a manufacturing program for a molecule that can combat EYLEA to be a first-line or the first-line agent, that's our belief. And so over the past few quarters, we thought a little bit about what are the studies that we need to run that we can have in our BLA to have all of the indications to be really unique to have wet AMD, DME and RVO in our initial filing. What are the studies that we need to run to have that really broad label so that will be clearly the most differentiated from that durability standpoint based on the science and the design and the data with our molecule and the design of those pivotals. And at the same time, be able to be the drug that can be used in every patient with a retinal vascular disease. And so we have a fantastic set of pivotal studies, executing all of those studies in all of the same centers largely. We have a pivotal program almost for all of the major retinal diseases, a treatment naive pivotal study in all of those centers for all of the diseases, so that provides a tremendous operational efficiency. And bringing all of them together to create a really exciting data package for regulators at one-time as well as an exciting data package for clinicians and also for payers on a global basis. So maybe I'll stop there. But we're speeding up and accelerating. It's a tremendous strategy that really takes into account that we're not just a company that's looking to turn the data cards on those registrational studies, but we're looking at the next step of the BLA of the approval of that BLA and looking at having a molecule that can basically win on the margin, right, with all of the stakeholders, whether you're a patient, whether you're a clinician, whether you're a practice owner, right, whether you're a health system, KSI-301 and ABC Platform as our commitment to retina on a global basis is going to be for you. And that's the company that we're building. We're capitalized for that. We have the support to do that. And we're excited about where we are and about the continuing data that we see every day. I'll stop there.

Yes. No, that's a great summary. So maybe jump into the newest trial that you've added to the development plan, the DAYLIGHT trial. Can you help us understand what changed your thinking and strategy broadly that maybe you feel it was necessary to add this trial in what seems almost sort of at the ninth hour, if you will, so help us kind of understand the though process there?

Right. I would say it's not at the ninth hour, but it's just at the right time, right? So we have our pivotals that are really designed to showcase that long durability, right, the long interval dosing and following from the results of the Phase Ib study, where we brought 2/3 of all of those treatment-naive patients to 6 months or longer between injections. So that's a tremendous profile, very differentiated from LUCENTIS and EYLEA and Avastin and faricimab, of course. But when we think about the molecule, and we think about what it needs to have to be a molecule for all patients, bringing that dosing interval forward, really following from the data from the Phase Ib, where, for example, in wet AMD, we saw single-digit percentage of patients in wet AMD needs, say, a monthly dose, right, or single-digit percent of patients in DME need a dose at every month. Well, those patients wouldn't be well served by the pivotals. And that's fine if we're just looking forward as the North Star of that long interval dosing, but actually, the data that we're seeing with the molecule from a safety and an efficacy and a durability standpoint, suggests that we can be the molecule for every patient. So maybe the patient that's on twice a month EYLEA or EYLEA once a month and then Avastin at the 2-week interval and then EYLEA again, but why shouldn't that patient be on KSI once a month, right? Or the patient that's on monthly, EYLEA, why shouldn't they be on 2-month KSI or the patient that's on 6-week or 8-week EYLEA, why can't they be at 3, 4, 5 or 6-month KSI patient, right? And our data in diabetes and DME is absolutely incredible, and I hope we're just going to blow the socks off of changing the game for treatment of diabetic patients. But some of those patients, we saw in the Phase Ia, and some of them we saw in the Phase Ib for DME need to be treated monthly. And what we're going to use our DAYLIGHT study to be able to get monthly label across all of the large indications. So when we take a kind of a commercial lens, the right strategy isn't to be afraid right, that if we're looking to be a 6-month drug that we can't run the monthly study, we have the clinical operations infrastructure. We have the time to get it in on schedule in terms of readout for, say, GLEAM and GLIMMER. And it will give us a tremendous capability in terms of those physicians and the patients and the payers being able to have that broad label. And so it's really a label broadening type capability that we've been aimed.

Got it. Okay. And do you think it was -- so you referred to data quite a bit in sort of driving that decision. Was it sort of looking at the clinical profile? Or was it also tied to maybe any payer feedback or physician feedback that led you to add this trial?

Well, we've been thinking about this trial, I would say, for several quarters and tried to message as we need to think about what are the sets of studies that we want to be running to get the broad label, such that KSI-301 can be the first-line or the drug for every patient. And so DAYLIGHT really follows from that line of thinking. Certainly, physicians really for many years, have had the problem, whether it was initially with EYLEA, where they had to go through the changing of the label to be able to get reimbursement from monthly dosing, right? Whether it was complaining a little bit when brolucizumab was launched before the vasculitis issue is really became front and center, that it didn't have a label for monthly in the Merlin study, which was -- for monthly hasn't read out yet. And then for Roche and faricimab, I guess, we'll try and see whether they're going to get monthly from the few patients who had monthly in their DME study. But we're doing it in a very purposeful manner. We think physicians certainly want that breadth and capability, and we're listening to them. And we think health agencies also would like to have the full set of data at the beginning, right? All of the indications, all of the different dosing regimens, it sort of fits together into the neat strategy. That we've been pursuing. So for us, it was just a natural next step. We felt very confident on the safety based on the data that we're seeing. And we think by getting the monthly across the indications in the beginning, it will be very powerful from a commercial standpoint.

Got it. And maybe from that perspective, if you can walk us through so many ophthalmologists or retinal experts, practice economics that would make that monthly dosing compelling? And maybe even you refer to some of the other comps where the monthly kind of came -- followed other dosing schedules and potentials of pay restrictions tied to that? So can you help us understand the economics flow here that makes this a compelling decision?

Sure. I think, Jason perhaps you might like to talk about that a little bit from some of the discussions that you've had with some of the KOLs and if we like we can circle as a broader conversation.

Yes, sure. Thanks Victor, So I think Victor started to touch on a couple of the pieces about, why this is important? Right. But I think you have to think about who are the difference -- who are the different costumers, right, for -- not for anti-VEGF in general but who are the major customers for branded anti-VEGF medicines, right? Those are the one reducing the commercial medicines LUCENTIS, EYLEA, Beovu. For those practices -- the practice economics of being confident in their ability to get reimbursed for the medicine every time they use it is really important, right? So they have a pretty sophisticated infrastructure for working with the patient, with the various insurers to make sure that that's the case. And as Victor had alluded to, going back to the days with EYLEA, EYLEA was studied with every 4-week and every 8-week dosing. On average, there's no difference in patient outcomes, right, but there are a lot of patients who physicians feel may need monthly EYLEA or patients who receive it. And because of the original wording in the label, some of these high-volume practices actually were -- got some pushback from insurers on the use of the monthly EYLEA, even though they felt it was clinically very appropriate. So that resulted in them working with the FDA and Regeneron to update the product labeling. And then for brolucizumab, the further your minimum dosing interval is from monthly, the more acute this problem becomes. So for brolucizumab, where they had 8-week and 12-week dosing. The issue is, let's say, you have a patient who needs 6-week brolucizumab or 4-week brolucizumab or a 2-2 week EYLEA, it's not so much just that you can't use the brolucizumab more often than every 8-weeks in that you can't use anything else either. Right? So you wouldn't get reimbursed for anything. And so that's a big impediment for the physician to want to use a new agent in terms of their confidence and reimbursement. And then when you march that minimum interval out further, 12-weeks, say, in our case, it's the same barrier. So -- or it's the same potential concern on their part. So for these practices that are very sophisticated, pay a lot of attention to the economics around the branded therapy. This is a very important issue for them. So we can address that challenge by making sure that our -- as Victor said, our medicine is available for use for every patient, whether they're a patient who goes 3, 4 or 5 months with KSI or whether they're the type of patient who needs every other week EYLEA, and in whom we still hope to have a significant improvement in the durability. So those are some thoughts there. Obviously, the market itself, the economics of the market are interesting and complex. There are some of these practices, and increasingly, some of these practices are being collected together with private equity arrangements. Those practices are very well attuned to the reimbursement of these medicines in the buy-and-bill model. There's other practices that are still using predominantly bevacizumab. And I think there's another equally important and interesting opportunity for a really well differentiated medicine, like we hope KSI-301 will prove to be and -- to make significant inroads into the bevacizumab market because of the potential for very meaningfully improved durability. Whereas right now, if you look in the real-world data, LUCENTIS, EYLEA and Avastin are not necessarily all that different in terms of the number of injections given per year. So for some of those practices, they'll continue to use Avastin and we think we can make significant inroads there, too.

Yes. Thanks, Jason. That's really well said.

Great. So based on sort of the real-world data that you have and maybe what you've seen in your clinical trials. What percentage or what proportion of the wet AMD patients do you think end up needing a monthly dose once they start on 1 of these novel agents?

Right. I mean we do have the Ib data, which we've been very transparent and showed the swim lanes from every patient. I think we may be able to just use a shorthand and say probably single digit percentages, let's say, 10% would be not unreasonable in wet MD and maybe even let's just say in DME as well, right, could be well serviced by once a month injection. So [indiscernible]. But you don't want to leave those patients behind, right? You don't want to have those patients to go through the loading phase, and then you create basically a dead zone where they actually can't be treated with any agent. And remember, with physicians with treatment-naive patients, nobody has any algorithm to predict whether a patient is going to be the 1 out of 10 that needs monthly, right, or maybe they're going to be the patient that's, say, the 50% that hopefully can go 5 months or longer, that's not predicted in advance. And so why create the anxiety that Jason described for anybody when we can basically flow that good feeling. Right, in that data across all of the indications at the same time as we're basically completing GLEAM and GLIMMER and writing up the BLA and finalizing the manufacturing and working towards the prefilled syringe, all of these things, which we kind of want to bring together at the same time. So that's a big lift, but we have now a strong execution and, I think, a very good track record, and we're working hard to bring all these pieces together with a good mission, right, to really build this differentiated new first-line agent.

Got it. Okay. And then so I guess you mentioned the prefilled syringe, so I'll just digress a little bit here. What is -- I mean, have you -- is that something that you plan to manufacture in house or assemble somewhere else? How is -- how are the manufacturing components going to work there?

Yes. Well, manufacturing for ophthalmology is a serious business. I think as we saw with some of the other agents in development, whether inflammation due to manufacturing or inflammation due to peccadilloes associated with particularities of the different molecules. But ophthalmology is a serious area. We're kind of blessed to have a tremendous safety profile for KSI-301, and I think that's the entire ABC Platform. And there's certainly an element of that, that relates to the design of the molecule and the phosphorylcholine and the nature of these conjugates. But there's equally the other side of that coin is the quality of the manufacturing. Now manufacturing the antibody and the biopolymer and conjugating those and then concentrating that to get to the right formulation strength right, and then doing the drug product aspects of that and also working hard towards a prefilled syringe, whether that's aspirational in the BLA and launch or whether that's really achievable, that's something that we're all spending a lot of time on today. I think, it's important, the branded agents that are doing well, anyway, LUCENTIS and EYLEA. And hopefully, ASI understand what you need to do to manufacture, let's say, 4 Phase III clinical trials, and hopefully, the market. I think that's also going to be quite a challenge, I think, for biosimilars players, many of whom I think are more focused on drug development and ophthalmology, sort of in a cost minimization to kind of access the biosimilars marketplace. I do think biosimilars in ophthalmology and retina is going to be quite different than it has been kind of in other sectors like oncology or immuno inflammation. The purity requirements, the ability to scale help issues associated with sterility and secondary sterilization. These are serious issues that took the lead branded providers as long as 10 years to basically work out. We're working hard to try and deliver that at the beginning or towards the beginning. I think we're in good shape, but we don't make any promises. We have our aspirations, and we're moving rapidly and checking the boxes in a thoughtful manner. If we can have the full suite of indications in the BLA that we anticipate, if we can have a broad label right from 1 month to 5 months in wet AMD, 1 month to 6 months in DME and 1 month to 2 months in RVO, and eventually, every 6 months in earlier diabetes as that preventive therapy. And if we can do that in the context of a prefilled syringe at or close to launch tremendously powerful set of activities and a really, I would say, dangerous kind of profile for the competitors in the space. And we're working hard to achieve that for the benefit of the patients. And that really is a key benefit of Kodiak's focus in retina, really as being an ambassador to the space, partnering with the key opinion leaders partnering with the retina specialists, partnering with the marketplace, hopefully, really partnering with the patients to try and change the field, right, as a strong mission-oriented company, but with a very aggressive plan that we're executing with a high level of excellence in a very a wonderful ABC Platform that provides a rich clay for drug development around KSI-301, but also the pipeline bispecific 501 and then also the new triplets where our science is progressing very well.

Okay. You throw it right out there. So I'm going to go in order. So you guys touch on biosimilars here quickly. Clearly, your comments suggest at least to me that the regulatory hurdle will be high enough for them to overcome and get through the approval process. And some of the feedback that we've gathered from prescribers seem to suggest that the discounting would need to be essentially magnitude. Otherwise, it's not going to make much economic sense for them to uptake by several years. So when do you think the hurdle is on discounting for biosimilars, if you've kind of through that or -- and/or even just sort of prescriber sentiment around them?

Well, I don't think there's going to be as many high-quality biosimilars players. Like I said, as there are for some of the other indication areas just because the secondary sterilization, the quality of the manufacturing, a little bit the complexity of that very focused buy-and-bill marketplace. So I think it's a hard area unless somebody is really focused in it. In some way, the biosimilars may end up being more of a stocking horse to try and keep the branded agents a bit more honest in terms of pricing and rebating. So at least in the United States, there's not a large number of prescribers. So they actually, as Jason mentioned, are kind of consolidating as well, and they have a lot of power. And so in some way, and there's very close relationships, let's say, between the prescribers and the manufacturers because these drugs have had such a big impact right on the patients. So there's a close linkage. I think there's a lot of trust right, between the prescribers and those manufacturers. They like to use those agents. We hope that KSI can displace those agents, and we can also have a similar level of trust. The physicians understand that, and they enjoy that relationship. The biosimilars companies are going to be much less unknown, perhaps much more cost-conscious. And in some way, the prescribers may be able to use those biosimilars as a stocking horse to drive additional rebates and discounts, both for the patients in terms of co-pays, but also in terms of the percent of the pie that those prescribers are able to basically get. But in the end, I think physicians want to prescribe the best drug for the patient, and they also want to do well themselves, and I think branded agents are a good way to do that for them. And if KSI-301 can be the best branded agent, right, with that broad label that we talked about, I think we can compete very effectively, both against the other branded agents but also against biosimilars. And as Jason said, a key aspect is capturing what percent of the Avastin, the bevacizumab could we capture right, with this argument that wouldn't it be unethical to be forced to use. What's fundamentally an inferior agent, right, Avastin, right? If you really confidentially many of the prescribers, would you put your grandmother or your wife, right or one of your family members on Avastin, the answer is no, unless there's really no reimbursement. So KSI-301 can provide the safety and the efficacy in a really differentiated durability and be able to be the right answer as a branded agent. So I think that's a long answer, but I think we'll have to really see and I think, of course, our LUCENTIS biosimilar is not that useful fundamentally in the face of Avastin. I think an EYLEA biosimilars can be more useful. I'm just not sure exactly when those EYLEA biosimilars, to be honest, are actually in entered the U.S. market. The longer it takes the better it is for KSI to be able to establish itself, and that's really another reason to pull DAYLIGHT forward so that we can come out with the gates, really kicking and fighting to make basically a strong case for our medicine.

Got it. Can you maybe help us understand this, this replacement of bevacizumab concept that you referred to. What you have to do both from a payer and prescriber standpoint to grab that share?

Yes. Jason, maybe you could chat about that for a little bit, really from initially from a clinical standpoint?

Yes, sure. So I think the -- particularly for the patients who can achieve very long treatment intervals, right, with KSI, I think that's a pretty compelling reason to use our medicine as opposed to Avastin, right? The fact that you would have a longer interval between visits is very important for the patient, not just the patient, but also the -- whoever has to take the patient to the visits, right, which is usually a care giver or one of their adult children. The average age of a wet AMD patient is 80. Maybe their spouse takes them, but their spouse may have aging difficult problems or health-related issues of their own -- on their own. So the treatment burden that exists with the frequent dosing is really substantial. And I think of Avastin, there's no alternative other than frequent dosing for patients who are receiving it. So I think you can make a pretty compelling argument that if you have long interval dosing that you can reduce the treatment burden, reduce the visit frequency, that has also a benefit from the payer perspective on the cost of care per year, right, for -- particularly for health care systems that look at like how many visits per year and how many patients can they see. If you think about like a more closed health care system like Kaiser or Intermountain or Geisinger or any of the systems in the U.S., let alone ex U.S. that take care of the whole patient, right? They have a certain number of providers, how many visits can they do per provider, per week, per month, right? If you can decompress their clinic, they can see more patients, they can take care of other things. As we get treatments for dry AMD, for glaucoma, more patients with diabetes, like the clinic keeps filling up. And then those patients who are there every month to get their monthly Avastin occupy more and more of the patient slots. So if you can help decompress them, there's like a number of pretty compelling reasons, both clinically and economically, where it would be beneficial. Now that's not to say that you're going to capture all of the Avastin share. Obviously, I know Avastin still has half of the market by injection volume probably, something like this. But I think you could make significant inroads if you had a medicine with a more compelling durability value proposition than the existing ones.

Understood. So maybe switching gears here a little bit, just kind of jumping ahead to the post the data readouts to the regulatory strategy. You've laid out a pretty tight time line between sort of that last data readout in the fourth quarter into filing end of '22 or early '23. So what are some considerations that went into that time line? And maybe help us understand some of the processes that need to take place that can get done within that short time frame to enable a filing?

Right. Thanks, Esther. Well, I think the better the clinical data the faster we'll be able to put it together, I think, into the package and have a stronger foothold with FDA towards approval. I think DAZZLE will read out in the first quarter of next year. And BEACON probably within a quarter of DAZZLE. And then we're going to wait a little bit until GLEAM and GLIMMER readout based on the enrollment rates and DAYLIGHT, probably in the same time, we expect as GLEAM and GLIMMER. So we're going to have some time as we look -- work towards a database lock for DAZZLE and some of the structuring that we're going to need to do for that readout and then following quickly thereafter into BEACON. And then sitting around a little bit on the clinical side through execution for GLEAM and GLIMMER and DAYLIGHT. So we'll have some time to structure and to organize those individual pieces, putting those together into a single BLA is somewhat unprecedented, right, in retina to have that much -- that many studies in all of those indications at one time, right, aggregating the safety database, et cetera. But also working towards the significant manufacturing and really getting the intersection of all of those manufacturing elements that I kind of talked about intersected with the clinical. Now often FDA will say, the review of the clinical data really isn't what's rate limiting, of course, preparing all of the clinical data from that many studies, from that many indications is a big lift. But putting together the package for the antibody, the separate package, for the biopolymer, the third package fundamentally for the bioconjugate drug substance. And in and around what we'd like to have as a violin prefilled syringe in the same filing. So as I said, that's very aspirational. We still think we're on track for that. But those are a lot of activities that are going to come together, and we're going to be working very hard to be able to bring those together as aggressively as we can really towards the very end of 2022 as those additional studies readout and as we bring the manufacturing and kind of commercial scale-up together basically.

Got it. So then end of '22 to early '23, is that sort of that -- a little bit of that wiggle room for the manufacturing to come together, is that a reasonable...

I would say -- yes. I mean I would say it's -- the top line data readouts for GLEAM and GLIMMER and DAYLIGHT, together with the manufacturing in terms of commercial scale coming together. I think like I said, from a manufacturing, it shouldn't either tail that wags the dog if the clinical data can drive priority review. Of course, you just don't know that out the gates, right, whether you can achieve that. So what you want to do is you don't want to spend more money than you need to, to accelerate clinical if your manufacturing is not ready. And vice versa, you don't want to spend the extra money accelerating the manufacturing if your clinical is not ready. So it's a little bit like the chocolate and the peanut butter kind of thing. But right now, I think we're in good shape for the pieces to essentially be coming together at the same time, which is fundamentally the end of 2022, but more likely very early 2023, but not much later than very early 2023 fundamentally is what we see.

Got it. Okay. So how are you -- so let's just assume filing somewhere between '22 and '23, when would you need to sort of start thinking about commercial preparation and when you start investing in that?

Well, I mean, we're already engaging and thinking about what is Kodiak's as a kind of a pre-commercial stage company. So we're very focused on execution, right? And thinking about those steps of execution. Ideally, you want a drug that sells itself, of course, that's aspirational. But part of the rationale for running DAYLIGHT is it's really a pre-commercial study. Now you can, wait and you can run that study after launch, but then for several years, while you're waiting, you're not having the broad label that would actually drive a stronger launch. So thinking about DAYLIGHT and running DAYLIGHT and getting the GLOW study started to further fill out the profile very early. It is an aggressive strategy, but it's fundamentally a pre-commercial strategy. In the United States, retina is very concentrated. So more fundamentally, when you talk about commercial, it's really what's Kodiak's ex U.S. strategy vis-à-vis Europe. What's Kodiak's ex U.S. strategy vis-à-vis, say, Japan, China and other, let's say, the top 6 to 10 jurisdictions by revenue. And I think our focus right now is thinking pretty commercially to make sure we have the right data, right? And from a regulatory standpoint, that broad label. And having the quality of execution, the quality of manufacturing, the scale of manufacturing that if the drug really does take off that we have the ability to flex up to make many millions of doses per year. And in fact, we will have the capability to make even more than 10 million per year, which is a bit silly. But there is that possibility for KSI-301 and as an agent that has that distribution of durability really for every patient in every 1 of these diseases and yet has that same safety. So there's that possibility. We are a company that thinks of itself as a pre-commercial stage in a way. We haven't forgotten the importance of that day-to-day execution. So for me we're not as far we thinking about ex U.S. commercialization really or Asia commercialization, although we've spent time and efforts on that recently.

Okay. I have a couple of questions here on email. Just going to go through the them on order. The first 1 is on -- this is with regards to your financing with the Baker Brothers. Can you still get the $125 million for Baker Brothers, while the 50% enrollment in BEACON is completed? And should that happen sometime in the next couple of quarters?

Well, that's our -- that's a very good question. When we did a royalty deal with the Baker Brothers, we were very much sort of a different company from a level of market cap and a level of cash, level of capitalization. Obviously, now we have north of $900 million, and we have a full slate of pivotals. And so the milestone in the structure of the Baker Brothers royalty deal with the first $100 million basically at signing and a second $125 million really has an option in terms of completing enrollment of 50% of BEACON is something that will become available within the next couple of quarters as we hit that BEACON enrollment milestone. And what Kodiak chooses to do at that time is something that we'll be thinking closely about, right, whether or not with the level of capitalization and cash that we have, that's something that's critical, right? Or whether that's something that we would potentially ask ourselves as is that something that we need right now.

Got it. And just so for the rest of the listeners, is that sort of -- is that tied to a time line when that optionality opens up? Or is it sort of open until you decide to take advantage of it?

I think it sort of is something that opens up at the time that we hit that 50th percentile enrollment, which for BEACON will be within the next couple of quarters.

Got it. Okay. And the next question is going back to DAYLIGHT. I appreciate your comments on having breath brought to the label. But how do you differentiate when you're going from 1-month plus?

Well, I mean, the key thing is that we'll have the best label. And if you look at, say, for example, DAZZLE as a pivotal study, it's 100% of patients on 12 -- in 3, 4 or 5-months. That's an unbelievable potential in that durability to be shown with non-inferior visual acuity EYLEA on its 8-week label already positions us as that top long interval agent wet AMD. And we're really excited about the tremendous durability, of course, that we showed also in DME as well. And we're really excited about the progress of the GLEAM and GLIMMER studies. So we don't know what percent we'll have in terms of durability in DAZZLE, let's say, we hope to have north of 50% on that 20 week regimen on that 5 months. And let's say that we hope to have more than 50%, the majority in GLEAM and GLIMMER right on that 6-month regimen, given the strength of our agent in DME from the Phase Ib. So that's very, very differentiated, clearly differentiating from the other agents. But when we fundamentally like -- what I like to think about, the way I look at it in my own mind is when you look at our Phase Ib data and you think about what percent of patients were dosed monthly or every 2 months, 3, 4, 5 or 6-months, in those different indications, that may actually be in the end in the real world how our drug ends up being used within the community of patients and physicians. So our pivotals, okay, DAZZLE, GLEAM and GLIMMER fundamentally drive that long interval durability, differentiation and story, and it's going to be very, very clear, let's hope from those readouts, okay? But you have to remember that the way that the drugs are really used, right, is that some patients are dosed monthly, every 2 months. And so it's sort of a distribution or a curve. Our curve has shifted fundamentally to the right end, it has a different curve shape than, say, EYLEA or LUCENTIS. So our differentiation doesn't need to come by saying, well, people are going to be confused because some patients need to be dosed monthly. Because our fundamental long interval durability and that differentiation should be very clear out of DAZZLE and GLEAM and GLIMMER. So I don't think the community of physicians is not going to be confused. And I don't think patients will be confused. We have the science behind a long, durable dosing molecule, and we also have that safety and that efficacy in the 1-week, 2-week and month after you get that initial dose. That's what's really amazing about the ABC Platform and KSI-301.

Got it. Okay. I have another question here on cash burn. And the question is basically asking, with a dozen new trial and a revised regulatory time line change your cash burn expectations? You kind of addressed it, but maybe in more clear terms.

I don't think it changes it. Well, it doesn't change it in a material way. The most important component of our cash burn and the acceleration of our cash burn really is our more broad strategy to file the BLA and all of the indications. And to have the manufacturing capacity to be able to manufacture millions of doses and flex up to many millions. And also to be pursuing, say, vials and prefilled syringe in parallel and kind of also driving the pipeline. Those are the more fundamental decisions that are driving the cash burn and DAYLIGHT given all of the efficiencies that we have by running treatment-naive studies in all of those same clinical sites today. And having an integrated clinical supply in all of those pivotal studies. For example, you see the relative efficiency that we have means that DAYLIGHT in some way with the level of cash that we raised last year on top of all of the other, I would say, fairly thoughtful capital raises that we've done as a company really since inception, and which we hope to continue to be able to do as we think about data -- to top line data readouts and thinking about launch. So DAYLIGHT itself is really not material. It's really more our broader strategy, right, to come out into this disease area and to really be this ambassador in retina with our platform and our molecules. And to come out, I guess, aggressively with all of those indications really in parallel, which has been our strategy, which we've messaged really since the beginning. So really, DAYLIGHT is really just an important next opportunity that we see today but doesn't have a material impact on Kodiak's cash burn.

Got it. Okay. Another question here on DAYLIGHT. How does this affect your strategy in Europe? Does it hurt or help it in terms of talking through reimbursements from a reference price standpoint?

Yes. Well, we don't think it hurts it. Jason, maybe you could talk a little bit to more holistic views around Europe, and I think they're likely excitement around KSI-301 and where we represent for their health systems and for patients.

Yes. I mean I think, Esther, it's -- fundamentally, it's -- I don't think the monthly study adds any new particular complexities or challenges with regards to reference pricing, right? I mean the studies all use in Aflibercept EYLEA active comparator, right? So to the extent that there's reference pricing relative to that, that's not different. I think, again, fundamentally, the price, I think, is going to be driven by looking at what sort of holistic package of information we're providing in any given like HTA or single-payer market, right? And it's -- because each of the disease indications is going to have somewhat of a different treatment need in terms of treatments per year to be at AMD, DME, RVO, we would expect there are already from all the predicate medicines to be some differences there. And then, of course, the payers know how many doses per year they're getting with the current medicines in each of those. So I think having the safety and the efficacy data from DAYLIGHT, for the patients on that sort of the left tail of the distribution who need more frequent dosing, who also need more frequent dosing today with the existing medicines. It's just additional information that's useful. And fundamentally, the value proposition for the payers in the HTM markets is going to be around how many people are going for how long with the different diseases, right? But we want to also make sure that we have a good sort of overall service offering, commercial offering that meets the needs of all of the patients.

Understood. Okay. I have a couple more. I know we're almost out of time or actually out of time already, but maybe I'll just ask 1 that just kind of put an eye to the future. And you indicated a couple of new INDs in early '22. So maybe can you talk about 501 and your triplet product and how you see that fitting into your broader ophthalmology strategy?

Well, KSI-501 is an exciting program as an anti-IL-6 anti-VEGF bispecific conjugate. A lot of these diseases are retinal vascular diseases are driven by this sort of long-term chronic inflammatory component. And certainly, IL-6 isn't just kind of a cytokine, but it's also a cell growth factor as well. So I think we're really excited to run a similar kind of Phase Ia/Ib or Phase I/II sort of Basket study for KSI-501. And I think in the wet AMD area, would probably be focused more on recalcitrant patients that don't show a dramatic response to anti-VEGF alone and some of the early data from the early ANCHOR and MARINA days with LUCENTIS showing that a number of those sort of pseudo nonresponder or recalcitrant wet AMD patients had very high aqueous IL-6 levels. So in particular, in wet AMD, that will be a really exciting area for us to look at. And if KSI-501 can make a dent in these refractory patients, of which there are many alone, that's a really important, very, very important product. Certainly, in diabetes and diabetic retinopathy, anti-VEGF does a tremendous job and KSI-301 is just an amazing agent in DME. At the same time, there is sort of this chronic long-standing inflammation. And the question is, if you bring an anti-IL-6 together with that long interval dosing and then anti-VEGF activity, what additional types of benefit can you have for patients? And then, of course, on top of that, there's sort of a fairly complex uveitic macular edema type diseases. And I wouldn't say a really orphan but where there's tremendous unmet need in patients. And we look forward to having an agent sort of as like an ambassador in a way for those physicians for their patients. So we're really excited about that program, and we see it entering the clinic in the context of sort of a similar Phase I/II study approach, like a Basket study. In the triplets is something that wall, we don't have time really to talk about today, but they build very nicely from the ABC Platform. We have novel small molecules where you can attach many hundreds of them into the polymer. They're hidden inside that water structure of the polymers. So you don't change your ADME or that hydrophilicity that, that water structuring brings. And then that's conjugated into antibodies, either monospecific or bispecific. And we're looking at that really for dry AMD more of -- let's say, more of an intermediate dry AMD at this stage and then sort of a geographic atrophy. And we think that combination of intracellular with a very high loading of small molecule per drug together with the biologic aspects in that conjugate will be and can be a game changer in some of these more multifactorial diseases, be it retinopathy of glaucoma or whether it's dry AMD. So it's just part and parcel of Kodiak's real commitment to the space of being a real focused entity with strong science in an aggressive overall strategy in retina for the benefit of patients. So we're really excited about our ability to invest in those programs and to have those programs kind of blossom. Sometimes we have to trade-off manufacturing slots from 501 into KSI-301 in the context of COVID, and we've made some of those choices, but we're still driving those programs, and we're still very excited about their clinical potential and the science that underlies them.

Great. Well, thank you so much for your time, lots going on, and we're looking forward to next year when we'll start to hear of our progress and data. Thank you very much for your time.

Bye.

Bye.

Thanks, Esther.