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

All right. Let's go ahead and get started. Welcome, everyone, to the Wednesday morning of the 41st Annual JPMorgan Healthcare Conference. My name is Anupam Rama. I'm one of the senior biotech analysts here at JPMorgan. I'm joined by Priyanka Grover and Malcolm Kuno from the team. Our next presenting company is Kodiak and presenting on behalf of the company, we have CEO, Victor Perlroth. Victor?

Thank you, Anupam. It's my pleasure to be here. Welcome to 2023. We have a large number of activities in progress and a lot of data that we're preparing, and we look forward to the progress of the year. Before we get started, let's remind that I may be making some forward-looking statements, so please refer carefully to risk factors in our SEC filings. With all of the discussions going on in the field of biotech, maybe consternations. It's useful to remind ourselves where does Kodiak fit in. And I think we fit in right where you want to be. So we have a singular focus in ophthalmology. So that's the demographics of aging and diabetes. It's chronic disease. It's high prevalence disease, and we're looking to treat and prevent. And we're looking to build medicines and to develop medicines with a differentiation that really matters that can be first-line agents. That's what we're trying to do when you look at the breadth of our clinical plan, the breadth of our science and our pipeline, you can understand where we're trying to go. In the context of durability, that differentiation is really what we call anchored at 6 months or 5 and 6 months dosing for the majority of patients, the differentiation that matters. And we're doing that in building from a science and innovative science for medicines and for a platform and platforms of medicines and linking the science to the design of the medicines and then the design of our clinical trials and our clinical programs and connecting the dots from the science into the profiles that we want to show. Durability clearly matters. It matters for patient outcomes. It matters for our differentiation, it matters for value that we want to build. We're predicated on Kodiak's ABC platform, our antibody biopolymer conjugate platform, which we built. It's for injectable biologics for ophthalmology and intravitreal, similar to the other key agents into the large proven market. There's a strong biophysical element to the design of our platform and to the types of conjugates that we build. But as we move deeper into clinical development, of course, it's really clinical data that we're going to be able to show with the application of our science into our medicines design. So as we look at what we call Generation 2.0 medicines or what we try to focus on is the key differentiation, the high molecular weight of our conjugates and of our platform and the formulation strength that we brought into our clinical and commercial formulations are designed to provide an important dosing advantage for patients and for physicians and for the community. So what is it that Kodiak believes is relevant and important for our lead program, tarcocimab tedromer? So we believe we have unique potential to achieve long interval dosing anchored at 5 and 6 months, while at the same time, through our clinical program design, preserving the ability to also dose monthly, in all the indications. At the highest level, the type of differentiation that we want to deliver into the marketplace and for patients and physicians and caregivers and payers, we think that we want to be achieving and that we can achieve 2 of every 3 patients on an every 5- or 6-month regimen. That's really pushing the envelope beyond any of the other medicines. And we're doing it in the context of building on the science of our ABC platform. So where do we find the support for this type of differentiation? Well, as I said it's a direct linkage from the science of the design. So the design of tarcocimab tedromer enables best-in-class durability. And we've seen that in all of the major retinal vascular diseases, and we've now seen it in 3 different clinical studies, initially in our Phase Ib study in which we took in treatment-naive patients, 2/3 of patients, actually more than that, went 6 months or longer in wet AMD, DME and RVO indications. And in the Phase IIb/III study that we announced last year, which didn't meet the endpoint for all patients. But what's important is that nearly 2/3 of patients, 59% of patients did achieve the longest interval at 5-month dosing with tarcocimab. And as we'll see, showed comparable vision and anatomical outcomes versus aflibercept on its label. So in the design of that study, we left the flank open for patients that should have been say, every month or every other month. But what's important, again, as you think about our differentiation is that patients anchored at 5 and potentially 5 to 6 months represent 60% or more. And then in our Phase III BEACON study in retinal vein occlusion where we announced top line data last year, we doubled the treatment interval for all patients and met the primary endpoint of noninferiority versus a aflibercept dosed on its monthly label. So looking at the Phase Ib study for a moment. I think it's important to slow down for a second as we think about the clinical data that we're going to be generating this year. And to put that in the context of clinical data we've already generated. So while the Phase Ib study was not an active comparator-controlled study. What's important to remember is that physicians could dose the patient at any time on any interval, whether it was monthly or every other month or quarterly, all the way out to 6 months in wet AMD and even longer in DME and RVO. And in this study, in the treatment-naive patients, 2 in every 3 patients were put by the physicians on a 6-month or longer treatment-free interval at year 1 after only 3 loading doses. In some way, I think about this study as perhaps the way physicians, if the drug were eventually to be approved, would actually want to use the medicine in their patients. Looking then to the Phase IIb/III study in wet AMD last year, a quick reminder of the design, right? It was a non-inferiority study of tarcocimab tedromer on every 3-, 4- or 5 regimen after 3 loading doses versus aflibercept Q8 week after 3 loading doses. So importantly, we didn't allow patients to be treated every month or every other month. And we focused on 3-, 4- and 5-month dosing. And again, at 5 months or 5 months and longer, it's the longest treatment interval being explored by intravitreal biologics. And what did we see? Well, we saw that 59% of tarcocimab-treated patients achieved a 5-month dosing, although the study didn't meet the primary endpoint due to undertreatment in some patients. But when you look at the vision curve of this 59% of patients on that longest interval, it's impressive. And when you look at whether you're looking at the absolute vision gain in terms of number of letters or whether you're looking at change from baseline, the majority of the patients on tarcocimab and on that month interval did extremely well. And that's true also when you want to look at the tarcocimab Q20-week dosing group, it did achieve similar anatomical outcomes compared to aflibercept Q8 weeks, as you can see here in the curve. Now moving into the BEACON Phase III study in RVO, a non-inferiority study of tarcocimab tedromer every 2 months after only 2 loading doses versus aflibercept every month in treatment-naive retinal vein occlusion patients. Now in this study, it's important to remember that we took 100%, we took all patients and drove them to the every other month interval and didn't allow any patients to be treated at a lower interval or to be matched to the comparator on its monthly interval, which means we even took the highest need patients and dragged them over to every other month dosing. In running the study, we had a hierarchical testing strategy. First, looking at the branch vein retinal BRVO patients and then looking at all subjects, branch vein and central vein together. When you look at the data, tarcocimab achieved comparable vision and anatomical outcomes in the BRVO patients and showed noninferiority to aflibercept. These are important curves, again, to slow down for a second and to take a look at. When you look at the matched phase or whether you look at the maintenance phase. The matched phase is important when you look at the 2 loading doses and then you want to compare, say, the power of tarcocimab as a medicine versus aflibercept. And what you can see is very strong and immediate responses, right, even as early as the week 1 comparison, both in terms of vision and also in terms of anatomic or CST or OCT measures. And you see a nice match through the match phase through 8 weeks. And then as you move into the maintenance phase, again, we see similar visual and anatomical gains are achieved by tarcocimab from week 8 to week 24 with only half the doses with strong vision gains achieved and also with very strong anatomical outcome achieved at the endpoint. This is important because later when we want to talk about what's the read-through from beacon, okay, into a new clinical study readouts, in particular, GLEAM and GLIMMER in DME, right? So the success in BEACON, how does it help us feel comfortable and confident success of tarcocimab in GLEAM and GLIMMER in DME. And when you look at these curves, you can have a strong level of confidence. RVO is a disease with very high and very strong VEGF load, okay, and a disease where soluble VEGF inhibition is important similarly to DME. On the next slide, when we look at the results of BEACON in all RVO patients, we also see strong, very -- a lot of strength in the matched phase, again, as early as the 1-week interval and strong in the maintenance phase, again, with strong read-through into GLEAM and GLIMMER. And in this case, remember, we drag all the patients to a doubling of the interval and don't allow any patients, including high-need patients to be dosed on a matched interval to the comparator. We like to talk about the relevance of anchoring our dosing interval really to 6 months or talking about the majority of the patients with our science and linking our science to our medicine of bringing the mere patients to 5 and 6 months, which is unique. But in retinal vein occlusion, of course, we tested an every 8-week regimen, a doubling of the interval for all patients. It's important, though, in retinal vein occlusion with such high VEGF load, the relevance of doubling the treatment interval is very important because real-world evidence shows that decreasing from 6 to even 4 results in a reduction of visual cue say, 40% or 50%, but not in the case of tarcocimab in BEACON. So in 2023, where are we at Kodiak with our clinical studies, clinical program and our clinical readouts and what's the timing and what our expectations? BEACON having read out in mid-2022, excellent. Looking at GLEAM and GLIMMER has our DME pivotals paired. We're looking as we've mentioned, to midyear 2023 for top line data. And we believe that will happen in concert with our DAYLIGHT wet AMD study midyear. And shortly thereafter, GLOW, which is our 6-month study, a Q6 month dosing study has a prevention study or prevention of worsening in nonproliferative diabetic retinopathy reading out within a couple of months from the triple readout of GLEAM and GLIMMER and DAYLIGHT. So let's say, by the end of the third quarter, we expect data from all 4 studies and midyear for the first 3. Another important advance for Kodiak in 2023 is that we make or we graduate from being about a science and a molecule to being a company about a platform with several molecules in the clinic. I think that's important because there's a lot of value following from the safety and the efficacy that we've shown our ABC platform and now the ability to advance that into our second program. So KSI-501, which is a bispecific antibody biopolymer conjugate, we filed the IND at the end of last year, and we're expecting to put that into patients for a first-in-human in early 2023. And we're also continuing our technology development with what we call our triplets. The triplet science is really fascinating. It brings the water structuring of the phosphoryl calling, which is a central tenet of our platform, and it brings many hundreds of small molecules conjugated into that polymer as linked into antibodies. This is really new. And although our focus is entirely in retina and ophthalmology, it's important because this technology as a new drug format has a lot of relevant, say, for systemic diseases. And there's another asset of value as a platform for Kodiak as we look at our portfolio of assets of value. So when people talk about ADCs and they talk about a drug antibody ratio or DAR of 1 or 4, our triplets platform delivers DARs of say, in north of 100 or 200. And it really changes the game in terms of the different types of mechanistic small molecules and multi-mechanism drugs that can be built inside of this really interesting water structure where we see tremendous safety in ophthalmology, which is perhaps the hardest. So as we think about Kodiak, we think about ophthalmology, but now we can think about Kodiak as a true platform company with 501 entering the clinic and with further progress expected and further announcements around some of this interesting and innovative science underlying our triplets this year. So a quick note on KSI-501. It's really a new category of medicine for retina and for the community and for patients. So it's a VEGF trap fusion in line to an anti-IL-6 antibody as an IgG1 with a similar framework to the KSI-301 as a bioconjugate. So it's picomolar potent in both targets with the durability of the ABC platform. So the IND has been filed in a Phase I dose escalation study is planned for first half of 2023. So as we think about what is Kodiak this year, mid-year third quarter, tolerability data on our second medicine representing really a new category, right, combining 2 powerful mechanisms to address underlying rent vascular disease and underlying inflammatory cascade as a single molecule. And it's important when you think about, well, what's the relevance for, say, IL-6 in DME? Or what's the relevance for IL-6 in wet AMD or what's the relevance for IL-6 in the other inflammatory diseases of retina? And there's a lot of, I think, powerful underlying basic science here on the bottom right, supporting the importance of IL-6 levels to a number of initial doses needed in order to get control of DME in patients or, for example, the levels of IL-6 in patients in terms of their resistance to being responsive to anti-VEGF therapy for wet AMD patients. So there's a lot of import science deriving from KSI-501, and we're excited to begin exploring that in the clinic with the community. At a high level or perhaps the highest level, what is the relevance of Kodiak, and what's the relevance of tarcocimab tedromer or of our platform for the community? While we believe we can bring a majority of patients to 5- and 6-month dosing, we believe durability does matter, and we believe we can achieve this and that we can showcase this, this year in 2023 to bring 2 out of every 3 patients to a 5- and 6-month dosing element. We do that by building from the science of our ABC platform, which really brings water to the heart of how medicines interact with their local environment, a true long interval dosing to be demonstrated, which we have in and laid studies and continue to do that and that we think every patient's goal should be to consider tarcocimab and the ABC medicines as first line. Okay. So in summary, Kodiak is strongly positioned to execute on its vision for tarcocimab this year to define a new category of medicines with KSI-501 and to continue our retinal science and medicines development journey in 2023, together with our stakeholders. We have a comprehensive development program with top line data from 4 Phase III studies reading out mid-year in DME and PDR and wet AMD with an objective for an industry-leading durability profile, pushing out to a level of durability not being tested and not supported by any science of any other medicines. We have a meaningful commercial opportunity. Durability clearly matters to patients, physicians and payers, and we're testing the longest treatment intervals of any intravitreal biologic while preserving dosing flexibility for high-need patients. Our pipeline and technology leaders advancing this year with the IND for 501. And we're continuing to progress our Triplet technology and look forward to discussing some of that underlying science in the midyear, let's say. And we have a very healthy cash runway. We're well capitalized with $537 million in cash and marketable securities as of the third quarter of 2022. So we have plenty of cash to read through 2023 and the clinical readouts and to continue our push for Kodiak. With that, we can move into some questions on Anupam.

[Operator Instructions] So just as a reminder, some of you have heard me like so many times, but there are 3 ways to ask a question, right? You can submit it via the digital conference book, and I will get it on this iPad. Number 2, you can e-mail me, and I ma happy to ask on your behalf. Or 3, you can go old school and raise your hand, and we will make sure we get your question answered. So maybe I'll start out here, though, Victor, how do you think about the read-throughs from the BEACON study in RVO to GLEAM and GLIMMER in DME?

Thanks, Anupam. We talked about it a little bit during the presentation. RVO is known to have the highest VEGF burden of the retinal vascular diseases. So the fact that tarcocimab was able to generate strong and immediate responses, let's say, as early as 1 week in the RVO patients and to achieve noninferiority, right, while doubling the treatment interval from monthly to every other month in all patients. It does show case the molecule's ability to generate rapid and deep responses in high VEGF burden diseases like DME. And DME shares many similar characteristics to RVO in terms of VEGF location, VEGF burden. And we're very optimistic about the GLEAM and GLIMMER trial readouts.

It's interesting GLEAM and GLIMMER are -- they're designed to look at treatment intervals, I think that range from 2 months to 6 months. Given the competitive landscape, what are the treatment intervals that you hear from physicians that need to be achieved in GLEAM and GLIMMER to gain market in DME?

Well, there's a lot of battling it out at 4 weeks and 8 weeks or 12 weeks and 16 weeks. But I think, to be honest, in the data, I think, supported also the clinical data that there is something special about pushing further, getting to the 5 or anchoring at what we call anchoring at 6-month dosing, right, for the majority of patients and reaching for the [ rain ] there. Our science supports that in terms of the design of our molecule, our clinical program is designed to showcase that. And that's our hope. And our view is that, that's a differentiation that matters, and it's a unique differentiation. And we think the market will appreciate that and especially the physicians and the patients.

I mean, I guess along the same lines, we have an e-mail question here, which is how has the faricimab data changed how you think about benchmarking for GLEAM and GLIMMER?

Well, I still think that faricimab is battling it out a little bit in the 12- and 16-week category. And so our program pushing it really into the 5- and 6-month category is different. And I think there's a lot of talk about patients being put on to faricimab or patients then being taken off of faricimab. So I think there's a lot of back and forth in the 12- and 16-week area. And I think we can be unique.

What are you hoping to learn from the DAYLIGHT study in wet AMD? And how can these -- these data contribute to kind of the known profile of the drug overall, but also in wet AMD post the DAZZLE results?

Yes. Well, wet AMD is a big piece of the market, right, around 50%, although DME and diabetes may be the growth area. What's important is a successful DAYLIGHT study and outcome will drive and help obtain approval of tarcocimab in wet AMD. Also, DAYLIGHT was designed really to expand dosing flexibility of tarcocimab to monthly, right, all the way to a top interval in all of the diseases. So it plays in 2 critical -- 3 critical roles in our portfolio, right? Access to wet AMD as a market, getting monthly. So in reality, let's say, only a single-digit percentage of patients really need like a monthly therapy. So I think as we think about, well, what are the risks around DAYLIGHT, right, driving intensive dosing on a monthly basis, let's say, in terms of inflammation that people have mentioned in the past, I think we don't have any expectation of imbalances. However, we believe the community can put those data in the context of getting us the monthly dosing that we want and at the same time recognizing a very small number of patients are really likely to meet monthly dosing. So we think daylight is an important piece of our pipeline.

Question from the audience.

Victor, one of the pushbacks on KSI-301 relates to some of the OCT eye drying data that's been presented and that being relatively inferior to the competition. How would you respond to that pushback?

Right. Well, in particular, the pushbacks coming from Phase IIb/III study, the DAZZLE study in wet AMD. I think what we showed here was that when you look at the majority of the patients, right, the 59% of patients that were on the 5-month dosing component, right, piece of DAZZLE, they achieved very strong vision gains, and they had very strong and appropriate OCT improvement. So that's the majority of patients. When you want to look at the mean and then you want to look at the loading phase in DAZZLE, of course, there's weakness in both division and in particular, in the OCT. And so then that raises questions for people to say, well, is the drug potent, right? Is it weak? I think when you look at BEACON, which we talked about, in particular in the matched phase, you can clearly see that the drug is not weak, right, that with 2 loading doses we can achieve powerful intermediate vision and OCT gains. So how do you close the loop on that, right, in wet AMD versus, say, RVO or DME where we have a lot of power. We really think that it's a minority from looking at the data in DAZZLE, it's really a minority of patients in wet AMD where perhaps it's not a potency deficit, but we consider it more, let's say, a disease biology or like a disease access deficit to the small number of patients that have like a much deeper disease. And so then the question is, well, what percent of patients does that represent? And let's say, it's like single-digit percentage of patients. So in our DAYLIGHT study, the design of the study will allow us to show noninferiority, we believe, in wet AMD for the reasons in the utility that I mentioned, right, accessing wet AMD as a market, allowing physicians to drive dosing on whatever interval they want, Q5 months or Q6 months based the durability that we're showing the science of that, but also to dose them monthly if they want them. I think it is a puzzle for us to think a little bit, to be honest. Well, how do we think about wet AMD in Kodiak and for tarcocimab. But I think for this year, what's really important is to recognize that we don't see a read through. We didn't see the read-through in BEACON, in RVO, we don't expect to see a read-through of that into GLEAM and GLIMMER. We expect from DAYLIGHT to get a positive outcome in wet AMD. And then the broader puzzle about how we showcase the 5- and 6-month durability of tarcocimab in wet AMD is something that we need to think about and figure it out. But I think just getting locked on that early weakness in wet AMD and losing the forest for the trees on that is a lost opportunity for people if that's as far as they go.

Questions from the audience.

Maybe on manufacturing. Where are you in terms of sort of prep for pending positive data on the commercial manufacturing front?

Well, we finished, let's say, our dedicated facility with Lonza, plus or minus a few minor qualifications. So we have a strong manufacturing partner in Lonza in a dedicated Kodiak facility. So we're ready for commercial scale. I think the prefilled syringe is also an important element of our manufacturing activities. We're working to develop a prefilled syringe to bring market as close to launch as possible. So prefilled syringe for retina is challenging, and it's a long lead time item. So we've started early with that and we continue to advance that in the background.

And how are you thinking about size and scope of the initial sales force in the U.S.? And would you launch in Europe on your own? Or would you prefer a partner?

Well, when we think about Kodiak, we think that we have a number of assets of value that we've held very close to our chest. For example, with tarcocimab, we held on to global rights because we do believe in the value of the molecule. But we're open to partner with the right partners, for example, on a European commercialization. If such a partner could bring the scale, expertise and the resources needed that would do justice to the drug and bring it to launch to the next level. In terms of scope of the U.S. sales force. In reality, our focus this year really is on clinical data. But I would still say that what's special about retina despite the fact that it's the demographics of aging and diabetes and chronic disease and prevention and treatment, but it's still feasible for a smart and nimble organization to commercialize in the United States in retine. But let's just take things one step at a time.

Got it. A question from the audience? Maybe then a final one for me. What's your cash position runway? And what are the scenarios about how you think about cash with so many readouts this year?

Yes. Well, in some way, our cash burn is not increasing as we have patients exiting the broader pivotal program, right, and with a lot of capital in general, having been spent towards clinical development. Of course, we're adding KSI-501 this year but as a Phase I study, that's not material. So as we think about midyear readouts in the pivotals and then the GLOW study shortly thereafter, say, Q3 readouts, we're going to be sitting on a substantial amount of capital. when we look at the data, when we can really understand and answer the questions around the relevance of the molecule, right, and that unique differentiation that we think we can see. And on top of that, Anupam, as I mentioned, we do have assets of value in the company, given that we haven't partnered in any way, shape or form, in any geography or on the platform or on the other molecules or on the new technology or on our capabilities as a retina franchise development entity. So I think our focus right now is on excellence of execution through Q2 and Q3. We're going to have a lot of capital with those readouts, and that will give us a lot of optionality. And we have an investor base, I think supportive of all outcomes.

One -- maybe I'll just squeeze in 1 more quick one because you just mentioned it on GLOW. What is that trial powered to show on the [ EVDRS ], diabetic retinopathy severity scale. And what's assumed there or sham performance?

We're very excited about the GLOW study, not just for the result and not just for the fact that it really anchors us again at an every 6-month dosing molecule, right, and another link of our science to a clinical profile, but also to the public health impact and the potential. I'd like to think of not being an expert or an ophthalmologist per se, but I like to think of the nonproliferative diabetic retinopathy as if you stick your hand into like a bucket of paint and then you splashed it onto your tableau, that's what the retinas and the micro hemorrhages look like in patients that have earlier diabetic retinopathy. That's not good. And anti-VEGF is a great agent, okay, to prevent that. It's just that the existing agents on a monthly or on a frequent and dosing basis, haven't been able to access and build that kind of incipient market. So with our science and with our study design in GLOW, we're really excited. We expect to win in the study because it's again, sham and the rate of spontaneous improvement is not all that high. And anti-VEGF is known to have a strong impact on this disease. So we think this is really an opportunity to showcase our science of durability, and we think it can be disruptive and really be a game changer for those DR patients and for the field and to build a market that's currently not served. And there are existing approved medicines that are just too frequent to be practical. So there's no set number, Anupam, actually that we need to deliver in the comparison against sham because nobody has attempted a Q6-month dosing. So although the approved medicines have put impressive numbers in terms of, say, 2-step improvement, that's only with dosing that's so frequent monthly or Q8 weeks after 5 monthly doses, and it's really not relevant and patients aren't getting the benefit. So -- and the other thing, just to say quickly is we're not just looking at DRSS, but we're also -- which is photographic improvement. But we're also looking and tracking how we can prevent vision-threatening complications, right? New onset DME, new proliferative retinopathy, use of laser and so on. These other end points that really matter to the system. So this is really what matters to patients, to pay and physicians. It's what they care about the most, and that's another element of the design and what we're going to share. So a lot of excitement, I would say, for diabetic eye disease with tarcocimab the platform in Kodiak.

Okay. Thank you, Victor.