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

Thank you for standing by, and welcome to Kodiak Sciences' DAYBREAK webcast. [Operator Instructions] Please be advised that today's conference is being recorded. Now it's my pleasure to turn the call to Victor Perlroth, Chief Executive Officer. Please proceed.

Thank you for joining the Kodiak Sciences' DAYBREAK Topline data results conference call. I'm Victor Perlroth, Kodiak's Chairman and CEO. The webcast portion of this call contains a slide presentation that we will refer to during the call. Those following along on the phone who wish to access the slide portion of this presentation may do so on the Investor Relations section of the Kodiak website. An archive of the webcast will be available on our website. Let's turn to Slide #2. I would also like to remind you that remarks made on this call today include forward-looking statements about Kodiak. A more complete description of these and other material risks can be found in Kodiak's filings with the Securities and Exchange Commission, including its Form 10-Q for the quarterly period ended September -- on June 30, 2026, which has been filed with the SEC. Kodiak does not undertake any obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Turning to Slide #3. It's with pleasure that I welcome all of you to our DAYBREAK primary endpoint results webcast. Turning very briefly to the Slide #4. We where we can take a moment to reflect on the length and also the importance of the journey that we have been traveling together with our Kodiak stakeholders of employees, patients, physicians, financiers, family and friends. In particular, we like to refer to this for quadrant plot here on Slide 4. As Dr. Brown said it nicely in his quote in our press release, years after [ Lucentis ] was approved for wet AMD, the Holy Grail remains the same: robust anatomic disease control and maximal visual acuity gains, i.e., immediacy/efficacy, sustained with less frequent dosing, i.e., durability. Before DAYBREAK and in particular, Zenkuda and Daybreak, durability always came with great sacrifice. And despite best efforts over these 20 years, our results of a community have been incremental. But today and together, we described a tremendous step forward, a step that builds on Kodiak's 17-year history, following what I'd like to call the gentle arrows of science and the harmony of company building and retinal medicines development. On this plot, the upper right quadrant has always been our target zone. I think we've hit the target directly in the middle in the upper right quadrant. On that note, we'd like the data to speak for itself. Turning to Slide #5. Joining me today from Kodiak is Pablo Velazquez-Martin, Kodiak's Chief Medical Officer. And joining us today also are Dr. Charles Wykoff and Dr. David Brown. Both are distinguished physician scientists with an important history of retinal drug development. After our prepared remarks, we will open the call for Q&A. Turning to Slide #6. I'm now pleased to turn the call over to Dr. Velazquez-Martin. Pablo?

Thank you, Victor. I would like to take a minute to bring us all the way back a few years ago, and we can move to Slide 7. Almost to these days of investor R&D Day in Kodiak -- sorry, for Kodiak in September 2024 in New York City to remind us how we got here to this moment. At that time, we emphasized our focus to be a learning organization and strengthen our commitment to the journey from data to insights to learnings to action. At that time, we made a variety of critical course correct decisions that led us here. In Slide 7, we continue this intentional journey got us here today. It is my privilege in Slide 8 to introduce this presentation, the primary endpoint results of the DAYBREAK Phase III study in treatment naive with age-related macular degeneration exploring both of our antibody biopolymer conjugate investigational therapies, Zenkuda and tabirafusp alfa tedromer, which will also be called during this presentation as [ Sabeco ]. One important reminder on Slide 8 -- sorry, Slide 9. DAYBREAK the innovative design enable an independent about Kodiak in a [ versus test ] at full clinical and statistical significance. This is important because each molecule had a different objective in this trial. Aligned with this principle, Dr. Wykoff will present the DAYBREAK results for each molecule compared to [ aflibercept ] separately in independent sections. We move to Slide 10, please. And with that, I am happy to pass the presentation to Dr. Wykoff, who will present the efficacy and safety results for Zenkuda first. Charlie?

Good morning. Can you hear me?

We can hear you, sir. Please proceed.

Thank you. Great to be here with you. It's an exciting time in retina, a lot of ongoing clinical trial programs always enjoyable to digest new data, particularly when it is positive, I think you will see that this is a go forward to the next slide. So DAYBREAK break fascinating Phase III clinical trial for many reasons. First is that it compared two different therapeutics to the same control arm. So a very efficient trial design to digest a tremendous amount of data. We'll first unpack the tarcocimab data and then dive into the tabirafusp food data. So with tarcocimab, the competitor here was [ aflibercept ] fixed Q8 week dosing, 2 milligrams every 8 weeks after 3 monthly loading doses, 225 patients, really the gold standard EYLEA control arm, always important to think about the control arm first. And then secondly, the tabirafusp arm was 4 monthly loading doses upfront, 225 patients and then a highly differentiated trial design here, and we'll go to about that on the next slide in just a moment. But these patients were then evaluated every 4 weeks and could receive dosing as frequently as every 4 weeks but could also be observed at those visits depending on their disease activity. We've talked a lot about disease activity criteria in this space for the last many years, in this trial was extremely strict on when patients were retreated and we'll dive into that. The primary endpoint was change in visual acuity there across three of the time points, weeks 40, 44 and 48, again, comparing tarcocimab with aflibercept, ultimately though a 2-year trial. And all of these were treatment naive wet AMD patients. You can go forward. In many ways, this may be the most important slide -- you go to Slide 12, please. Because the retreatment criteria in any clinical trial trying to look at durability are critically important. And most clinical trials use a retreatment threshold of increased CST of a certain threshold, 50, 75, 100 microns, for example, associated with visual acuity loss, usually 5, 10, even 15 letters of visual acuity loss. This trial was highly unique and none of those requirements were necessary. Specifically, we did not wait for patients to experience visual acuity loss. And there was no CST threshold that would drive retreatment. Instead, we use an AI-based fluidics analysis to look for the smallest amount of intentional and/or subretinal fluid to initiate a therapy. We were trying to practical criteria. In the real world, when we see fluid, we reinject and we don't go longer in between injections. And that's what we tried to recapitulate in this clinical trial using a point of care deployed AI algorithm. So on this slide, you can see examples of what this looks like. On the left is an eye that was dry that did not have significant [ interactor ] serial fluid. In fact, you see no fluid on that central B scan. And then on the right, you see those small intraretinal [ cystic ] space as highlighted in red, which is an indication of not have met any of the other retreatment criteria that I'm aware of in any advanced clinical trial used in retina previously. But it did cross the threshold for volumetric increase, and therefore, that I was retreated at that time point before there was vision loss and before there was a meaningful increase in CST. You go forward 1 slide. So baseline characteristics of tarcocimab versus [ aflibercept ] comparison were balanced. Visual acuity was about 260. And there was balance in the BCVA category, the low limit visual acuity deficit. And CST is about 50 microns in both arms. About 40% of all patients were faced. You go forward 1 time. So this slide demonstrates mean visual acuity change over time, absolute visual acuity actually plotted here on the Y axis. Both of the arms. And importantly, you can see that the primary endpoint was met with high statistical significance, demonstrating not only noninferiority but equivalents of tarcocimab tedromer versus [ aflibercept ]. You can see at the end there, the [ aflibercept ] armed gained 7.6 letters compared to 7.2 with tarcocimab. And you see numerical fluctuations across the year of interest, you see actually slightly higher numerical visual acuity gains due to loading phase there with tarcocimab compared to aflibercept. But again, the key message here is really overlapping visual acuity curves from baseline through the end of 1 year at the primary end point. You can go forward 1 slide. Looking at the similar trajectory here with absolute CST, again, you see overlapping trajectories. This may be the most important data point for tarcocimab for me. If you look at the loading phase is there through 8, 12 weeks, you see overlapping CST curves. No indication of a separation between these curves, meaning that we have achieved that immediacy result were we have achieved complete drying relative to the [ aflibercept ] gold standard monthly dose control arm there in that loading phase. And then after that, you see that characteristic sawtooth pattern in gray when you switch to [ aflibercept ] every 8-week, 2-milligram dosing pattern. And again, you see minor fluctuation with tarcocimab. But again, these values are overlapping, demonstrating equivalents of anatomic outcomes from a CST perspective through the week 48 endpoint. You go forward. So what does this look like from a durability perspective? Because remember, the goal here was to achieve a completely dry retina and then maintain that retina at a dry state, right? We were not allowing significant recurrence of fluid before these eyes got retreated, that is very differentiated from most of the other programs, and I think is a much clearer reflection of how we manage these patients in our routine clinical practice. So despite that strict treat to dry and maintain dry approach, we still had a very large number of patients at in every 24-week or 6-month interval, so 54% majority of patients achieved that, again, within that 48-week time window. Another approximately 30% of patients achieved Q12, Q16 or Q20. And then reflecting the real-world nature of these treatment-naive patients, about 15% to 17% were in every 4- or 8-week interval. I really like looking at that because it shows me that this is a representative patient population for what we expect in the real world. Some patients do need very frequent dosing, and I'm glad that we included that population of patients in this clinical trial and yet the large majority are at every 24-week dosing without recurrence of fluid, you can go forward. From a safety perspective, we saw no cases of interact inflammation here and or fleet arms, no occlusive retinal vasculitis no end optimitis. There were three cataracts, one in the tarcocimab arm for 0.5% and two in the [ aflibercept ] arm at 0.9%. You go forward 1 slide. So this slide summarizes that tarcocimab comparison with [ aflibercept ], Zenkuda as it's also known. And again, the primary endpoint here was met showing equivalent the loading phases and through the extended dosing phases through week 48 from both an anatomic and visual outcome perspective, while a majority of patients were every 6-month dosing intervals. Importantly, from a clinician's perspective, a multi-indication BLA is planned by Kodiak across 5 positive Phase III clinical trials involving DR, RVO and, of course, by AMD with this DAYBREAK trial. You go forward. And you go to 2 slides, actually go to Slide 20, please. So now we're going to switch over and look at the comparison with tabirafusp. So this is a comparison using the same fixed EYLEA control on there, [ aflibercept ] 2 milligrams every 8 weeks. Again, that same 225 patients. Now we're comparing that with a separate statistical analysis plan with tabirafusp. This drug was given, again, 5-milligram doses. Dave will go into details about what these drugs look like in the dosing. And this is 4 monthly doses through week 12, followed by fixed every 8-week dosing, that's that solid green boxes there at 2028, 36 and 44 weeks. And importantly, in between, patients could also receive additional monthly doses if there was presence of disease activity using that same AI algorithm I discussed before and Dave will go into more details. Again, the objective here was to give patients what they need on a very individualized patient-specific basis on an ongoing basis. So patients had disease activity. We did not want to extend them. We wanted to be very aggressive and treat them as they deserve to be treated. But if there's no fluid, we did want them to be able to grow every 8-week dosing. And again, the goal here with this trial was to really look at patients within the treatment-naive population and see if there could be a population that could do better with IL-6 inhibition, you can go forward. Based on characteristics, we're similarly balanced here. We saw baseline visual acuity, about 2060 BCVA categorical and a low luminous deficit ranges were again balanced. CST was about 55 microns in both populations and again, 40% [indiscernible]. You can go forward. The primary endpoint in this trial comparison was also met with equivalents demonstrated between tabirafusp as well as [ aflibercept ]. You can see at the end of the 40-week period gain of 7.6 versus 6.3 mean letters. And again, noninferiority was demonstrated with high statistical significance, the p-value at the bottom there on 0036 with minor visual acuity fluctuation across the duration of that 1-year endpoint. You can go forward. So Slide 23 here demonstrates outcomes. And again, this was actually an alpha protected p-value in this comparison. So this anatomic endpoint also demonstrated noninferiority and actual equivalents between tabirafusp as well as [ aflibercept ] every week dosing. And you can see minor CST fluctuations again that classic sawtooth pattern and the gray population of a [ aflibercept-8-week ] dosing as well as some minor fluctuation with the [ aflibercept ] and then immune identical CST improvements in both populations at week 48, go forward. From a safety perspective, similar to the tarcocimab comparison here, no cases of exclusive and vasculitis, no cases of [ optimitis ], there was one [ intraocolane ] inflammatory event in a severe push farm at 0.4%. Again, there two cataracts in this comparison, none in the tabirafusp arm and 2 in the [ aflibercept ] population. You go forward. So Slide 26, my last slide here is just summarizing this tabirafusp analysis. You can see it overset the primary endpoint of wet AMD demonstrating equivalents with both visual acuity and CST outcomes in a comparison of fixed gold standard 2-milligram force arms. And looking forward, this drug is being studied in ongoing DME program, also, trying to understand who the patients are that may be able to benefit from additional IL-6 inhibition. With that, I'll pass it over to my friend and colleague David Brown. Thank you. [Technical Difficulty]

Ladies and gentlemen, please stand by.

I keep getting muted. Can you hear me now?

We can hear you, sir. You may continue.

Great. Technology, you got to love it. All right. Next slide. The biggest problem we have, we have great drugs that solve [indiscernible]. The biggest problem is all our current drives require frequent injections, especially for a population that has fast drug clearance. Even though a treatment-naive population, it's only 5% or 10% that need monthly dosing in our clinics, it's 30% to 40% because those patients have to come every month, and we know their kids. We know their families. We'd love to have a drop that maintains visual acuity and we see these great patients a little less often. Next slide. So what Zenkuda is interesting. They have a conjugated ABC protein, which is very high molecular weight. And we know from all kinds of pharmacology studies that the larger the molecular weight, the slower the drug clearance. And so you actually have about a 20-day drug clearance of this big ABC conjugated protein. In the previous studies with Zenkuda, it was mainly -- it was only the conjugated protein. And while you saw longer dosing, you didn't see an immediate improvement in anatomy and visual acuity, like we see with our standard of care great drugs like [ aflibercept ], EYLEA. What this is, is a 2-in-1 formulation, it's 20% unconjugated protein and then 80% conjugated protein. So you're basically -- you're getting a rapid response from your unconjugated protein, while you're conjugated protein provides long-lasting and longer-acting durability. Next slide. Again, like I talked about, you have strong immediacy. What that really means is just disease control. You want the OCT curve, you want the fluid to go away. And correspondingly, you want to improve visual acuity that comes with that. The durability or the ability to last without having injections all the time. I think, comes from this conjugated platform exactly as it's been designed by Kodiak. It's a phosphorylcholine-based polymer that's conjugated to the antibody. Again, the half-life is approximately 20 days. Our current drugs, half-life 7 to 9 days or so, but that's in the average patient. There's good data with tarcocimab, 10% to 20% of the population has a half-life, about half of that. And that's probably the same with all of our drugs. Some people have a longer half-life some bowl to have a shorter half-life. Next slide. So both of the conjugated and unconjugated have a high binding affinity. So the binding affinity is with maximum inhibition is really good numbers, very comparable to [ aflibercept ]. The inhibition of a cell culture media, same thing, very similar to [ aflibercept ]. The difference is one of them is available immediately, the unconjugated. And then one is more sustained release or you can look at it as sustained release, which gives you that will acting into this curve. Next slide. I love this slide. We push for Kodiak to really look at their macular half licensed humans, this isn't done in many drugs. It's tarcocimab in the FDA filing. And so that's where this data comes from. The mean half-life tarcocimab tedromer is 7.5 days. And again, that comes from their FDA filing. It is included is 19.8 days. And I think it really is the main reason why you're seeing the more than 50% getting up to 6 months, like Charlie showed. Next slide. This was calculated in the aqueous humor fluid or the patients in the Phase Ib study. I applaud Kodiak for doing this. I beat on him and said, "Boy, this is super important", and it really shows us what you're looking for in a drug if you're trying to get extended durability it doesn't mean that you're going to get 6-month dosing in everybody. If you look at the study, 10 or so percent needed monthly dosing. That being said, that's -- the majority of patients had a very long duration between treatment intervals. Next slide. Just showing you more of that Phase Ib study. And again, this is a fully conjugated protein. Here, you have the half-life varies from 6.1 days to 39.8 days very similar to what we see in the first oat-filing data. And I'm sure it's the same with [ aflibercept ] to tarcocimab. Some patients just clear drug fast. That's a function of [ Sudafakia ], how much the vitreous is [ syneretic ], how long the eye is, et cetera. But it just shows you that we're very different. I love the design of this trial because it's not one size fits all. It's trying to figure out how do we get each patient the maximum effect within the realms of their biologic clearance. Next slide. State-of-the-art today is faricimab and EYLEA HD. Even though in the clinical trials, which were a little -- they were artificial because they required some vision loss and substantial fluid before you could get retreated, you had 77% and 79% and 70% of the faricimab trials go out to 16-week interval, a recent study by [ Bill Freeman ] shows that in real world, it's about 25% with EYLEA HD and about 21% with faricimab. Next slide. Discrepancy is two things. One, real world is different. We know from the CAT trials that a certain percentage of patients, three shots and you're gone. And so those all go away in a treatment-naive trial. However, in a real-world trial, the patients that stay in our clinic that need ongoing injections probably have a faster clearance if you test them all. And very few of these patients can switch and go into these links that you see on the TV commercials of 3 and 4 months. Next slide. I do applaud Kodiak for this retreatment criteria. It is PRN and so it's not going to be quite as good in real life as you see in this trial, but it was a very tight PRN. The AI reading read just very small amounts of fluid, which is much better than what you saw as retreatment criteria in our Phase III pivotal trials of faricimab and [ aflibercept ] 8 milligram. Next slide. So here you got treatment of retinal fluid monthly, individualized treatment. Again, it treated very small amounts of fluid. It is PRN, which I'm not happy about in the clinic, but I think it's the best you can do in a clinical trial. And I think it's very good to not allow much fluid. That's why you have maintenance individual acuity curves. A lot of the other trials out there for TKIs and gene therapy have a very, very lean. You have to have a lot of fluid before they let you retreat and that's why you see those visual acuity curves dropping off. which is, in my mind, not acceptable. Next slide. So 54% of patients got 6-month dosing interval. That's super impressive. If this is anywhere near this in clinical practice, it certainly will set a new standard of care for durability. Next slide. And in conclusion, we really are excited to be able to see what this clinic can do in the clinic, right? They're impressive. This is where the field needs to go. A lot of the clinical trial design because with it, they can go to the FDA and say, they can get monthly dosing and a certain number of patients are going to need that. The strong fluid and vision gains in the loading phase. And then the maintenance of both the OCT curve and the vision curve are super sitting. The safety is consistent with our existing anti-VEGFs. And I applaud the development team and Victor and Kodiak for helping us move the game forward. With that, I'm going to pass it off to Victor for Kodiak's next Frontier.

Well, thank you, Pablo, and thank you, Charlie and Dave for walking us through the results, the exciting results both for Zenkuda and for tabirafusp [indiscernible] and thank you, Dave, for putting a bit of the results into the historical context and into the context of your clinics. Let's turn to the Slide 41 for very quick conclusion, and then we'll move into a few Q&A. I just wanted everybody to take a moment to think after the 17 years of development, it takes a long time to try to move innovation in drug development. I think we've achieved a definitive milestone here in the field of retina. We're proud to have been part of that. And we're poised as a company for upcoming regulatory in terms of BLA filing that we are planning to do this year for Zenkuda and wet AMD in diabetic retinopathy following our GLOW1 and GLOW2 studies and in RVO, following our successful BEACON study. and we're excited to do the work to file the BLA and hopefully move from a pre-commercial stage company into a commercial stage company. We're excited from the tabirafusp [indiscernible] 10. We're very pleased that our KSI-501 molecule met the primary endpoint in DAYBREAK. And we'll continue to evaluate different subgroups of patients within the wet AMD population to identify which populations they really can benefit from that dual mechanism in the anti-inflammatory action of the 501 molecule. And of course, we already are enrolling and randomizing patients in the Alto Phase III DME study. We're continuing to accelerate site activations and randomization we're powering in that study for superiority, and we're very excited to see where we can take the 501 molecule into these inflammatory vascular diseases. And we think that can be a good partner for Zenkuda commercially. And of course, with our KSI-101 molecule where we have ongoing clinical trials in the PEAK and PINNACLE pivotal program. We remain extremely excited about what we're seeing with KSI-101. Obviously, we have very strong data in the APEX study. and have moved APEX into the PEAK and Pinnacle program. We remain on track to release top line data for KSI-101 in PEAK before Christmas. So we're looking forward to that milestone as well. And then following from that, we'll have the top line data from the second pivotal analysis for the PEAK on PINNACLE program that will be expected in the second quarter of 2027. And hopefully, we can follow that with a quick BLA for KSI-101 as well. So as you look and think about Kodiak and you think about year-end 2027, and we think about hopefully approval for Zenkuda and potentially as we look probably not the end of '27, but let's say, early '28 approval for KSI on and also, of course, continued progress and acceleration of the tabirafusp ted program in the background in DME. We think about Kodiak as a 3-product company. That's very exciting, led by the science. And I think the validation that we see on the ABC platform, also validating some of our pipeline and development work looking at future retinal diseases such as glaucoma, geographic atrophy and additional bispecific work in ocular inflammation. And we have had also a very exciting work on our ready retinal analyzers and engagement tools and that's something that we can talk about a different day. I think I'll stop here and we'll begin to take a few questions. Thank you.

[Operator Instructions] [Technical Difficulty] One moment for our first question, please. It comes from Anupam Rama with JPMorgan.

Congrats on the data. Really great to see I was wondering if I could ask two quick questions of the KOLs on the line. So the first one is with the profile of tarcocimab or Zenkuda and wet AMD, where do you see the product fitting into what is a fairly competitive treatment landscape? And which types of patients do you think would be best for therapy given the emerging profile that we're seeing here? And then the second question on for the KOLs, what percent of patients are super difficult to treat in wet AMD and maybe have some sort of inflammatory component from which they may benefit from an IL-6 mechanism, when thinking about KSI-501 [indiscernible]. [Technical Difficulty]

Yes. Charles Wykoff here. I don't know if you can hear me, but happy to take that question first. I appreciate the perspective that you're taking, which I completely agree with, that we need to start thinking about wet AMD patients as more of a heterogeneous disease population than we have historically, right, historically, we have a one size fits all, and I think we're getting to a place in retina where we can be more nuanced. So to take the second part of the question first, tabirafusp, I do think that there are some patients with an inflammatory component. I think we still have to dive into the data to kind of understand who those patients might be in this particular clinical trial. On average, we're seeing that we've met equivalents here non-inferiority with [ aflibercept ], but are there subpopulations that may be doing even better with IL-6 inhibition, I think those analyses still need to come. I do think there will be those patients, and we'll see. On the other side, I think that tarcocimab could be useful for a broad range of patients with wet AMD, right? The value of this clinical trial program is that we're showing that we can dry equivalent to fixed EYLEA monthly dosing during the loading phase and then a very large number of patients can go longer in between injections than what we used to do with our current biologics. So that perspective, I think this could be broadly useful for a large proportion of patients with wet AMD. Both the patients with high need dosing frequencies and also those patients that are already on extended intervals because we can hopefully go longer based on the half-life data that beautifully impact, right? This bipolar conjugate looks like it's meaningfully extending intraocular half-life for this anti-VEGF component in these patients, which I think would be quite clinically meaningful for a large number of patients.

Yes, I agree with Charlie, there's lots of patients out there that if you -- to answer the first question, it's in a busy tertiary care clinic like Charlie and I have, it's probably 30% of the waiting room needs monthly treatment with faricimab or EYLEA HD. So that population is really out there. Will this molecule move that population? I don't know. I'll have to see. In terms of the IL-6 question, I think it's much more likely that with diabetes, we're going to see an IL-6 responder group. AMD, there's less evidence of IL-6 or inflammation. But in the DME population, certainly, that's why steroids have persisted all these years is there's a certain part of the population that really has inflammatory components.

Our next question comes from Maury Raycroft with Jefferies.

This is Amina for Maury. A couple of questions. First, for Dr. Brown and Dr. Wykoff, do you -- how do the treatment criteria compare with your real-world practice? And would you expect durability to be -- to change outside the trial. And then I have a follow-up.

Yes. So in the real world, most of us don't allow any fluid. So in the real world, we figure out a dosing interval and we stay at that interval. The difference in this trial, and you had to do it in a clinical trial is here, you're actually waiting for fluid to occur even though it's a very tiny amount of fluid. So in the clinic, you're going to use this a little less than what you see in this trial. How much less? You really won't be able to tell until you get it out there. But unlike previous trials that wanted 50 microns of fluid or 100 microns of fluid and commissioning loss -- this is much more real world. This is very small amounts of fluid. Any appreciable amount essentially with the AI read. And so this is as close as you're going to get to the way we treat in the clinic. And not -- given the trough constraints that you can't do treat and extend in a clinical trial and get a drug approved.