Ocular Therapeutix, Inc. (OCUL) Earnings Call Transcript & Summary

Great. I wanted to thank everyone for joining us for our next fireside chat with Ocular. We're really pleased that we have Antony here with us today; Dr. Goldstein, a long-time friend of Cowen's; and Donald as well. All 3 of you, great to see you and really appreciate it. Looking forward to being able to be live next year so we can give real hugs, not virtual hugs. But we're appreciative of you taking the time now. So I thought what we'll do is Georgi and I are going to ask some questions. We also have a dashboard. I'm trying to figure out how to use it. But I know Georgi does, too. And so as you have questions throughout the conversation, feel free to submit them, and we'll try to get them in.

But maybe let me kick it off, Antony, with just a general question about what is clearly an exciting program you have, and it's been getting a lot of attention. And we'll back track on DEXTENZA in a second. But the OTX-TKI program, it's really making good progress. I thought it would be great if you could just take a moment upfront to set the stage a little bit about the technology itself and maybe give us an overview of the data we've seen to date and the next steps in development. So broad question, but I'll allow you to frame it, and then we'll start winnowing down.

Yes. I'll frame the vision for the project, and we'll have Mike sort of jump in with the data and what it shows. I mean, what we're trying to develop here is a product that will get a certain percentage of patients, repeatable patients, out to 6 months and beyond, because we think that's really kind of a magic time point for setting the standard of care in the space. And the question is how many -- or what percent of patients will be in that bucket that we can repeatably dose? When you look at the treat-and-extend paradigm where essentially, you take a patient who's already dry, you dose them with the TKI, with OTX-TKI, and then after a period of 6 months or more, you dose them again while they're still dry. And that's the way they spend the rest of their lives. So that's the vision of the product. We're aware that there's probably not 100% of patients that are going to respond in that way to the TKI. So the question is, how many do we -- are we aiming to respond in order to hit the product profile? And we feel that's about 50% of patients. So 50% of dry eye patients who are well controlled on normal anti-VEGF, monoclonal antibody therapy, getting dosed maybe 4 to 6 -- 4 to 8x -- sorry, for every 4 to 8 weekly. They try the TKI, where they'll still dry in one of their visits where they're getting injected with the monoclonal antibody. And then the retinal specialist treats and extends them to get them out to 6 months and beyond. After that point, they just take the TKI. So we believe that we can get 50% of patients into that environment where we can get them reliably to 6 months and beyond. We have a drug that can be a substantial blockbuster. So the trials that we're trying to develop are to look at -- to tease out what that -- what the drug will be able to do in terms of how many patients that will get past that time. I think what's hugely important in that is then the safety profile. So if it's only going to respond in 50% of patients, and we're not presuming that it's only going to respond to 50% of patients, but we think that's a threshold, that the safety needs to be pristine. We need to demonstrate that the downside risk of it -- of the -- using the TKI is mitigated and that we don't have any dose-related toxicity, or we don't have any toxicity related to the depot itself. And that's where we think we have the true advantage in that our hydrogel is a standard that is -- that we have been able to show in many parts of the body, both as a device and as a drug, that breaks down by bulk hydrolysis and essentially goes away in a limited period of time, doesn't build up, doesn't migrate, doesn't snow globe, so that there's no untoward effects from the delivery technology itself and the benefits that are delivered by the active ingredient. So I don't know, Mike, if you want to talk about where we are with the clinical trials and what they're showing and how we're trending towards this product profile. But I thought I'd like to set that up from the beginning.

Yes. Thanks, Antony. So I mean, I think as everyone is well aware, anti-VEGF drugs work exceptionally well in this space. The big issue with them, as Antony alluded to, has been durability. And so coming up with something that has better durability than every 4- or every week -- 8-week dosing is the big unmet need here. The secondary benefit is to come up with a drug with new mechanism of action, and I think TKIs are a good target because they work on all 3 VEGF receptors as well as PDGFs. So potentially have a broader spectrum of activity than any of the anti-VEGF drugs alone. And there's been a history of people using TKIs. But to our knowledge, people haven't taken, people with active wet disease, and seen the fluid go away. And so that was really what we set out to do with this trial is to see if we can get fluid to go away and to see what the duration that we could get that fluid to go away for. So we've now dosed -- we're in Australia in a Phase I trial. We've dosed -- or are dosing 3 different cohorts starting at 200 micrograms, dose escalated to 400 micrograms and dose escalated to 600 micrograms. And as Antony alluded to, it's been extremely safe and well tolerated to date in the patients we've seen to date. So that's obviously a key thing with Phase I trials. From a biological activity perspective, in Phase I, we really sort of saw a stabilization effect. We didn't see a lot of fluid going away. We didn't see fluid increasing. We really saw a stabilization effect. So that -- we met into DSMC. We saw a good safety profile. We escalated to 400 micrograms. And there, we have seen many patients where the fluid has gone away. In some patients, the fluid has gone away completely. And we've been able to maintain that effect beyond 6 months in many patients and some -- and in 1 patient now beyond a year with just a single 400-microgram injection. So with that, we again -- and again, no safety concerns. And to date, we have actually seen no patients who have had IOP elevations related to the TKI. That's been a problem people have seen. We've seen no patients who have had inflammation requiring steroid use, which is a problem people have seen. And we've seen no issues with snow globing or anything like that, which is another problem people have seen with TKIs. So we escalated to cohort 3, which has 2 groups: One is the 600-microgram alone, the other is a 400-microgram with an anti-VEGF. And people always ask why the anti-VEGF at the beginning. And remember -- a couple of reasons. Remember, one is almost every other trial, maybe every other trial you've seen, there's a loading phase where people get 1 or 2 or 3 injections upfront. We did not have a loading phase. We're just treating with the TKI ones. The other is in cohorts 1 and 2, we have seen the effect. We've seen a lag of about 6 to 8 weeks, and we know the anti-VEGF part will get rid of that lag. So we're now enrolling the cohort 3, which has got those 2 arms. We've reported data from a few of those patients in cohort 3. And we've seen in the first patient, in the group that got the 600-microgram injection who's gotten beyond 2 months, that patient has done extremely well with complete resolution of fluid that's been now maintained after 6 months. And in the 2 patients in the 400-microgram plus anti-VEGF arm that have gotten beyond 2 months, in both those patients, the fluid is resolved. And the effect has been very quick without the lag, obviously, helped by the anti-VEGF arm. So super excited about that data. We continue to enroll patients, and we'll continue to report on additional patients in cohort 3. Hope to give another update in the ARVO time frame, which is in early May. But with that data, we've actually filed an exploratory IND, which we submitted at the end of last year with the FDA. Have had a little bit of back and forth, but have announced that we will start dosing in the U.S. in midyear using the highest dose, the 600-microgram formulation, with an anti-VEGF at the beginning to cover the lag and moving to a single injection. So the current 600-microgram is 3 200-microgram implants. That's what we have formulated. So it's all done at the same time, but it is 3 different injections. The new formulation would be 1 600-microgram formulation.

Great. Okay. Before I'll let Georgi drill down into a lot of that great detail, just one of the points that you made was maybe the need, obviously, for a TKI. So can you just talk about -- oftentimes, we look at winner take all in the longer-acting VEGFs versus maybe your approach. Can you just talk about that need, how many patients or percentage of patients really just don't get dry that might benefit from an underlying TKI and continue to give maybe the VEGF injections but be able to use this as kind of part of the treatment paradigm? Is there some metrics you can give us in terms of the need that we may have for a product like this?

Yes. So the need depends on disease state. So for AMD, and the concept of people who were non-VEGF or anti-VEGF responders or nonresponders is really definitional. There are almost no patients who don't respond to anti-VEGF drugs in the AMD space. There are -- but it all depends on durability of response. And so there are a lot of patients that need injections monthly or every 6 or 8 weeks. In the DME space, on the other hand, there's probably about 1/3 of patients that really don't respond to anti-VEGFs. So there's a bigger unmet need for something beyond anti-VEGF in the DME space than the AMD space. However, as I mentioned, the big unmet need in AMD is really longer durability. And getting beyond 8 weeks, I think, is critical. If we sort of forecast out and say, well, in a few years, when this drug could potentially be on the market where it needed to be, our target is really to be in that 6 to 9 months space. So we think that's the sweet spot that we should be targeting.

Okay. Georgi, I'll turn it over to you.

Thank you. Thank you, Ken. So I guess just following up on this idea of, I guess, complete response to anti-VEGFs and the need to have this frequent dosing, do we understand what exactly is the reason why patients need this continuous dosing? Is it because, for example, there are different mechanisms involved? And I guess we're -- it looks like even with the newer therapies, we're still seeing a lot of patients, like 10% to 15% of patients, still need, even with the longer duration anti-VEGFs, monthly or bimonthly dosings. So do you think, I guess, the broader mechanism of action could actually be beneficial for those patients?

It could be. I don't think we have the data there to make a claim yet. As you are aware, the TKI marketplace is heating up, and there's been a long-term interest in TKIs systemically as well as topically. But there are now at least 4 companies, as you're aware. They're now working on intravitreal injections of TKIs. And so I think we're going to find that out in the next year or 2. I think as everyone reports their data, we'll see. Frankly, again, I think the issue is -- I think TKIs work. I think there's no doubt about that. I think the issue is really going to be what is that durability. I think the other question you're asking is, do we have biomarkers? Or can we identify "nonresponders" or suboptimal responders of -- from anti-VEGF therapy? And that is the million-dollar question, which, as far as I know, no one's been able to figure out yet. It doesn't mean someone won't be able to do it. But as far as I know, it's really more of a trial-and-error type of approach. And the common paradigm that most clinicians use is a treat-and-extend approach, where you get the anti-VEGF drug, you come back in a set time period. If you're still dry, then you get another anti-VEGF drug and then you extend the interval. So people are kept in a dry state, but the interval keeps extending. It's not like we currently treat patients, wait -- and if they're dry, we wait until they get wet again. We keep them in a dry state. So I don't think anyone's really figured out who's going to -- who the best anti-VEGF responders are. And so again, I think it is trial and error. And I think this will be the same with TKIs.

Got it. And I guess you mentioned -- you alluded to the fact that there are multiple TKIs out there. So maybe could you talk about how you selected axitinib as the API for OTX-TKI? And how do you see it being differentiated from other TKIs out there?

Yes. So there are a lot of choices, as you mentioned. So I think fundamentally, there's a difference in the drug that's picked, the method of delivery and the delivery system. So in general, we pick drugs that work best with the hydrogel system. And we can work with almost any drug in almost any size, which is one of the benefits of the platform, which we hope we'll get into. But drugs that are more insoluble tend to work better. And drugs that are more potent tend to work better because you can pack more drug in. Space is obviously the issue. And the more potency you have, the better. So axitinib has the right insolubility characteristics and is the most potent of the TKIs. And it has the advantage of it's clear or white rather than having a color to it. So there's a lot of nice benefits -- potential benefits of axitinib. And then the hydrogel platform that -- and then we're delivering it intravitreally, and the technique that's used is very similar to what is done with anti-VEGF. It's really no different than the technique physicians use for anti-VEGF injections, the only difference being instead of injecting a liquid, you're injecting a formed implant. But the amount of volume that we displace with that formed implant is about 7 to 8 microliters. The typical anti-VEGF injection is about 50 microliters. So we're actually displacing much less volume, which should decrease the risk of any adverse events like IOP elevation. So that's the difference with some of them. And then the third difference is the delivery system. So we're using the same hydrogel delivery system that we use across our whole platform. It's a delivery system that's been the basis of multiple different companies that has literally been in millions of patients across multiple areas in the body, including the lungs and the brain and, of course, the eye. So there's a wide, long track record of this delivery system. And in all cases, it's been shown to bioerode in a timely fashion and not cause an inflammatory response. So -- and so in our personal hands, we're the only company that's using it as a drug delivery system. In the other areas of the body, it's used as a spacer or as a sealant. But we're the only ones using a delivery system. And so we've been able to, and are able to, tune it in order to match the characteristics of the indication that you're looking at and the molecule in order to get this to release the drug in the right way and for the delivery system to go away in a timely fashion. Because what you don't want to do is put the delivery system in, and it breaks apart or it stays around. The drug is gone, and the delivery system is still there. And you've got a bunch of beer cans floating around in the back of the eye. So you really want to kind of match the release -- the breakdown of the delivery system with the release of the drug. And like I said, there's a lot of experience doing that all over the body, and we have a lot of experience doing it in all areas of the eye.

Got it. And I guess just to follow up on your previous comment on the formulation, the 600-microgram formulation. What would -- is there going to be any difference in terms of, I guess, the injection, the needle size that would need to be used? And do you think -- do you anticipate any sort of issue or impact from that?

So the needle size used for the single implant 600-microgram is slightly bigger than the needle size being used for the 200-microgram implant but still well within the range that people typically use. The size of the single 600-microgram is slightly bigger than each of the 200 micrograms. But if you take the 3 200 micrograms together, that's obviously much bigger than the 600-microgram. But the most interesting news I can tell you is the rate of release from the single implant 600-microgram is greater than the release that we get from the 3 200-microgram implants. So put another way, although we are not increasing the dose in that we're not putting more drug into the eye, the daily release from the implant into the eye should be higher, which there's the potential, and we'll have to see, but there's a potential that could help with that early lag. But that's a potential upside. And one of the questions we often get asked is, "How high can you go? And are you at the maximum dose?" And the answer to that is from a tolerability perspective, we could go higher. But from a formulatability perspective, we're kind of at the higher end. But being able to release more drug per day, I think, will provide an advantage, and that is the dose we'll be using in the U.S. trials.

Got it. Yes, that's great news. And I guess just to follow up on that and just the drug release, do you know whether the -- that lag in response, is that something to do with the TKI mechanism itself? Or is it something to do with the rate that the drug is actually being released from the implant or from the depot over time? Do you have an initial...

We think it's probably more a function of the way the drug works, and it works intracellularly rather than extracellularly. And it's something we have seen in our preclinical models. So that's what we think, but we will keep exploring this issue.

Got it. So I guess just turning -- looking forward to the data that you're expecting to disclose further this year. So what should we expect to see? And I guess, also focus on when attempting to analyze that data when it comes out, like what would you -- I guess what would be the key elements of the data that may provide investors sort of additional comfort for the upcoming trials?

Yes. So safety, number one. If we -- I mean, as Antony highlighted at the beginning, it's key that we have a strong safety profile. So continued follow-up. We wouldn't expect to see -- start seeing terrible adverse events later on, but you never know. That's why you do these trials. So we'd have continued follow-up on the patients that we've talked about as well already and then additional follow-up obviously on cohort 3. We're looking for how can -- what's the durability? And are we getting to that 6-month and beyond time point? And then what's the consistency of the durability? Antony, throughout a target of 50% of patients getting to 6 months or longer, I think that's a reasonable target. We obviously hope to be higher. And I think it's still possible if we're lower, that there's a product there. But I think that's a pretty reasonable target. One comment I would just say is that the whole idea about rescue and the need for rescue may be different with these long-duration therapies in that when you give a typical drug, you give the whole bolus at the beginning and then you're getting less and less drug. And so if the patient starts developing fluid and the fluid hasn't gone away, there's no reason to think it's going to go away without doing something else. If you've got a long-duration therapy that continues to release drug, there may be -- you may need -- not need to rescue as quickly. You may be able to tolerate fluid for a longer period of time because they're continuing to get more drug over time. And I think that's a little bit of a paradigm shift that we need to think about. It's something that was brought up at the angiogenesis meeting by Peter Campochiaro. And I think he's right on like just our whole thought about how we think about long-duration drugs may be a little bit different in how we think about how rescue is and what it means. So anyway, so we hope to have -- so that update, we've said we'll provide at the ARVO meeting in a few months.

Understood. And I guess just following up on like interpreting those durability results. Could you comment on the rescue criteria that was used in the trial? And how it might differ from the design of other early Phase I wet AMD trials with similar extended duration drugs?

Yes. I mean, I think they're not all that dissimilar. I mean, it's an increase in retinal fluid, and we haven't disclosed exactly what they are yet. But it's an increase in retinal fluid or a decrease in vision or both or investigator discretion. And for example, I'll just say we had 1 patient in cohort 2, which we have disclosed, that had no fluid, no change in vision and got rescued during COVID by the investigator. And the reason was they had some peripheral fluid, and the investigator was concerned that because of COVID, the patient wouldn't be able to - wouldn't come back. So I mean, at some point, it's always up to the investigator if they think it's in the best -- patient's best interests. But in that particular case, that patient may still do well -- have done well without any rescue, but they got rescued.

Got it. And I guess going back to the safety and tolerability profile. You mentioned you have seen no inflammation, which is really great to see. You did indicate a few AEs across the different doses. Could you describe the nature and severity of those AEs and how concerned you are at this stage? I guess a couple of them were of moderate grade. So just qualitatively, what kind of issues you've got, if at all?

Yes. So we've had no serious adverse events. We've had no severe AEs. We have had scattered AEs, as you would expect in any trial. Most of them are pretty typical of just from doing the injection or from the early formulation. Of the adverse events that were moderate in severity, most of them were actually systemic and unrelated to the drug. At least one of them was in the nonstudy eye, had nothing to do with the study eye. And of those events that were deemed to be related to the study drug, they were all related to typical early formulation. There was one where there was a fiber that was seen coming off one of the implants, that sort of thing. So really nothing of any note.

Got it. No, this is actually very helpful. So I guess just pivoting to the other pipeline programs. You recently presented an update from the long-term follow-up for the glaucoma program. Have you selected a dose or formulation to go into the Phase II studies? And when should we be expecting the next data readout or catalysts?

Yes. So you're talking about the OTX-TIC program, which is travoprost implant. So here, the big unmet need is better delivery systems. There's tons of different mechanisms of action for glaucoma drugs, and they work extremely well if the patients take them. Because glaucoma is a painless condition and although you lose vision, you lose it peripherally and very slowly and it mostly affects the elderly, compliance rates are extremely poor with glaucoma. So really, the unmet need is a better way to apply the drops. So we're using travoprost, which is a prostaglandin, which is the market leader in terms of what we use in terms of lowering IOP. The target here was to get something that would last at least 4 months with a single implant, single intracameral implant, which is done in the office setting. We are in a U.S. trial, 4 different formulations. We've completed enrollment. All patients are finished. But 3 -- we're still following 3 patients in cohort 4. We've shown consistently IOP lowering of 7 to 11 millimeters across all 4 cohorts. There does not seem to be a difference in the degree of IOP lowering across all the 4 cohorts, and that's on par with the contralateral eye, which is a control eye, which receive the topical travoprost drops. The difference we have seen is in durability. So in the first 2 formulations, which are longer durability formulations, we're seeing IOP lowering between 6 months and 9 months with a single implant, so better than our target. In cohorts 3 and 4, we're seeing durability more like 3 to 5 months, actually up to 6 months in some patients, but more consistent with actually what our target was. From a safety perspective, the big issue is whenever you put a foreign body into the eye, you worry about safety. So the biggest thing is you don't want it to move around because that can cause damage to the lens of the eye or to the cornea and, in particular, the endothelial cells, which line the back of the cornea. So the good thing is, from a safety perspective, like all our products, when the hydrogel comes in contact with water, it swells. And so what happens is you put it into the intracameral space, it moves to the inferior angle, it swells and it stays in that space. So we have not seen it move. We have not seen any trauma to the lens of the eye, and we have not seen any damage to the corneal endothelium. And we can measure the actual endothelial cells directly. We can measure -- do functional measurements using ultrasound pachymetry, and we can directly evaluate the cornea with slit lamp. So from a safety perspective, that looks good. The other key thing is you want -- as we talked about earlier, you want the hydrogel to go away. So in the longer-acting formulations, we see the hydrogel going away in 5 to 7 months. In the shorter duration formulations, we see the hydrogel going away in 3 to 5 months. That's super important because unlike the vitreous, where there is a lot of space in the intracameral space, there is very little space. So you need the first implant to go away before you put the second one in. We've picked 2 formulations to move forward with. The formulation 2, which is the highest dose formulation, had the most consistent durability with all patients getting to 6 months with a single implant in half to 9 months; and formulation 4, which is the smallest of the implants but also had nice durability in some patients out to 6 months. And so we think that's the best to show a dose response. One will be a shorter duration, one will be a longer duration. And we're comparing it head-to-head with DURYSTA, which is the approved product.

That was great. Thank you. Very helpful. And I'm guessing we are just 1 minute before time, so I'm going to turn it to Ken.

Yes. Great. The discussion goes very fast, and you have a lot to talk about. I'll just remind investors that at Cowen, working with your organization and taking you all public was predicated on a potential long-acting glaucoma program. And so all of our diligence at the time, Dr. Goldstein mirrored exactly what you're saying, and I think you even might have helped us with coming to that understanding, just a huge need for compliance. And I know a lot of our focus is on the TKI program and how massive that can be, and its -- congratulations to the team to how far advanced it's been. And now, obviously, with the glaucoma program, and I know there's others as well we didn't get to talk to, dry eye and whatnot, just a lot of great things going on. And congratulations to all the really good balance sheet repair that you all did this year. And we didn't even get to DEXTENZA, which we know is a quid that you have in your armamentarium, if you ever want to use it beyond just continuing to make it almost a profitable program but also potentially nondilutive financing. So a lot of great things going on at the organization. We couldn't be happier for you. And thanks for taking the time for this discussion. We really appreciate it.

Thanks, guys.

Thank you.

I appreciate everyone's time.

All right. Be well. I hope you have a great rest of the conference. Can't wait to see you all in person next year, but I know we'll be talking well about -- ahead of that. Take care. Thanks, Georgi.

Thanks, Ken.

Bye.