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

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to Ocular Therapeutics conference call announcing interim results for its U.S.-based Phase I clinical trial of OTX-TKI for the treatment of wet AMD. [Operator Instructions] It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer of Ocular Therapeutics. Please go ahead, sir.

Thank you, Shannon. Good morning, everyone, and thank you for joining us on our conference call to discuss interim results from our U.S.-based Phase I clinical trial of OTX-TKI for the treatment of wet AMD. The press release can be accessed on the Investors portion of our website at investors.ocutx.com. Leading the call today will be Antony Mattessich, our President and Chief Executive Officer, who will also be joined by Dr. Rabia Gurses Ozden, our Chief Medical Officer; and Dr. Peter Kaiser, our Chief Medical Adviser, Retina. Following our prepared remarks, we will open the line for your questions. As a reminder, on today's call, certain statements we will be making may be considered forward looking for the purposes of the Private Securities Litigation Reform Act of 1995. In particular, any statements regarding our regulatory and product development plans as well as our research activities are forward-looking statements. These statements are subject to a variety of risks and uncertainties that may cause actual results to differ from those forecasted, including those risks described in our most recent quarterly report filed August 8 with the SEC and our annual report on Form 10-K filed on February 28 with the SEC. I will now turn the call over to Antony.

Thanks, Donald, and good morning, everyone. We're really excited to be announcing the news today and sharing with everybody very encouraging interim results from our U.S. Phase I clinical study evaluating OTX-TKI for the treatment of wet AMD. This represents a significant milestone for Ocular Therapeutics. We are very pleased with the data in terms of the safety profile, durability and biological activity. As a next step, we intend to request a meeting with the FDA to discuss this new data as well as the data from our Australia-based Phase I study and agree on an appropriate clinical development plan. Before I hand the call over to Rabia and Peter, who will take you through the specifics of the data, I would like to provide some background on why we are developing OTX-TKI. You probably heard me say many times before, that we begin with the end in mind. We focus first on evaluating the size and dynamism of a disease state in ophthalmology and then determine the key unmet need in that space. Only then do we consider whether our platform technology enables us to build a therapeutic that could satisfy the key unmet need and potentially become the standard of care. The product candidates in our pipeline are pulled by market need and then enabled by our proprietary hydrogel technology. In wet AMD, we saw the potential to improve upon today's standard of care by providing patients with a non-biologic alternative with improved durability compared with other anti-VEGF medicines. Current anti-VEGF agents need to be continually injected to achieve VEGF suppression to keep the disease in check, creating an injection burden of around 4 to 6 intravitreal injections per year. There have been multiple attempts over these past 20 years to achieve biopharmaceutical-based approaches to increase durability and reduce injection burden, but most have failed, and we believe the opportunity for a more durable solution is substantial. Our goal in developing OTX-TKI is simple. We wanted to develop a non-biologic that marries a potent TKI, axitinib that we believe is capable of delivering comparable efficacy to today's biologics with our proprietary Hydrogel extended-release technology to reset the current standard of care in terms of product durability. Where current injections provide adequate efficacy for 1 to 4 months, our goal with OTX-TKI was to move the injection frequency to 6 months and beyond, thereby significantly reducing the injection burden. We believe that with our encouraging data presented today, combined with our data from our Australia-based Phase I study, the potential for OTX-TKI to treat wet AMD and other retinal diseases is exciting. With that, let me turn the call over to Dr. Rabia Ozden and Dr. Peter Kaiser to discuss the data. Rabia?

Thanks, Antony. Let me begin with the background of OTX-TKI. The active ingredient of OTX-TKI is axitinib a highly selective multi-target inhibitor of vascular endothelial growth factor VEGF receptors 1, 2 and 3 and platelet derived growth factor, PDGF receptors alpha and beta. Among TKIs currently being evaluated for retinal diseases, axitinib has been shown to have the highest affinity for VEGF receptors, which we believe will result in less off-target effects, potentially improving tolerability and terrifically maximizing the efficacy. High affinity TKIs enable similar efficacy at a lower drug dose which may potentially facilitate smaller or fewer implants, while current anti-VEGF drugs find different isoforms of VEGF in the extracellular space, parsing kinase inhibitors bind to the intracellular domains of VEGF and PDGF receptors inhibiting downstream activation, PDGFR angiogenesis and permeability. We loaded this highly potent TKI axitinib into our programmable sustained release, biocompatible hydrogel technology that has not been observed to have a propensity for inflammation and formulated it into bioresorbable intravitreal implant. The product candidate delivers axitinib for 6 to 9 months at near zero order kinetics using a 25 gauge niddle that sends in the eye has minimal to no visual impact to the patient is real antimicrobial preservatives and by results completely as it clears from Vitreous. The data we are presenting this morning is from our U.S.-based Phase I clinical trial, a multicenter prospective, randomized, DMS control trial, evaluating a 600 microgram loading those of OTX-TKI in a single implant with a 2 milligram of aflibercept injection at week four after the implant compared to a 2 milligram of aflibercept injections administered every 8 weeks in subjects previously treated and controlled with anti-VEGF therapy. This clinical study was designed to enroll a total of 20 subjects at 6 clinical sites in the United States who were randomized 3:1 to OTX-TKI or on label of aflibercept injections. The objective of the trial is to assess the safety, tolerability and durability of OTX-TKI and to assess biological activity in subjects by measuring visual acuity and anatomical changes of the retina using optical coherence tomography. Our goal in this trial is to answer the question of how long a single 600 microgram OTX-TKI implant containing axitinib keep the subjects controlled without the need for retreatment. This study enrolled 21 subjects, 11 males and 10 females. The mean age was 76 for the OTX-TKI arm and 84 for the aflibercept arm. The other baseline characteristics of both arms were similar. Both study arms receive diagnosis of wet AMD, a mean of 18 months before the enrollment and received an average of 8 anti-VEGF injections within 1 year prior to enrollment. At baseline, the OTX-TKI arm had a mean best corrected visual acuity score of 70.9 ETDRS letters rates versus a mean of 73.88 ETDRS letters in the aflibercept arm. Mean central subfield thickness was 273.8 microns in the OTX-TKI arm and 240.6 microns in the aflibercept arm. These baseline characteristics provide confidence that previously well-controlled patients were enrolled into both arms to help address our questions. I will now turn the call over to Dr. Peter Kaiser to discuss the data. Peter?

Thanks, Rabia. So is this is a Phase I trial, let's begin with the safety profile. So as of the data cutoff of August 24, 2022, OTX-TKI has been well tolerated with a favorable safety profile. No drug-related Ocular or systemic serious adverse events have been reported or observed. There was one event of endophthalmitis, and this was in the OTX-TKI arm, but occurred following the mandated aflibercept injection at month 1. This event was assessed as related to the study injection procedure by the investigator and fully recovered with intravitreal antibiotic and steroid treatment. There were no reported adverse events such as elevated intraocular pressure, retinal detachment, retinal vasculitis, implant migration into the anterior chamber observed in the TKI arm, and most importantly, no subjects have dropped out in either arm. While all patients were included in the safety analysis, there was one subject who was randomized to the TKI arm who was incorrectly given aflibercept instead of sham injections at month 3 and month 5 by the investigator. These were not rescue treatments as the patient did not meet any rescue criteria and in fact, had gained over 4 lines of vision and had only minimal change in retinal thickness when those aflibercept injections were done. This patient required no rescue therapy up to month 12. Since this patient was not treated according to protocol, we excluded this patient from the bioactivity analysis, but included them in the safety analysis. So in addition to safety, this trial was designed to assess biological activity using 2 validated scales we commonly use in wet age-related macular degeneration trials, including change in central subfield thickness on optical coherence tomography and best corrected visual acuity from baseline. Since all patients entering the study were previously treated and controlled with anti-VEGF injections. We would expect that both central subfield thickness and best corrected visual acuity will be stable compared to baseline. In fact, the results demonstrated stable and sustained best-corrected visual acuity outcomes with a mean change from baseline of minus 1.3 letters and central subfield thickness was a mean change from baseline of plus 9.2 microns in the OTX-TKI arm at 7 months. This was comparable to the aflibercept arm dosed every 8 weeks with a mean change from baseline of minus 1 letter in best corrected visual acuity and mean change from baseline of plus 0.4 microns in central subfield Thickness. One of the trial's key observations regarding the durability of OTX-TKI. It is important to stress that we had predefined rescue criteria. However, investigators were also free to rescue at their discretion. The rescue criteria used in the study were similar to other TKI studies. In the OTX-TKI arm, 80% of subjects were rescue free up to 6 months and 73% of subjects up to 7 months following an injection of a single OTX-TKI implant. Overall, patients in the treatment arm saw a clinically meaningful reduction in treatment burden at 6 and 7 months post treatment with OTX-TKI. Based on this, we plan to file our analysis of both the Australia-based Phase I and U.S.-based Phase I studies in the upcoming months. And we look forward to scheduling a meeting with the FDA to share this data and just discuss our plans to advance OTX-TKI into the next phase of development in 2023. We also plan to follow subjects in the Phase I trial, at least until their respective 1-year anniversaries of initial dosing in accordance with the clinical trial protocol. I'll now turn the call back over to Antony.

Thanks, Rabia and Peter. We are encouraged by the interim results shared today that represent a significant milestone for Ocular and potentially for patients with wet AMD. Wet AMD is the leading cause of blindness, affecting an estimated 14 million individuals globally and approximately $2 million in the U.S. alone. The data presented today highlights the potential of OTX-TKI to become a highly differentiated product capable of providing a durable anti-VEGF response that improves upon today's standard of care in the management of wet AMD and with potential in other retinal diseases. I encourage anyone at AAO this week to attend the presentation by Dr. Dilsher Dhoot,, who on Friday, September 30 at 329 Central Time will be presenting the OTX-TKI data in more detail. Thank you for attending the call this morning, and we look forward to discussing our future development plans with the agency and initiating a Phase II clinical trial in wet AMD in Q3 2023. With that, I'd like to open the call for questions.

[Operator Instructions] Our first question comes from Joseph Catanzaro with Piper Sandler.

Thanks so much for taking up my question here and congrats on the data. Maybe first, 2 quick ones for me. I know the study was empowered to demonstrate noninferiority on BCVA or central subfield thickness. So maybe Peter or Rabia, if you can maybe put into context the difference you're observing between the 2 arms in BCVA and CSFT and the clinical meaningfulness of that. And then maybe similarly, you're working with relatively small patient numbers when you're talking about mean values. And Peter, you mentioned that one patient who is inappropriately rescued in how they gained letters. So wondering if you could say how many patients in the TKI saw letter gain improvements at month 7? And if so, how does that compare to the [ILEArm]? And maybe I have a follow-up.

So if we look at the non inferiority margin that wasn't performed at this point, being such a small study, there's going to be very large standard deviations in the group. And bear in mind, there's only 5 patients in the aflibercept group. The overall outcomes, when we look at mean change in visual acuity is basically very, very similar. There's really no difference between minus 1.3% and minus 1%. As I stated at the outset, we would expect really no change in vision. The best example of this would be the Archway Phase III study with Port Delivery System, where the patients were treated -- previously treated and very similar to our patients and really gained no vision with either ranibizumab or the Port Delivery System. So we were really expecting a stability of visual acuity, and we were hoping for it to be sustained for the full 7 months that we're announcing today, and that's exactly what we saw. Interesting thing is we really debated that one subject because, obviously, being in the OTX-TKI arm and having a very considerable improvement in vision of 4 lines of more than 20 letters. It would help our arm to leave them in. But because that patient really wasn't treated according to protocol and when we ask the investigator, these were not rescue injections. They did -- they didn't think the patient needed them. We thought it was best from a scientific standpoint to really only include the 15 patients who were treated normally. Now in terms of visual acuity gains, et cetera, we'll have to wait until Dr. Dhoot's, presentation on Friday, which will give us much more clarity about how the differences are between the patients, but suffice it to say between groups. But suffice it to say, at this point, the results look very similar.

Great. That's helpful. Maybe just one follow-up. Antony, I think you previously said that achieving rescue-free rates in the range of 75% to 80%, which you've shown here would really open up the development strategy for the program. So maybe you can just expand upon that and how the recent high-dose EYLEA impacts that strategy if at all?

Sure. I mean, I'll start and then let Peter finish because he has a much deeper insight into the regulatory environment. And what I've always said is that the commercial hurdle here is lower than the regulatory hurdle. If you can get 50% of patients reliably to an interval of 6 months, you really have a home run in terms of the commercial potential of the product. The question is the regulatory hurdle may be higher. And what we don't -- the true answer is we don't really know exactly what rescue rates we would need to achieve in order to make the product registerable or to be able to preserve the non-inferiority margin. But what you would expect is that if the rescue rates are similar among the EYLEA treated group and the OTX-TKI treated group that, that should not be an issue with the FDA, but we don't know that to be the case. And 75%, 80% is roughly the rescue rates that you would expect in an EYLEA arm of a trial. But I'll turn it over to Peter, who has a much deeper insight into what Wiley is thinking and how the FDA looks at this stuff. But I think the answer is nobody really knows right now exactly what the right answer is from a regulatory standpoint. But Peter would no better than the other. So go ahead, Peter.

Yes. I think Antony is right. I mean, obviously, nobody has any insight into what Dr. Chambers and the agency is looking for in terms of rescue criteria in a study such as this. We -- none of us feel that this is going to be a first-line therapy. Although if you look at the Australia study, our Australia study, we had many treatment-naive patients who did incredibly well simply with an injection of OTX-TKI. So maybe I'm wrong with that. And that's certainly something we're going to be looking at very closely. But for the most part, when you look at previously treated patients, the only predicate approval that we have to go by is the Port Delivery System. And in that study, obviously, there were very few rescues, but there were rescues in the port arm. And so as Antony pointed out, we don't know, and it's something we will work with the agency to come up with a number that would be reasonable in terms of rescue injections. I was very pleased with the 80% rescue-free interval at up to 6 months and the 73 at 7%. This is much higher than I could have hoped for and will help us when we design our next study.

Okay. Perfect. Congrats again.

Thank you. Our next question comes from the line of Jon Wolleben with JMP Securities.

Just a couple for me as well. The visual acuity and retinal thickness data you provide here, does that include the patients who are rescued in OTX-TKI? And if so, what does that look like if those patients are removed from the analysis?

So the data is including rescue in both arms, I might add. And when we did the analysis without Rescue, the results were -- I mean, with basically last observation carried forward, the results were actually very similar.

Perfect. And you discussed the treatment criteria in the past. We know what that is, but wondering if you could tell us the reasons for the rescue in the 3 and 4 patients in the TKI arm at 6 to 7 months and if there were any multiple rescues.

So in terms of the reason for rescue, this is something we're going to discuss at the presentation on Friday. So I don't want to steal any of Dr. Dhoot's his presentation. There were patients who were rescued more than once yes.

Okay. And the last one for me, if I may, for Dr. Kaiser probably. When we think about the use case for OTX-TKI, and we're seeing such good data in patients well controlled on anti-VEGF, what percentage of the population do you think this represents where you could have patients with a good response and treat and extend into the 6 or 7-month time point?

Well, speaking as a retina specialist, these are the majority of my patients. So patients do very well on anti-VEGF injections. This is well known. And most likely, barring a study in treatment-naive patients by a TKI company, including ours. Anti-VEGF will remain the first-line therapy. But the issue is, of course, that these patients, if you look at real-world studies, simply don't follow up the amount of times they need to follow up to get the injections they need. And that's even with longer-acting drugs like we have currently and may have in the future. So I would envision that we would use still anti-VEGF at baseline. And then when we get patients controlled very similar to the patients in this study, we would give them a TKI injection. And as needed, we would give them additional anti-VEGF. This is very similar to how we use the Port Delivery System now. So if we put the port in and every so often in between, we need to supplement with an anti-VEGF injection, we don't really consider that a failure of the port. It's just some patients to have a higher need for an anti-VEGF therapy. The exciting thing about this is although we're going to have to come up with a number to retreat, say, a Phase III, like the Port Delivery System did, we know that looking at the early data that it lasts longer than 6 months. And so we would expect in reality that that's probably how we'd use it. We would keep you basically following the patients. And by then, maybe we'll have home OCT's so we can follow them very closely, but only rescue as needed with an anti-VEGF injection.

Very helpful. Congrats again on the data.

Thanks, John.

Our next question comes from the line of Chris Howerton with Jefferies.

Really appreciate you taking the questions all for my congratulations as well. So perhaps, for me, a couple of questions. First of all, could you comment at all on any observations of the durability of the implant itself anything like residual observations of the actual implant, anything you'd like to say about that? Secondly, I'm curious if you could articulate in a little more detail what the expectations for the next steps might be in terms of discussion with the FDA, any manufacturing work that needs to be done? And I think, Antony, you mentioned a trial will start in 2Q or 3Q of next year. So would love to get a little preview of your thinking there.

Well, I'll take the first question, and I'll have maybe Rabia to talk about the second FDA manufacturing. But in terms of the first question, obviously, we have to rely on the investigators to tell us if they still see the implant in the eye. It is something that usually you could see. But in some cases, may be very difficult to see, especially if it's along the inferior vitreous base. But in general, at the time points we're discussing today, the implant was still visible, not in all patients, obviously, but I wouldn't take that as a sort of a PK study to tell us how long these are lasting in humans. In all our studies previously, including the Australia study, we would expect this to last anywhere from 6 to 9 months, and we would anticipate that to be the case with all these patients. And Rabia, I'll turn it over to you for manufacturing.

Sure. Thank you, Peter. The -- what we have seen in our trials so far, the implants, as Peter was mentioning, is lasting 6 to 9 months, about 7.5, 8 months. It's very programmable. And we see a terminal release of the drug from the implant than the hydrogel completely by resorts, with our formulation work, we, of course, keep working on our formulation to just have the final trials do with the commercial grade formulation. And the -- what we are trying to do is to marry the implant, the hydrogel to the axitinib so that it completes clearly everything clears completely from the vitreous than the implant and leaving it clean space for the next implant. That's the goal, and that's what we are working on and it's working well. In terms of our plans for the next year, as I mentioned, now with this data and Australia data, we're going to have a discussion with FDA. Our goal is to start a Phase II, but very similar to upcoming Phase III. So studies from the design perspective, in Q3 of next year, and start a diabetic retinopathy trial in the Q1 of next year.

Got it. Okay. That's really helpful. I'm not sure if there's any other analysts on the line, but maybe I'll just sneak 1 more question in. I know that we're going to have the detailed presentation at AAO on Friday, and Dr. Kaiser, you mentioned some of the points that will be presented there. Is there any other kind of key updated detailed information you'd like to draw our attention to that will be presented there?

Well, I think the things that if I were an analyst I'd be looking for are the cases. The -- when you have a small study like this, myself, and I consult for companies, we -- in a Phase I study, the most important thing is to look at the patients and see how they're actually doing. How many treatments right up to enrollment versus how many treatments thereafter? Are these patients who are just kind of burned out or are these patients very active? And I'll just tell you, just like we talked about in the call today, these patients, on average, had about 8 injections in previous year. It just shows you how active they actually are before they were enrolled in the study. So I'd want to look at the cases. I want to look a little bit more closely at safety to see if there's anything there. But you know that we're required to talk about anything bad, so I wouldn't expect anything to come out, but I certainly would want to look at the safety part of the presentation. And finally, since this is a randomized active control study, so most Phase I studies are not actively controlled with our best treatment currently, which is Q8-week aflibercept. How do those visual acuity curves look like? How do you do the OCT curves look like? Are these right on top of each other? Are we seeing like the aflibercept arm come out earlier or not? So these are all the things that I would look for if I were sitting in the audience on Friday. I hope that answered your question.

Yes. No, that's excellent. I really appreciate it. And congratulations on the progress and the great data.

Our next question comes from the line of Yi Chen with H.C. Wainwright.

Congratulations on the data. My first question is on the upcoming Phase II trial, do you still plan to administer a 2-milligram aflibercept injection 4 weeks after the implant? And if without -- if you do not administered this aflibercept dose 4 weeks after the implant, how would that change the data readout?

So it's a great question. It's one that, internally, we'll be wrestling with as well as when we speak with Dr. Chambers at the agency. Remember that in our Australia study, the majority of patients were not treated with anything, but OTX-TKI, did not receive the 1-month injection of aflibercept. So we have to really come to grips as to which one of those options we want to proceed with. The Phase 1 in Australia would suggest we don't need that first mandated injection at month 1. But but it's one of those things that we're going to be looking at very closely. We -- at this point, we have nothing to announce in terms of study design for Phase II. We need to do a more analysis of this as well as discuss with the agency.

Yes. Just to build on that point, the only reason for that month 1 or week 4 aflibercept injection is that we understand that the mechanism of the TKI, because it works intracellularly, it takes a little while to kick in. So we want to do with that is to make sure that there were no sort of false early rescues in the trial. We looked out data 24, 28 weeks. There is really no way that, that aflibercept is still active at that point. So whether we do it or whether we don't, depending on -- depends entirely on how the investigators treat those patients in the early days. So we're very confident that, that 4-week injection really had no effect on what we saw at month 6 and month 7 because that's really the TKI that's working there and not the aflibercept.

Got it. And my follow-up question is, could you comment on the different population between the Australian and the U.S. Phase I trial? And how that may contribute to the data readout, and whether you plan to stick with the U.S. trial population going forward?

So there's actually some very large differences in the enrollment criteria between the Australia study and the U.S. study. So both groups allowed -- or both studies allowed previously treated patients into the study. But the Australia study also allowed treatment-naive patients into the study. And specifically, we wanted patients with a lot of excess fluid because we kind of wanted to see what happened to that fluid. The U.S. study was more similar to other TKI clinical studies that have been performed in the U.S., where the patients are better controlled, so much less fluid at baseline versus the Australia study. And it's interesting. I'm very excited about the Australia data because, to date, nobody has really been able to reduce fluid in treatment-naive patients, and we did it in the vast majority of our patients up to 6 months. So it's an interesting dilemma we have that, again, I'm not trying to be quite here. We really want to discuss this with the agency in terms of what possible labeling differences we could get if we enroll similar to other TKI companies? Or if we do something totally different and go after all comers, basically, which we possibly could do. So this has not been decided. We're not announcing anything about our Phase II at this time. But we have options, and I really like when you're designing studies to have options. And the thing that's really important to me is the Phase II study design that we sit up on will be approvable in terms of the outcome. So in other words, many Phase II studies are basically used to reduction in treatment burden for their primary outcome and in visual acuity as their secondary outcome. And we're not going to do that because reduction of treatment burden is not an approvable endpoint, only vision is. And so the outcome for our study will absolutely be one that we could use an identically designed study in Phase III should the Phase II be positive. That gives us the best chance of success in Phase III.

And I think, to add on that, I mean, clearly, the first one, it's got to be something that will get us approval. So it has to be -- has to pass regulatory muster. But the other element that we really want to design into it is how we see the product actually being used. The way we envision the market going forward is it really almost more like the asthma market, where you take your combination Advairs as your baseline therapy. And if you have an exacerbation, you use your rescue hailer. We sort of see the VEGF market moving in that direction where TKIs or OTX-TKI will be given once every 6 or 9 months is sort of your baseline VEGF therapy that will dramatically reduce any kind of a breakthrough from a VEGF perspective. And if you have an acute exacerbation, then you may need to be rescued from time to time. So if that's the vision of how the product will be used in the future, what we want to do is, like I said, understanding the first order megs, we have to get regulatory approval, but we also have to support how we see this product being used in the future. So we marry those 2 things together, we have a real opportunity here. And we think, with the data that we've seen, and with the way the market works and the unmet need in the market, that we have a perfect opportunity to marry those 2 things together, regulatory acceptability and market acceptance in a Phase II/III program.

Our next question comes from the line of Dane Leone with Raymond James.

This is Sean on for Dane. Congrats on the promising data. a couple from us. First, can you provide any additional detail on the timing of the endophthalmitis, and any detail around adjudication as related to the aflibercept injection? And then secondarily, you discussed the reformulation for the single insert. And so could you provide any detail on how the data today impacts your plans for a Phase II and implementation of any new formulations?

Well, I'll handle the formulation question first because I think we've heard a lot of noise on this. And one thing I think is important is to really frame how delivery companies work with formulations and how the regulations work. Many of you will know that in our first Phase I trial in Australia, we had a single 200-microgram load in a single insert that was injected through a 27-gauge needle. We assumed at the time that 200 micrograms would be enough to be able to -- to be well above the IC50 and be able to give us the maximum efficacy. We realized that, that was not the case and that we needed to go up in dose. So we just used the formulation that we have, the 1x 200-microgram load. So we got to 400 micrograms that way with 2 inserts and 2 injections and then 3 inserts and 3 injections. We realized that, that's not a commercially viable formulation. You're not going to want 3 inserts floating around in there. So we decided that in our Phase Ib that we would formulate a 600-microgram load into a single insert, which we did, and we've been very, very excited by the data that we've seen. Clearly, the drug release rate, which is what really drives the efficacy, is above the level that we need to be in order to get substantial efficacy out of this product. So we're going to do what we always do, which is the next time around, we're going to improve the formulation even more, and there's opportunities for us to do that, both in terms of building in a lower drug load and the higher drug release rate, which would give us the ability to potentially have it act faster and maybe, in some cases, even act better if we can increase that drug release rate. And with a lower drug load, we can then have less or no residual drug when the implant fire absorbs. We have a very good problem in that our hydrogel actually goes away reliably and goes away fairly quickly so that we don't have a situation where we have a depot that is -- that has no longer has drug in it that's floating around in vitreous. Having foreign bodies in the vitreous is just not a good thing. So you want to minimize as many foreign bodies as you have. So we have a very good problem that we actually have, our drug lasting a little longer than our hydrogel. So we can adjust that, and that's exactly what we're going to do as part of our Phase II. But in the drug delivery world, we only need our final formulation in our final Phase III clinical program. So we will continue to iterate because we think we can get better and better formulations as we go on, and we don't have to go back and start from the beginning, we actually leverage all the data that we've had in the past and build a better and better formulation. When I say that we begin with the end in mind, I mean that very sincerely. We are building a product that will become the standard of care, not building a product that will get to the next data stage in order to be able to put out data that looks impressive, but potentially with a formulation that is not commercially viable. So we're really excited about being able to iterate 1, 2, maybe 3 more times before we get the final formulation. But in each stage, we'll be getting a better and better formulation, which is exactly what we did between Phase I in Australia and Phase Ib in the U.S. In a very, very short time line, we're able to come up with a better formulation and I said we can do it again with the Phase II. So then I hand off to Peter for the first part of your question.

Yes. So it's unfortunate when anybody develops endophthalmitis in the clinical study. In this case, the endophthalmitis case occurred within a week after the aflibercept injection. It was treated with intravitreal antibiotics and steroids, and thankfully, to patient's vision returned back to baseline. Obviously, there was a slight reduction around the time of the endophthalmitis. The good news is the patient has also remained on study and has done very well after the endophthalmitis event. In terms of endophthalmitis, this is something we see, unfortunately, is an injection-related complication that occurs in almost all clinical studies. It's unfortunate when it occurs, but it is related really to the injection procedure itself. In this case, the injection happened to be aflibercept but it was injection related and not drug-related. And a very experienced investigator was the one who reported, treated and agreed that this was a injection-related complication, not a drug-related complication. Does that answer your question?

Yes.

Our next question comes from the line of Georgi Yordanov with Cowen.

Congratulations on the data. Just maybe to start real quick with a clarification, just as we try to compare this to other programs, I just want to confirm, when you talk about the 6-month duration, the 6- and 7-month duration, this is from the time patients received the implants not from the induction with the anti-VEGFs that happened to them that, right?

That is correct. So 6 months and 7 months that is from baseline in the study.

Great. And then maybe just a follow-up on the endophthalmitis question. I guess, one, maybe for Dr. Kaiser. When does that side effects usually occur in other injection procedures just based on your practice and experience? And then maybe just more broadly speaking, what is usually the rate of end of endophthalmitis that you see with EYLEA? And I guess, eventually, what would you be comfortable with from an intravitreal product like OTX-TKI?

So endophthalmitis usually occurs after the injection within roughly 7 to 10 days that we would expect. It doesn't occur the day after or the next day usually, it takes a little to percolate. General injection-related endophthalmitis is not as bad as other endophthalmitis that we get. In terms of your second question, it's a little bit difficult because, obviously, when you look at EYLEA across the country, the rate is rather low. We usually quote to patients 1 in 1,000. But unfortunately, in clinical studies because 1 patient will dramatically increase that rate. Just to give you a comparator, the closest comparator study to what we're doing here is the Archway study. And recall, in the ranibizumab, now I'm not talking about the port delivery arm where they had a very high endophthalmitis rate. But in the ranibizumab arm, the rate was about 0.6%. So they had the 1 case like we had. So we do see endophthalmitis in almost every study. It doesn't matter what the drug is that's being injected. We saw them in faricimab studies. We saw them in the brolucizumab studies. Injection-related endophthalmitis Is a known complication that we see in pretty much across our practices as well as across clinical studies.

Great. That's very helpful. And then just finally, can you remind us the needle gauges that you're seeing with OTX-TKI? And does your reformulation work plan to kind of improve on that? Is that gauge like something that retinal physicians are comfortable with when they do intravitreal injections?

Yes. So in the Australia study, we used 27-gauge in the 1/600, which was used in the U.S. as well as the later cohorts in the Australia study. It was slightly larger at 25-gauge. We plan for all future formulations to fit through that 25-gauge needle, which is a very small needle, and it's something that as a retina specialists were very used to using just as a case of comparison, the only approved polymer for retina right now is OZURDEX, and that uses almost a 23 or even the 22-gauge, which was originally there, so a much larger needle. So we're used to using needles at this site. 25-gauge is easily used for an injection.

This is great. And congratulations again on the positive data.

Our next question comes from the line of Yuan Zhi with B. Riley.

Congratulations on the data team and a couple of questions from us. So first, hypothetically speaking, if you add 1 more EYLEA injection as induction, do you expect result to be better or different between OTX-TKI arm and EYLEA arm? Is it smaller in terms of BCVA and the CSFT?

Obviously, the study wasn't designed to answer that question, so it's a hypothetical question. My hypothetical answer is, I don't think so, right? So the reason I don't think so is we made out of it even needed that anti-VEGF injection at all. And obviously, you lowered the number of injections, you lower the treatment burden. So that would be even better. So some companies think that you need multiple anti-VEGF combined with TKI. But really, if you have a good TKI that truly blocks the VEGF receptors downstream activation, which is what we're trying to do here, you really shouldn't need an additional anti-VEGF unless, for some reason, the implant wasn't releasing right away. Some people feel that the main reason to need an anti-VEGF is that the polymer doesn't release immediately. And so you need to somehow cover the patient with an anti-VEGF injection during that time. And then as the polymer starts to release, then you're good. In our case, in the Australia study, we showed that, that wasn't true because we were getting very quick results, both on OCT as well as visual acuity in that Australia study. So I'm not sure that you need the second one. I'm not even sure we need the first. So this is something that, obviously, we're going to take internally and really analyze along with our scientific advisory board to come up with sort of the best idea for a Phase II study.

Got it. And 1 more from us. For the control arm, did all patients receive EYLEA on time every 8 weeks?

So when you look at the study, the answer is, the injection fidelity of the aflibercept arm was good. I don't have the top of my fingers here what the exact numbers were. There's obviously 8 weeks plus or minus a week in a clinical study. It's not always possible to get a patient in exactly when the visit should be. There's always a slight range to that. But in general, the patients did receive. So it wasn't like the aflibercept arm missed a bunch of injections. That's not the case.

[Operator Instructions] Our next question is a follow-up from Jon Wolleben with JMP Securities.

Just wondering about diabetic retinopathy and the opportunity, can you discuss a little bit about number of patients, what we know about anti-VEGF sales and the unmet need there? And then I guess following that, the translatability of wet AMD to diabetic retinopathy data?

So you've hit 1 of my pet projects, which is diabetic retinopathy. So as you would well think, anything that works so well on a VEGF receptor downstream activation should work just as well in diabetic retinopathy. But I want to back up and answer part of your question first, which is, we have 2 approved products to treat diabetic retinopathy in EYLEA and LUCENTIS. And certainly, we can use Avast and off label. But we don't use it, right? So I can count, on 1 hand, how many patients would mine with diabetic retinopathy in the absence of diabetic macular edema. So I'm just treating their diabetic retinopathy that I actually use these approved products. Patients just simply don't accept the injection frequency that high. Now the port delivery system from Genentech Roche, they're also looking at improving diabetic retinopathy scores with every 6-month refills. But if you ask a patient, they don't -- especially a young patient, diabetic patients are in general much younger than AMD patients, wet AMD patients. So they're not as willing or wanting to have a surgical procedure done. But if we could do every 6 months or maybe even longer because the diabetic the VEGF load that we're trying to sort of overcome with the treatment is lower in diabetic retinopathy than it is in wet AMD, so maybe we could even go with even a lower injection frequency. So for us, we're incredibly excited about the idea of using this for diabetic retinopathy. And speaking as a retina specialist, if I could easily convince my patients even my young patients, they come in every 6 months or so, I'll give you the shot, and it's going to reduce everything in terms of retinopathy future complications, which is the whole idea of reducing the diabetic retinopathy severity score. Towards this end, we are doing a diabetic retinopathy study. This has been announced. And so I'm looking forward to the results of this study. And the interesting thing, if you kind of think about it for a moment is, if we could show in that study that it works, the diabetic retinopathy regulatory pathway is actually easier than the wet AMD pathway when it comes to tyrosine kinase inhibitors. And why do I say that? Well, you still can do a placebo-controlled study in diabetic retinopathy. This is very ethical study as long as you obviously have a rescue in that placebo control arm, the sham arm, whereas the wet AMD study has to be controlled with EYLEA at this point. The agency is not allowing us to use faricimab as a control group yet. So from that standpoint, doing a placebo-controlled study is much easier in Phase III to hit the primary than it would be to do a noninferiority study in wet AMD. So that's why it's my pet project because I'd be super excited for that to be our sort of first foray, but we'll have to see. At this point, I'm not announcing anything. I'm just saying it's a pet project.

And I'm currently showing no further questions at this time. I'd like to turn the call back over to Antony Mattessich for closing remarks.

Well, thanks, everyone, for joining us on this call and for asking the questions. One of the things we're really excited about is that we're announcing this data just before the AAO, and we'll actually have the big presentation, obviously, with Dilsher Dhoot, on Saturday -- sorry, Friday afternoon, but Peter Kaiser is also going to be presenting at Accelerator on Thursday, talking a bit about the Australian data, but now can throw on a little bit of the data that we have in this trial as well. We hope the questions keep coming. We've been living with this data pretty intently now for at least a few days, and we've been looking at it from all different angles. And we actually think that as we look at it more, we like it more. And is going through the AAO to have people come back with questions to have them bounce off other key opinion leaders, to be able to look at pictures because a picture really means a thousand words. And if you look at some of these OCTs at month 7, it really is spectacular what these things look like in patients who have really not had treatment for 7 months. So keep the questions coming. I think a lot of the people on this call and a lot of people listening will be at the AAO. We'll be available for additional questions as they come up, but we could not be more excited heading into the AAO, and we really, really want to dig into the data. And thank you very much for your attention and for the continued story of how we're trying to bridge the gap between what we see in clinical trials and what happens in the real world in terms of preserving vision of people living with both diabetic macular anemia and retinopathy as well as wet AMD. So thank you very much for your attention today.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.