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

Ladies and gentlemen. Thank you for standing by. And welcome to Ocular Therapeutics in term 10-month data update from the ongoing U.S. Phase I clinical trial of OTX-TKI for the treatment of wet AMD. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker host Donald Notman, Chief Financial Officer. Please go ahead, sir.

Thank you, Olivia. Good morning, everyone, and thank you for joining us on our conference call to discuss the interim 10 months results from our U.S.-based Phase I clinical trial of OTX-TKI for the treatment of wet AMD. The press release that we issued on Saturday and the slide deck with the interim results can be accessed on the Investors portion of our website at investors.ocutx.com. Leading the call today will be Anthony Mattessich, our President and Chief Executive Officer, who will also be joined by Dr. Rabia 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 November 7 with the SEC and our annual report on Form 10-K filed on February 28, 2022, with the SEC. As a reminder, the slides being presented in today's call by Dr. Peter Kaiser are available on the company's website under the Investors tab, Events and Presentation, Investor and Corporate Presentations. I would now like to turn the call over to Anthony.

Thanks, Donald. And good morning, everyone. Before handing it off to Peter to take you through the presentation, I just wanted to say a few words that we believe that this data means for Ocular Therapeutix and more importantly, for patients suffering from VEGF-mediated ret diseases such as wet AMD, diabetic macular edema and diabetic retinopathy. In the case of wet AMD is well known that the vision gains seen when starting treatment are not maintained over time in the real world. The main reason for this is the lack of compliance caused by the injection burden of current antibody therapies like LUCENTIS and EYLEA. In the real world, patients tend to miss necessary injections for a variety of reasons. Wet AMD patients tend to be elderly and can find it difficult to get to rent offices on a 4 to 8 weekly basis. So appointments are missed or delayed and permanent vision loss occurs because of the damage caused when the medication wears off and the disease process returns. In the case of diabetic retinopathy, where patients are generally at working age, the lack of urgency from the fact that the disease may not have manifested yet and finding the time to get treated on a frequent basis create real compliance challenges. In this population, the result is that patients are not treated and frequently progressed to more severe vision destroying disease before seeking treatment, making diabetic macular edema a leading cause of blindness among the working age population. In short, we believe the promise of a drug like OTX-TKI is not only about convenience, but also about saving vision. If we can move durability from the current frequency of injections of 4 to 8 weeks and maybe at the outset 3 to 4 months, to 10 months and beyond, we believe we can keep people on treatment and preserve vision. Lastly, it is important to understand that OTX-TKI is a different paradigm than typical antibody treatments. Existing treatments like Lucentis and EYLEA, our bolus injections were a large amount of antibodies well above the amount needed for immediate treatment are injected into the vitreous and those antibodies are eliminated from vitreous until they drop below therapeutic levels, allowing the disease process to restart. Extending intervals is done by making the antibody larger and slower to eliminate or just by jamming more antibodies into the eye with each injection. Either way, you're still treating a chronic disease of pulsatile dosing. OTX-TKI is different. OTX-TKI is designed to deliver a continuous dose of axitinib, of potent inhibitor VEGF, keeping drug concentrations above therapeutic levels for extended periods without the drug peaks or troughs of pulse dosing. We believe that these results bear this out and demonstrate that we are keeping therapeutic levels of axitinib at continuous levels in vitreous for the duration of the study. If OTX-KTI works as it's designed to, it should work as long as we keep adequate levels in vitreous, which our hydrogel technology allows us to do. This new paradigm will allow physicians and patients the comfort of knowing the drug is always on board, like a security blanket. You can hopefully demonstrate that there is less variability in the retina over time, and more importantly, the vision games from anti-VEGF therapy are maintained in the real world. So what's next? We believe we have our proof of concept in wet AMD and by extension, have gone a long way toward proof of concept in other VEGF-mediated retinal disease given the impressive durability of OTX-TKI. Importantly, we also have a working formulation. We believe we are ready to enter our first pivotal trial in wet AMD as soon as the third quarter of this year. We have scheduled a Type C meeting with the FDA to discuss the pivotal study design within the next few weeks. We have also mentioned that commencing this trial is subject to financing, and we are considering a range of non-dilutive or minimally dilutive funding options, we have a strong preference to go forward through a potential strategic alliance. We have also stated our intention to begin a Phase III program for diabetic retinopathy in the first quarter of 2024, assuming positive top line data results from our ongoing Phase I clinical trial and subject to a follow-up meeting with the FDA. The diabetic retinopathy program is a separate program with much more modest resource requirements than wet AMD. Consequently, our plan to commence the first pivotal trial in diabetic retinopathy in the first quarter of 2024 is not contingent upon a strategic partnership. We believe both wet AMD and diabetic retinopathy could be blockbuster applications for the product profile we are building with OTX-TKI. We have a very valuable asset, and we believe a very clear plan going forward. So without further ado, I'll pass the baton on to Peter to go over the 10-month data. Peter?

Thank you, Anthony. As was mentioned before, the slides I'm presenting are available on the Ocular Therapeutix website for viewing. So it's my pleasure now to present the U.S. clinical trial results we just presented at the Angiogenesis meeting, which show the up to 10-month interim analysis. Next slide. As was mentioned previously, there are forward-looking statements, and this presentation discusses an investigational product, which are in development. the efficacy and safety profiles have not been established and they have been not reapproved for marketing by the FDA. Next slide, I'm now on Slide 3. So the OTX-TKI is a hydrogel proprietary polymer matrix combined with axitinib, which is a multi-target Tyrosine kinase inhibitor, specifically with high selectivity to all the VEGF as well as PDGF receptors. If we look at the VEGF receptor 2, which is the most pathologic, the one that causes leakage in angiogenesis, it has the highest IC50 versus all other current clinical TKIs in development. This is injected as a rod through a 25-gauge or smaller needle into the vitreous, it completely bioresorbs over roughly 6 to 12 months. Next slide. So we are on Slide 4 to remind everybody about the U.S. Phase I study design. This enrolled patients with age-related macular degeneration with sub phobia choroidal neovascularization that has been previously treated with anti-VEGF injections. And in the investigator's opinion has controlled fluid. The patients are then randomized to 1 of 2 treatment arms, either the OTX-TKI arm where they received the OTX-TKI at baseline a month later than aflibercept injection and then that are followed on a monthly basis for rescue. The rescue criteria shown at the bottom. The most important rescue criteria that since this is a Phase I clinical study, the investigator had the option to treat the patient at their discretion. In addition, if the patient lost more than 10 letters of vision from the ETDRS eye chart, or if they had evidence of more than 75 microns increase on the OCT of their central subfield thickness combined with a 5-letter loss of visual acuity or the presidents of new macro hemorrhage. The control arm was aflibercept dosed on label every 2 months. Next slide. The baseline characteristics were well matched and it's important to understand matching in a small study such as this, but we were able to achieve very good matching in terms of baseline visual acuity, central subfield thickness, age, et cetra. Next slide. So we are now on Slide 6. And this shows the swimlane plot. And there are some very important things to note about this. First of all, these are not patients who are not receiving injections as shown on slide left in the pretreatment. These are patients who are receiving extensive anti-VEGF injections, the majority at a monthly basis before being enrolled in the study. If you look at the OTX-TKI arm, the majority of rescues were at the investigator's discretion. These are the purple squares and only a few patients at the month 8 and beyond actually met any rescue criteria and were treated according to rescue criteria. So 3 patients overall. This leads to a treatment reduction up to the 10-month time point of 92%, a dramatic reduction. Next slide. If we look just at the rescue-free subjects, so these are patients who didn't require any rescue, we previously reported at the 7 month time point, a 73% reduction or rescue free duration. And we're pleased to report now at the up to 10-month interim results of this study we have the identical 73% of subjects being rescue-free up to 10 months. Next slide. We are now on Slide 8. This shows both the visual acuity and the OCT results of the clinical study. There are several very important things to note about this slide. First of all, -- the -- if you look at the visual acuity outcomes and the OCT outcomes, versus a basically gold standard control of aflibercept dosed every 8 weeks. There was essentially no difference in visual acuity outcomes at month 10, 0.3 letters loss in the OTX arm and in the aflibercept arm, 0.8 letters lost. And if you look at the retinal thickness, essentially no change, minus 1.3 microns in the OTX and minus 4.5 microns in the aflibercept that's essentially within the error of the machine. The other thing I want to point out is aflibercept was dosed on label for every 2 months. And as Anthony mentioned earlier, if you look at slide bottom, there's that seesaw pattern that we've seen in pretty much every clinical study with EYLEA showing that some of those patients are having a lot of fluid fluctuations visit-to-visit, depending on if they receive an injection or not. In contrast, the OTX-TKI arm, shows a very stable OCT result. So fluid fluctuations are kept to the minimum. In addition, at the end of the study, so we're looking at the 8-, 9- and 10-month time points, we see the OCT actually improving over time with an uptick in the visual acuity at those same time points. Finally, if you censor the rescue subjects from these analysis, the visual acuity and OCT results are the same. Next slide. Since this is a Phase I clinical study, the most important outcome for investigators is safety. And we're pleased with the safety up to 10 months with no reports of drug-related ocular or systemic serious adverse events in either arm. If we look at adverse events of special interest, including elevated intraocular pressure, retinal detachment, retinal vasculitis an implant migration into the inter chamber. This was not seen in any of the patients in the OTX-TKI arm. There was one patient in the aflibercept arm that had elevated intraocular pressure and this was judged as a moderate adverse event. In addition, as previously described in the OTX-TKI arm, one patient had acute endophthalmitis, this occurred after the mandated aflibercept injection at month 1, was deemed to be not related to the study drug, but instead related to the injection of aflibercept. It resolved with standard treatment, which is intravitreal antibiotic injection. This same patient developed a moderate adverse event of a cataract after the acute endophthalmitis, which is shown here. So the safety at month 10 was very similar to the safety at month 7 and so far shows good results. Next slide, we're on Slide 10 now, which is the concluding slide shows that this Phase I clinical study at U.S. clinical sites in patients with previously treated neovascular age-related macular degeneration comparing OTX-TKI versus standard -- gold standard aflibercept injections every 2 months in the OTX-TKI arm, the safety was generally well tolerated. As I mentioned, there were no drug-related ocular or systemic adverse events, and adverse events of special interest for a TKI polymer, we're not seen in the OTX-TKI arm. Importantly, no subjects to date have dropped out of the clinical study in either arm. We're very excited about the efficacy that has been shown now. Recall that at the 6-month time point, 80% of patients were rescue free. And now at the up to 10-month time points, 73% of patients are rescue-free following a single OTX-TKI injection. The visual acuity results in the OTX-TKI arm were stable and comparable to aflibercept dosed every 8 weeks. And we showed a very clinical meaningful reduction in treatment burden up to the 10-month time point of 92%. Next slide. So this concludes my remarks of the U.S. Phase I clinical study. And I now turn it over to the operator to take your Q&A.

[Operator Instructions] Our first question coming from the line of John Wolleben with JMP Securities.

Maybe two for me to start and then a follow-up if I can. Can you let us know the reasons for the three per protocol rescues, later on in month 8, 9 and 10? And then also, there's some discussion of the dissolution of the hydrogel over the weekend at Angiogenesis. Can you give us an update on what the distillation rates look like in the consistency and then an update on any of the formulation work that you previously have discussed?

Sure. I think Peter, you want to handle the first question on that?

I'm going to punt the first question, Rabia. I'll take the second question.

Sure. Those risks were for the visual acuity changes and also the -- like they were per criteria is described, and those were visual acuity changes. And I can actually just quickly go over the solutions, if that's all right, and then Peter can add.

Sure, go ahead.

Sure. Okay. The -- what we have seen in Australia data, we have a very -- like our implants are very programmable. Only temperature and water contract -- would a sector is option of the implant. Again, for the data we have seen from Australia so far, we have seen a very consistent stable reduction of implant at around 8 months. There may be individual differences but we expect that would be still the case in most subjects. Currently, the trial is still masked for that, and we will have this data available at the end of the trial. Peter, would you like to add more?

Sure. I've spoken with several of the investigators, both in Australia and in the U.S. studies. And what they see as basically there's bioresorption of the hydrogel and release of the axitinib is basically some white particles, very similar to what we'd see with a [indiscernible] alone. So this is very different than, say, intraocular inflammation, which is something we'd be very concerned about these particles are released, as Rabia said, roughly at the 8 months or so time point and then within a month or 2 are completely gone. An interesting thing is we're talking about a polymer here that should be bioresorbing anywhere from 6 to 12 months. We're starting to see it really around 8 months and to me, looking at the clinical trial results as a clinician, we want to kind of see patients start to get rescued in any study of this sort, because that would show that the drug is wearing off and the disease is indeed going back to being active. So when I start to see rescues in 8-, 9-, 10-month time points. That doesn't bother me. In fact, that's what I kind of would expect to see in any trial with a polymer releasing any sort of drug. If basically, there were no rescues that would concern me because that would indicate that maybe these patients didn't need any treatment at all. So we hope to see that over time in any study with the polymer.

And is there any changes necessary to the formulation then that you'd like to get done before starting the next round of studies?

No. We clearly have a formulation that works. And we've mentioned before that we are working on an additional formulation that would have a higher release rate but given what we've seen with the results of the current formulation, we have a workable formulation and certainly one that we would want to bring into Phase III development.

Fantastic. And then just one more for me. Before jumping back in the queue. The diabetic retinopathy trial. Any sense when we could see some interim data from that perhaps some time this year. And then as we're thinking about the translatability from wet AMD to DR, any sense of how what we've seen with visual acuity or retinal thing this translate to diabetic retinopathy severity score, just getting a sense of what expectations should be either in this first Phase I or moving forward?

Rabia, do you want to do the first one and then Peter sort of follow up on the second.

John, would you mind -- I want to understand your question very clearly. Would you mind?

Yes, Rabia, just when we might see some interim data from the ongoing Phase I.

Ongoing Phase I, U.S. Phase 1, you mean?

Diabetic retinopathy study is currently enrolling...

Okay, yes. It is currently enrolling and we're going to just -- we are thinking now is seeing the interim results by the end of this year.

And taking your second question, which is how much can we use the data from both the Australia in the U.S. clinical studies and sort of extrapolate that to diabetes. Well, it depends on mechanism of action of a drug, whether you can extrapolate. So for us, the mechanism of action is targeting downstream activation of the VEGF receptor. We have two clinical studies: one in patients who are been previously treated, but more importantly, treatment naive in Australia. And then this study, which we just showed the U.S. study shows good activity in macular degeneration, which is largely VEGF-driven. Diabetic retinopathy is also largely VEGF-driven has been shown with both the EYLEA and ranibizumab approvals for the treatment of diabetic retinopathy -- so for us, the extrapolation is pretty easy. Obviously, we're not going to move forward until we have some results from our Phase I clinical study in diabetic retinopathy. But as a clinician and as a scientist, the MOA between the two are very similar, so we would hope to see a similar result.

Got it.

I want to add one thing to your question about the axitinib being showing the terminal burst at about 8 to 9 months. To me, speaking with the investigators in addition, looking at the results. Basically, when you have that [indiscernible] axitinib we're seeing a bump in both the visual acuity and a reduction in retinal thickness. So in a way, one of the things that we were concerned about was what would happen with axitinib the when released and what we're finding is that actually is working great in these patients sort of the tail end of when the polymers are round. It's actually disappearing, but we're seeing improvements in our patients, not the opposite.

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

This is Sean on for Dan. Congrats on the update. So actually, to put a finer point on the point that Peter just made, perhaps difficult to quantify, but do you guys think that you are kind of confirming that you're seeing visible release and having elevated vitreal effective concentration of axitinib, it kind of ask that like 8- to 10-month time point? And kind of how are you thinking about that going forward in terms of maybe potentially confirming a more durable effect due to that accelerating release towards the terminal dissolution of the insert. And it seems like you guys are now leaning more towards this formulation, potentially due to this effect confirming more durability. So kind of just to clarify, you're still going forward with the new formulation in terms of development, what you're thinking more about the current formulation moving towards the Phase II/III? And kind of how does that affect timing on the Phase II/III?

Well, I'll handle the first part. I mean we -- the last part, we're looking enough to know that we have a formulation that works and one thing that does seem to be suggestive from the data is that more axitinib is better. The formulation that we have currently in development actually increases the daily release rate of axitinib. So in the earlier periods, you'd get a higher concentration of axitinib you wouldn't have as much drug at the end of the life of the insert. So there may be some effect on the durability. So we really have two things to really choose from here that a higher release rate with potentially less durability, although we're well beyond the period that we thought we would be initially speaking about 8 months and longer initially, we thought we were going to go about 6 months. So it is -- we are definitely in the realm of a standard setting durability. So we intend to bring both of these doses forward and we will decide later on which one we want to bring to market or both, depending on which indication suits, which formulation better. But it's kind of an embarrassment [indiscernible] is because we have the potential for both, with neither one are on the critical path in terms of being able to start our wet AMD in the third quarter of this year. We've had great progress on the backup formulation. So we believe that, that will be ready in time for that trial to begin. So we're in very good shape. But your specific questions around the [PK] and what we're seeing in the trial. I mean, clearly, we don't get human data on the [PK] in the vitreous. And we have now collecting data on when we can see the insert go away, or the hydrogel bioresorb and then when the drug clears. And that all appears to be around the 8-month time that we see the insert, the hydrogel bioresorbing and then the 9-, 10-month period where we see the drug clearing. So in some ways, we're not surprised that our month 7 results were the same as our month 10 results because we are keeping axitinib in the vitreous at the same or higher levels than the earlier treatment. I think the interesting part is going to be the month 12 analysis where we see patients who are no longer on high levels of axitinib and Novitreus to see how long it takes the disease process to restart. I think we would kind of expect that to be highly variable, just like it is with the current anti-VEGF treatments, but it takes a while for the disease process to restart, but we would expect in that 10- to 12-month period, to have a number of patients with fluid starting to return to the retina, because they no longer have axitinib at therapeutic levels in the vitreous. I don't know if either Peter or Rob, would want to add anything to that.

No, I think you said it well, right? To me, the -- we sort of have two formulas that we could take forward and plan, hopefully, to take forward. As Anthony mentioned, one of the things that's very interesting about this formulation is longevity. And one of the things that's interesting about the new formulation is sort of the higher levels early on -- and what we don't know and what we don't -- we can't tell you at this point is what we're planning to do in terms of Phase III, Phase II/III -- and one of the things the FDA usually requires is oftentimes two different drugs. So it's not out of the question to be able to go forward with either this or the other one. So I'm very excited about the results of this, especially in the later tail points. Basically, this drug is working up to month 10. I can't wait to see the final 12-month analysis of the full study.

Yes. That's helpful. And if I could have just one quick follow-up. How are you guys thinking about those two formulations in terms of patient populations? It seemed like maybe it could be more amenable for certain distinct patient populations. So how does that inform those Phase II/III as well.

Well, I don't think it's two populations, and we certainly don't plan to bring two drugs to the market that we're going to figure out which one is the better of the two. But as Anthony said at the beginning, this basically gives us options. This is a -- this -- many companies will be like, we'll just take this one forward. We have a couple to see which one is the best. I don't think in the future, it will be like, okay, we'll use this formulation for these patients in this formulation for other patients, we're only going to take one forward to the finish line.

I think if I can also add is that, again, none of the formulations are a critical path. This one is ready to go into a pivotal, and we mean to move this one to the pivotals. And the other one is needed, if needed, would be added as well. Otherwise, I just want to clarify, none of them are critical at to start a Phase III -- a pivotal trial in Q3.

And our next question coming from the line of Joseph Catanzaro with Piper Sandler.

Congrats on the data. So I just wanted to follow up maybe first on Anthony, your comments on the 12-month time point and follow-up. It sounds like that data point is going to tell us more about the disease and less maybe so about TKI, but maybe you can correct me if I'm wrong, and just speak a little bit more to sort of the data points you're going to get and what it will inform you with regards to TKI and perhaps even the formulation. And then on safety, so ocular AEs went up from, I think, 10 to 16 from 7 to 10 months of follow-up. So maybe you could help contextualize those a little bit in terms of whether there were any trends or specific AEs observed in more than one patient, anything along those lines would be helpful.

Yes, I don't know if you want to handle the safety elements first. Rabia, you want to talk about the safety results?

Sure. The -- when we look at the safety, and this is an ongoing trial, as you just go towards the trial. Of course, you expect your adverse events to be increasing in the number. We have not seen any safety signal most worthy to just hit like -- the -- all of the safety is you expect from a retina trial with intravitreal injection. That's why it's an expected phenomenon to see that they are increasing and the -- but none of them are not worthy at this point.

Yes. And to handle the first part of your question, I mean I sort of think about it in terms of what we know and what we don't know. I mean what we do know, given the trials that we've had in both Australia and the U.S., is that when you deliver axitinib through our hydrogel into vitreous, you can get rid of fluid, so it actually can work to decrease fluid in patients that have active fluid in the retina and in the naive patients. We've also proven that it can extend durability when axitinib is present in the vitreous. This is a brand-new mechanism of action in the treatment of VEGF-mediated disease, and it's an intracellular point of efficacy. So we're not working in the extracellular space. It has to get inside of the cell in order to be able to bind to the receptors and working with a number of drugs that have an intracellular mechanism of action, it's very difficult to tell without clinical data. First of all, how much you need in order to get inside the cells. So we -- that's why we chose such a potent, a TKI, because even though you may have a very high concentration in the surrounding tissues, you may have a much lower concentration intracellularly. The other thing that is what we don't know, which we'll find out moving forward, is that once you get inside the cell, how long it stays in the cell and how long it will take when the drug is no longer visible or apparent in the environment outside of the cell, how long it takes for the disease process to regenerate. As I mentioned earlier, my guess would be that it's going to be highly variable that some patients may last quite a bit longer than you would expect there. But I would imagine a larger number of patients will start seeing fluid return within a relatively near time point of when the drug clears from the vitreous. I don't know if Peter or Rabia, you want to add a little bit to that, but it's going to be a very exciting data point in the 12-month time point.