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

Hi, everyone. Good Afternoon. I'm Ellie Merle, one of the Biotech Analysts at UBS, very happy to have Ocular Therapeutix here with us today. And joining us from Ocular is Pravin Dugel, the Executive Chairman, President and CEO. Pravin, thanks so much for joining us. Maybe before we jump into the specifics, can you tell us a little bit about when you joined Ocular and what you see as the vision for the company and the team that you've assembled?

Ellie, first of all, and Samantha, thank you very much for having us. I'm delighted and honored to be included. And I will assure you that I have no plans to return as much as I absolutely [ loved ] my time at Iveric Bio, I was very happily retired, this was such a unique opportunity where I knew there was a product from my time in Iveric Bio that absolutely worked, a platform that worked for sustained delivery, which as a physician, I knew how important it was for my patients. And I saw a regulatory path that was about as clear as it could possibly be. There was a singular challenge in this company. And the challenge was, can you communicate well enough to recruit for this trial, which was the first of its kind, but followed the FDA guidelines absolutely precisely. And in Retina, I was convinced that I could assemble what has been known now as really the dream team to be able to communicate exactly the reasons the FDA wanted this trial design. And I think we've been very successful in doing so because our recruitment has been just simply outstanding.

Great. Well, yes, maybe you could give us an overview of some of the data that you've seen so far, both some of the extended duration details on your mechanism of action? And where do you think this is differentiated in the wet AMD landscape?

Well, this is a tyrosine kinase inhibitor. And as you know, the VEGF receptors are tyrosine kinase. This works -- it's an intracellular pan-VEGF inhibitor -- very importantly, not all tyrosine and kinases are the same. This one, in particular, is about 200x more potent than others that are being developed. That, in combination with the platform, the platform being a hydrogel gives us the advantage of having a very similar PK/PD, which means that when the drug is gone, the hydrogel is gone as well. So there's no stacking issues whatsoever. We know from studies done in Australia and in the U.S., we're very confident that this will last for at least 10 months or so. So the trials are designed in a way to showcase that as well as lead us to, I think, a great deal of commercial advantage. What you'll notice is the trial designs are not the same. One is a superiority study. The other is a non-inferiority study. This was done from a regulatory point of view to give the FDA a great deal of confidence that this -- the results are indeed what they are. But it was also designed specifically to give us a very large, I believe, commercial advantage in potentially having a label that will have flexibility. In other words, dosing from 6 months to 9 months, we'll have repeatability as well as potentially the only drug in the market with a superiority lead.

Yes, that's exciting. Maybe we can go into that in a little bit more detail, specifically some of the FDA feedback that you got and the details of these designs?

Yes. And that's a really important question because I think there's a lot of confusion out there. What the FDA wants is really very, very clear. They have stated repeatedly, and this hasn't changed, even as Dr. Chambers has now left the FDA, this really hasn't changed with the current administration at all. What they've said is to say, look, we want you to compare a drug to what is being done in reality, not to a label that's never used. And what's being done in reality is treatment extend and what that means is that the drug is given and anti-VEGF has given and then one waits until it loses effectiveness and then that's repeated in a different cadence until that particular cadence is found as appropriate for the patient. And that's really what this replicates and that's what the FDA wants, which is -- the drug is given head-to-head and what we see is when that drug loses effectiveness. But just once the patient is then rescued and then the patient is on On-Label EYLEA for the rest of the trial. This is what the FDA guidelines dictate. This is exactly the way we designed the SOL-1 study and it was validated with a SPA agreement. We're very confident in our regulatory pathway for SOL-1. We also designed SOL-R exactly according to the FDA guidelines for non-inferiority. The FDA has stated explicitly that they do not believe that sham is proper masking. We have received a guided Type C response that is written, so a written response from the current FDA stating "the following in writing". First of all, they stated that SOL-R, our non-inferiority study is a registrational study, they've also stated that all we need is SOL-R and SOL-1 for approval. In other words, no other study is needed. Very importantly, they validated what we've been saying all along. They have stated again in writing that they do not recommend sham injections. They do not believe that sham is proper masking. They've also said that if there are studies with sham injections, and of course, we don't have any that, that will be at risk under review. And again, this validates everything that we've been saying. We have elected not to do any trials at risk, and therefore, given the SPA agreement for SOL-1, given the written Type C response for SOL-R, we are very, very confident in our regulatory path for both sites.

Great. And then maybe just talking a little bit about the data that you've seen so far, what gives you confidence and success in both SOL-1 and SOL-R?

Well, first of all, there are some boxes to tick, right? The first one, most importantly, is safety. And let me talk about that. We know that EYLEA and Lucentis are absolutely very, very safe drugs. There are superb drugs that we have decades of history with. In order to succeed, in order to replace those drugs, one has to be at least as safe as those drugs, and I'm very confident that our safety profile is as good, if not better. What actually gives me a great deal of confidence in that it's not just the trials that we have done, the 3 in Retina, which is one in Australia, one in the U.S. and trial called HELIOS, which is a small diabetic retinopathy trial. But actually, a glaucoma trial that's not all that well known with our glaucoma product called PAXTRAVA. And the reason I say that is because the hydrogel is exactly the same, and PAXTRAVA is placed in the angle and eye right behind the corneal endothelium. If you were to pick a place in the eye to place a product to check for any kind of safety issue, it will be right there because if there's any inflammation, if there's any safety issue, the endothelial cells are the first to be damaged, they do not regenerate and that causes thickening of the cornea. There was absolutely no change in the coronal endothelium. There was no thickening of the cornea, and that should give us, as it gives me a great deal of confidence in the safety of our product. As far as efficacy is concerned, we have excellent results in the trial from Australia. The take-home message there is that it's the first time that this product has been used. Any sustained delivery TKI for that matter has been used as monotherapy in a treatment-naive patient population, and the response was what one would expect for commercial-grade anti-VEGF as far as the OCT and vision acuity is concerned. As far as the U.S. study is concerned, here, AXPAXLI went up against EYLEA. EYLEA was the control. And what we're able to show there is that at 10 months, 80% of patients were rescue free, which gives us a great deal of confidence in the success of our primary endpoint at month 9 in SOL-1. And most recently, what we've seen are the results of HELIOS study. Now this is a small Phase I study, a safety study really for diabetic retinopathy. It was not designed for efficacy. It was a small study design only for safety. What we saw there was absolutely remarkable, which is that every single parameter for every single patient favored the drug, and that doesn't happen by accident. So with a single injection, I think there's very little doubt that at week 48, this drug is safe, active, effective in diabetic retinopathy. So all those things should give us a great deal of confidence in the data that is to follow.

Great. And any color on the powering in each of the Phase III studies and sort of the minimum threshold to hit superiority and non-inferiority, respectively?

Yes. So let me tell you about SOL-1. We haven't disclosed the powering in SOL-R yet as that study is just been recently disclosed. But in SOL-1, Again, the primary endpoint is at month 9. The primary endpoint is the percentage of patients who maintain vision. And the criteria is an absolute loss of 15 letters or vision, which is a net loss of at most 5 letters of vision because remember, these patients have to gain 10 letters of vision in order to qualify to be randomized. We believe, based on our internal modeling as well as information publicly available, such as [indiscernible] that EYLEA, the control arm that number at most will be 20%. We believe based on the U.S. study that AXPAXLI that number at 9 months at least will be 70% of patients. So we have a delta of 50% and we need statistically a delta of 15%, 1-5, to be statistically successful. So we are very, very confident in our powering. Again, we expect the delta at least at 50% and what's needed is 15%, 1-5. The other thing I would tell you also is that our SPA dictates that all rescues, all rescues, whether they're on protocol or off protocol be counted as failures and be tallied in the in the final result in the primary analysis. In other words, even if patients are rescued off protocol, they're not censored. They must be counted in the primary analysis. And again, we expect far more of those patients to be in the EYLEA arm than in the AXPAXLI arm. So as far as the rescues are concerned on-protocol or off-protocol, that also is very much in our favor.

Makes sense. And any changes in the rescue criteria in Phase III versus the other earlier trials?

The rescue criteria as mentioned in SOL-1 is going to be a net loss of at most 5 letters of vision. The rescue criteria in SOL-R has not as yet been guided publicly. We expect the rescue guidelines to be different and much more in line with the non-inferiority studies that you have seen.

Make sense. And so it seems like the enrollment has been accelerating and going well. Maybe just what are your times for completing enrollment in SOL-1 and SOL-R and the time lines to data?

So we're absolutely thrilled with the recruitment and the enrollment. On June 13, we had an Investor Day -- and I think we announced was beyond anybody's expectations or imagination, which is that we announced that 151 patients had been enrolled and we're in various stages of loading and randomization. This was really 8 weeks after this team got together, which is absolutely remarkable. That shows you that -- an idea of sharing those numbers and sharing that data was to show people that this could be done. This was being done that this dream team wasn't here just to be on the website, but they were here to do work, and they were actually achieving great results. We have reached very shortly thereafter, a point where the recruitment is not just linear, but exponential. And we're doing extraordinarily well. The other part that is also important is we announced then as we will still maintain that the screen failure rate is lower than we expected and lower than we modeled. So what that means to us is not only are we getting a lot of patients, we're getting really good patients, really high-quality patients as well. Since then, we haven't really given you any numbers or guidance, it hasn't been a long time. We're doing very, very well, and we kept on saying that we're very happy, We still are. Our original guidance in terms of completion of enrollment has been the end of the first quarter of 2025. We have not changed that. We have said, however, that we expect our enrollment to be earlier than that. And when appropriate, we'll certainly give you more specific guidelines.

Exciting. Congrats on all the progress. In terms of the landscape, there's a lot in development, looking at extended duration, other TKIs, gene therapy, maybe just where to see AXPAXLI fitting in the context of this landscape?

Yes. So I think it's important to step back and say, what is the best needed for any drug to replace the current anti-VEGFs that we have? And I say that specifically because I've been part of the entire anti-VEGF process when I was a practicing physician. Anti-VEGFs are extraordinarily good drugs. The boxes that need to be checked have a very, very high bar. The first one, and this has to be checked sequentially. The first one is safety, the safety of any drug has to at least match anti-VEGFs. You can't have an inflammation rate of 2% or 5% or 8%, and you certainly can't have inflammation where you don't know when the inflammation is going to occur. So the patient effectively has to be followed all the time. You don't know if it's going to occur early, late in the middle, et cetera. So if there's any drug or any strategy that does check that first box of the anti-VEGF safety, it simply is not going to go any further. The second box is that of efficacy. Anti-VEGFs are efficacious 100% of the time. Now unless you've got the wrong diagnosis. Now they may not work as well as you want them to work, but they will show some sign of efficacy 100% of time. So you can't have an efficacy rate that's going to be 50%, 60% or 70%. It's got to match the anti-VEGF. The third box is that of adoptability -- you've got to have a drug or a strategy that will allow it to be placed in the current workflow. It's illogical to think that doctors are going to close their office and change what they do economically completely because of a drug that's a very, very big ask. So at the end of the day, it really has to fit into the current workflow. And I believe that AXPAXLI checks all those boxes. And on top of that adds the durability that I've mentioned of at least 9 to 10 months. The other thing that I would also mention is that -- which really isn't talked about much is that there -- we know that most patients, almost all patients who get anti-VEGF in the current manner end up losing vision, not by re-bleeding but by fibrosis and atrophy. And we have good evidence now that, that happens because of the pulsatile nature of our treatment, where the back of the eye gets thick and thin and thick and thin. It's like having multiple concussions and the result of that is going to be atrophy and fibrosis. So if suppression occurred in a way to decrease those oscillations so that there is a low level of suppression that is constant then there's a really good possibility and there's very evidence for this that there will be less fibrosis, less atrophy and the long-term outcomes will be better. So I think the major advantages that AXPAXLI has that others don't in different categories -- and I think I'm very confident that once these studies are positive that this drug will be used pretty much universal.

Makes sense. And what are your expectations in terms of the dosing interval? You have the flexibility in the design between, I think, you said 6 to 10 months dosing. So what do you think you'll see in Phase III and how this could potentially affect the commercial uptake?