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

Good evening, and welcome to the 43rd Annual JPMorgan Healthcare Conference. My name is Dave Parag, and I'm part of the health care investment banking team here at JPMorgan. Today, I have the pleasure of introducing our speaker, Pravin Dugel, President and CEO of Ocular Therapeutix. And also here on the podium, we have CFO and COO, Donald Notman, who will be participating in Q&A. In terms of the logistics for today, please reserve any questions for after their presentation. For those in the audience, a mic will be passed around. And for those viewing on the web, please submit your questions online, and I'll be able to view them through the iPad on stage. With that, take it away, Pravin.

David, thank you very much. And I'd like to first start by thanking the organizers for this opportunity in this wonderful meeting, and I want to thank all of you for being here this afternoon. Let me see if I can find the clicker. Our forward-looking statements are in our filings. So Ocular Therapeutix is a public company targeting wet macular degeneration with this lead product,,AXPAXLI. So what is wet macular degeneration? Well, what macular generation is the leading cause of blindness in this country? And if you're in this beautiful city, and we're looking at this beautiful bridge and had wet macular degeneration, this bridge wouldn't look like this, but unfortunately, would look like this. We, at Ocular Therapeutix, have 1 goal, and that goal is very simple, is to redefine the entire retina experience. And we aim to do that by redefining 3 different portals. We will redefine treatment, we will redefine development, and we will redefine outcomes. And let me address each of these individually. First of all, redefining treatment. As mentioned, wet macular degeneration is the leading cause of blindness in this country, but it doesn't have to be. 1.6 million Americans suffer from wet macular degeneration in the United States alone. However, we have a proven target that we've known for many years, and that's VEGF. We also have proven treatments that we've had for several decades. That's the anti-VEGFs that are commercially available. So what's the problem? The problem you see is that 90% of patients, 90% require an injection, a needle in the eye, once every 1 to 3 months. And that's simply not sustainable. So we have a problem of sustainability. And for that reason, understandably, but tragically, 40% of patients in the U.S. alone discontinued treatment in the first year and end up going blind. So you can imagine an elderly patient with wet macular degeneration has to come in to see a doctor like me, once every month, for entire day. That's simply not sustainable. And because they're elderly, they oftentimes need a loved one or a caregiver as well. And that person oftentimes of a working population also has to take time off. to bring this person in. And although there's effective treatment, it is tragic that 40% of patients in this country discontinued treatment in the first year and end up going blind. Now to add salt to the wound, it gets even worse than that. Those patients who are actually able to be on treatment, after about 3 to 5 years, end up losing vision anyway, and they lose vision because of the episodic nature of our treatment. When we give these injections every month or every other month, the back of the eye gets thick and thin and thick and thin, akin to having multiple concussions in the back of the eye, which causes scarring and atrophy, causing to a loss of vision. At Ocular Therapeutix, our goal is to correct both of these problems. We intend to have a drug that's both sustainable as well as a drug that will provide better chronic visual outcomes. So what is the thirst for this? Well, history has shown us that incremental durability improvements deliver significant market opportunity. And let me show you this. With Lucentis, there was a durability of 30 days, and the global market revenue was $1.8 billion. With EYLEA, now 7 years later, EYLEA wasn't safer. It wasn't stronger. It simply lasted 2 weeks longer, so a total of 44 days, and the global revenue rose to $2.8 billion. Most recently is the second version of Lucentis, which is VABYSMO. And again, VABYSMO is not safer, it's not stronger. It simply last 2 weeks longer, so a total of 57 days and the global market revenue $4.3 billion. Now when we talk about AXPAXLI, we're talking about a different orbit altogether. We're not talking about days. We're not talking about weeks, we're talking about lasting 6 to 12 months longer. So you can see the market opportunity here is enormous. So what is AXPAXLI? Well, AXPAXLI consists of 2 different components. First is the drug itself, which is axitinib, which is a multi-targeted tyrosine kinase inhibitor. It is a highly selective pan-VEGF inhibitor. It's the most potent and selective TKI that's being tested. And this is placed in a proven platform, ELUTYX technology, which is a bioresorbable sustained drug delivery platform. It's a proprietary hydrogel. And it's important to say here, this is not an implant. This is a hydrogel. It's versatile, it's biocompatible, and it's tunable. So AXPAXLI is a single injection, a single hydrogel. It provides continuous and consistent delivery for up to 12 months. It has complete and predictable bioresorption. Again, very importantly, this is not an implant. This is a hydrogel. So when the drug is gone, the hydrogel simply dissolves. There are no carcasses left behind. There's nothing floating around. There's no stacking issue whatsoever. When the drug is gone, the hydrogel is going. Now redefining development. We have proof-of-concept data that has demonstrated very robust lead that AXPAXLI has activity and durability. I'll feature 2 studies. The first is our study in the U.S. that shows that with a single AXPAXLI injection 100% of patients, 100% of patients were rescue-free per protocol at 6 months. And again, with a single injection of AXPAXLI 80% of patients were rescue-free per protocol at 10 months. In our study in Australia, we're able to demonstrate substantial monotherapy activity in treatment-naive patients with wet AMD. And this is as monotherapy with AXPAXLI. Currently, we have 2 Phase III registrational studies. The SOL-1 study, which is designed to show superiority with a single injection of AXPAXLI, and the SOL-R study, which is designed to show noninferiority to standard of care with repeat dosing. These studies are complementary and designed to show durability, repeatability and flexibility. We're redefining development by redefining the process, we're derisking the entire program. The main features here are compelling Phase I data, derisking of the Phase III designs and derisking of the regulatory path? Let me first address SOL-1. SOL-1 is a superiority study comparing a single AXPAXLI dose to a single aflibercept or EYLEA 2-milligram dose. It is designed as a 2-arm trial with 150 patients in each group. The primary endpoint is at week 36 and is designed to demonstrate that a single AXPAXLI dose is superior to a single aflibercept or EYLEA 2-milligram dose based on the proportion of patients who maintain visual acuity defined as losing less than 15 letters of vision at week 36. The main features here are that we've derisked this trial by derisking the patient population by randomizing only those strong anti-VEGF responders. The trial is designed to establish AXPAXLI durability. It's also designed to enable a superiority claim on the label. Very importantly, this potentially would be the first and only superiority claim on the label in our field, and it's aligned with the FDA through a special protocol assessment or a SPA. Now let me move to the second registrational study named SOL-R. This is a noninferiority study comparing AXPAXLI given every 6 months to aflibercept 2 milligrams given every 8 weeks. It's a 3-arm trial with 825 total patients randomized in a ratio of 2.2 and 1. The primary endpoint is at week 56, and is designed to demonstrate that AXPAXLI is noninferior to fixed-dose aflibercept at 2 milligrams every 8 weeks with respect to mean change in best corrected vision acuity at week 56 from baseline in wet AMD patients. The main features here are that we've derisked this trial by derisking the patient population by randomizing reliable anti-VEGF responders. The study is designed to enable every 6-month dosing on the label, and it provides commercially relevant data and is aligned with the FDA with a written Type C response. We have enrolled and randomized and completed SOL-1 very much ahead of schedule. We expect the top line results to be in the fourth quarter of 2025. We have randomized over 300 patients, again, very much ahead of schedule. In regards to SOL-R, our second registrational study. This was conceived of in May of 2024. From the time of conception to the study to the time of the enrollment of the first patient was less than 90 days, and that's remarkable, less than 90 days. A month later, we received a written Type C response from the FDA validating SOL-R as a registrational study. And since that time, we have been very actively and very successfully recruiting SOL-R. Today, I'm very pleased to announce to you that as of January 10, we have currently enrolled 311 patients in SOL-R across various stages of loading and randomization. So let me repeat that in a very short period of time, in this second registrational study, we have already enrolled 311 patients across various stages of loading and randomization. Now let me switch to diabetic retinopathy. Diabetic retinopathy is a large and unrealized market opportunity. Diabetic retinopathy is the leading cause of blindness in the working-age population in this country. about 3/4 of patients with diabetic retinopathy suffer from nonproliferative diabetic retinopathy. So that's more than 6 million patients in the United States alone. And here again, there is a known target, which is anti-VEGF, and there are known treatments that we've had for decades, which are the commercially available anti-VEGFs. But yet in this blinding disorder, less than 1% of patients are actually being treated. And why is that? Well, the reason is the same as for wet AMD, and that's a matter of sustainability. It's simply not sustainable. And that's, again, a problem that we and Ocular Therapeutix look to correct. We have a study, a proof-of-concept study, a Phase I study named Helios. This was designed as a multicenter, double-mass, randomized, parallel group study of AXPAXLI in moderate to severe to severe nonproliferative diabetic retinopathy without central involving diabetic macular edema. The primary endpoint was the safety and tolerability of AXPAXLI. The secondary endpoint, the changes in the diabetic retinopathy severity score, rescue therapy, vision and OCT and, most importantly and most clinically relevantly, vision-threatening complications or the risk of losing vision and going blind. The results, in my opinion, are absolutely remarkable. First, look at the control, and what you'll see there is that at week 48 in the control arm, 37.5% of patients, so almost 40% of patients developed vision-threatening complications. And this is in line with what we know about the natural history of this disease. That year upon year, 30% to 40% of patients develop vision-threatening complications and risk blindness. Now look at the treatment arm. That's what's remarkable. With 1 injection AXPAXLI, 1 injection at week 48, that rate of vision-threatening complications was reduced literally to 0. So what does that mean? That means that I, as a retina physician, can be sitting across the table from a patient and say, "Mrs. Smith, your risk with this blinded disorder of developing a vision-threatening complication year upon year is 30% to 40%. And if you come to see me once a year, but once a year, much like you go to a dentist for teeth cleaning, I can reduce that risk literally to zero." That's powerful, and that's impactful. So AXPAXLI is not just preventative. In this study, we had patients with noncenter involving diabetic macular edema. And every single patient, every single patient with diabetic macular edema improved. Every single patient. So not only is AXPAXLI potentially preventative, but it is also therapeutic for patients who already suffer from vision-threatening complications. Now let me switch to outcomes. What does all this mean to patients? So let me go back to wet macular degeneration. I said earlier, that understandably, but tragically 40% of patients in this country despite a known treatment drop out because of sustainability. With a more sustainable treatment regimen like AXPAXLI, if that 40% number was reduced by even 5% to 35%, that means that more than 50,000 patients in the U.S. alone could avoid vision loss. If that number was reduced to 25%, more than 150,000 patients in the U.S. alone could avoid vision loss. And if that number was reduced to 15%, astonishing more than 0.25 million patients in the U.S. alone could avoid vision loss. Those are pretty powerful numbers. And that's just the first problem that we will correct. The second problem is that of chronic visual acuity by not having these oscillations in the back of the eye by avoiding fibrosis and scarring. We believe that we'll have better chronic vision outcomes in both the patients who don't drop out as well as in the patients who are already on treatment. So what is the market opportunity for this? Our ongoing registrational studies target wet macular degeneration. And despite the 40% drop out, that market is huge. Despite the 40% drop out, that market consists of 1.65 million patients in the U.S. alone. Soon, we'll be targeting nonproliferative diabetic retinopathy. That target is even bigger. Here, that we're talking about 2.7 million patients in the U.S. alone and future opportunities where VEGF is a known and proven target include retinal vein occlusion, which is 1.4 million patients in the U.S. alone, proliferative diabetic retinopathy, 1.7 million patients in the U.S. alone, and diabetic macular edema, 1.7 million patients, again, in the U.S. alone. So a total market opportunity in the U.S. alone of 9.2 million patients. So as I mentioned, we will redefine the retina experience we will redefine treatment, we will redefine development, and we will redefine outcomes. AXPAXLI has the potential for up to 12-month dosing across all retinal vascular diseases. It has a proven mechanism of action with a proven delivery and compelling early results. We've redefined development by derisking our registrational programs that SOL-1, which is a superiority trial, and SOL-R, which is a noninferiority trial. We know from our experience practicing for decades that for a drug to be easily adopted in retina, it needs to be safe, it needs to be effective, it needs to be durable, and it needs to be flexible, and AXPAXLI checks all of these boxes. As a company, we at Ocular Therapeutix are resourced for success. Infrastructure, we have clinical and commercial capabilities to execute successfully. Capital. We have a strong cash position, $427 million reported in September of 2024, expected to fund operations into 2028. And finally, expertise and, most importantly, expertise. We have a world-class team that has played key roles, leading roles, in the approval of LUCENTIS, EYLEA and VABYSMO. Let me end where I began. We will redefine retina globally. We will redefine treatment. We will redefine development, and we will redefine outcomes. I'd like to thank the organizers for allowing me this opportunity, and I'd like to thank you for being here today, and thank you for your attention. I'm happy to take any questions. Dave?

Thanks, Pravin. I'll kick it off with the first question. So you kind of touched on this, but there are a few extended duration TKIs being developed in the wet AMD space, along with other long-acting approaches to treatment. Can you walk us through how ocular's asset is differentiated from those in development?

Yes. I certainly can. First of all, look, not all TKIs are the same, right? TKIs are a class of compounds that behave and act quite differently. What I can tell you is the TKI that we're using axitinib is known to be the most potent and most selective of the TKIs that are in development. And that is combined, as I mentioned, with a hydrogel. It's not an implant. It's a hydrogel that is tunable. So it's tuned to dissolve and go away when the drug goes the way. It's targeted for 10 months, which is exactly what we want in a study that has a 9-month endpoint. So in those ways, I think we're very much differentiated from any of the other products that are being studied right now. Let alone the fact that our data is completely different. As you know, in diabetic retinopathy, this drug was used, as I mentioned, with Helios as the only drug with a single injection with the results at 48 weeks. And I showed you some of the results, but it's important to underscore that every single parameter we study, and that mean absolutely every single parameter was aligned in favor of the drug, every single one of them, and that doesn't happen by accident. Our regulatory pathway is differentiated. We have a very clear regulatory pathway where we've followed exactly what the FDA wants us to do. And that's validated with a Spa WITH SOL-1 and a Type C written response in SOL-R. So we're differentiated in many ways from the data to the biology as well as the regulatory pathway. It couldn't be that clearer. Somebody's got to have some question. Anything is fine. Yes?

Yes. for different companies sectors. Is there a standard for investment, whether it's in and number of visits, all that kind of stuff to go off.

Yes, it's a great question. The question is what are the standards for rescue? And I think those standards, quite honestly, are very clear. So let's do 2 things. Let's differentiate the superiority study from the noninferiority study because the standards are different, okay? So in our superiority study, which is SOL-1, the standard for rescue is very clear. It's a loss of 15 letters of vision, right? So there's no question about that whatsoever. It's a single rescue, and that's considered a treatment failure. So when that occurs, that patient then goes on on-label EYLEA from that point on, and that patient is counted as a treatment failure. And that patient is then part of the calculation in the primary analysis in the proportion of patients who maintain vision EYLEA versus AXPAXLI. So that's very clear, right? Now a little bit more complicated is the rescue criteria for patients in the noninferiority study. Now that also is a discussion with the FDA. Our expectation, we haven't guided you yet as to what the rescue criteria are for our noninferiority study, which is called SOL-R, but it's going to be very different than SOL-1 because, again, this is a noninferiority study. And my expectation is that, that is going to be very much in line with the noninferiority studies that have been done in the past historically. So very much in line with that. The other question that was raised...

[indiscernible]

Which is the BCVA OCT combination. That is correct, yes. The other question that was raised, which was a little bit more nuanced, and I want to address this directly, was how many rescue injections can you have in a noninferiority study and still be legitimate, right? And that was answered directly by our FDA Director, Bill Boyd. And what he said was -- and I'm paraphrasing him very clearly, 1 rescue injection is allowed, okay? More than 1 is under review. But what they don't want is they don't want a rescue injection to influence the primary end point and they consider the commercially available anti-VEGFs to last for about 3 months. So the bottom line is if you're giving a rescue injection within 3 months of the primary end point that's going to be under review because that potentially can influence the primary endpoint. One rescue is okay, on rescue injection, but more than 1 is under review. Does that make sense? Yes, shoot.

[indiscernible] through the trial?

Yes. Yes. I mean that's pretty standard in all the trials, right? So we are. We have monthly visits that look at the OCT as well as the vision. I will tell you that if there are issues, for instance, particularly in SOL-1 1, and that was one of the concerns, and maybe that's what you're driving at, which is to say what if there's thickening of the OCT? The and I think you were going there -- what if -- and with your small, I can see you probably were going there, which is actually a very fair question. What if the OCT starts getting a little thicker but the patient hasn't quite met rescue criteria? Well, we have safeguards in place. We have 2 world famous medical monitors, [ Barry Cooperman ] and [ Darius Moshfeghi ], who are available pretty much 24/7 to guide people through that. The PIs can have the patient come back as often as they want. They don't have to wait for a month. If they feel like this patient needs to be observed in a week, that patient can come back in a week. There's no issue with that whatsoever. And I will tell you, and let me be very clear, we're under masking right now. We are very, very, very happy with the conduct of the SOL-1 study. The on protocol rescues are exactly what we would expect. We are very, very happy with that, and we're very happy with the conduct of the study. And that speaks to the study centers, RPIs as well as our medical monitor. So again, the conduct of SOL-1 1, again, under masking is something that we're absolutely thrilled with. Couldn't be that clearer. Yes, shoot.