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

All right. We're going to get started with our next session. Thank you, everybody, for joining us at the Leerink Global Healthcare Conference. I'm Marc Goodman, one of the biopharma analysts. And we're lucky to have Ocular Therapeutix with us, Pravin Dugel, who's the CEO. Thank you for joining us.

So maybe I'll let you just make a quick just opening comment. It's been just a lot going on over the past year and joining the company. And just give us a sense of why this company. I guess you could have done a lot of different things, and it's always an interesting question to kind of kick start.

So Marc, first of all, thanks for having us here. It's really an honor and delight to be here. And when you ask an open-ended question like that, unless you pull the plug on me, I may keep going for the entire half hour but it's really simple. Look, as a person that practiced for 30 years, to me, it's absolutely tragic that we have a treatment that we know works, a target that we know is valid. And yet in this country and in this country alone, in the first year, 40% of patients are dropping out of treatment because it's not sustainable. 40% of patients that drop out are going blind. And to me, it's just absolutely tragic and it's solvable. The other part also that's solvable is that even in patients who stay after about 2 to 5 years, inevitably end up losing vision anyway, even with this treatment. And the reason for that, now we understand it is because of the way we treat, which also makes it not sustainable, causes oscillations in the back of the eye because we treat in a pulsatile way, the back of the eye, which is nerve cells, end up getting thicker and thinner and thicker and thinner. It's like having multiple concussions. And they end up having fibrosis and atrophy and going blind. So what we're doing in this company with AXPAXLI solving 2 problems. The obvious one, which is that of a sustainable treatment, but the other one, which may not be quite as obvious but is equally important, which is better long-term outcomes by reducing the amount of fibrosis.

Right. Okay. So just high level for a second, just explain the goal of the product for a second before we jump into because I don't want to get into the details too much without at least the high-level overview.

Well, with AXPAXLI right now, we're in 2 Phase III studies, so 2 registrational studies. One is a superiority study called SOL-1. The other is a non-inferiority study called SOL-R. And you'll notice immediately that what we're not doing is we're not repeating the same study twice, which is what most people do. And this is a very deliberate, and we believe it's quite revolutionary in a positive way, which adds even more information, having 2 different studies, a superiority study and a non-inferiority study reached the same conclusion. So we're targeting wet macular degeneration with a product called AXPAXLI, which is a TKI, a tyrosine kinase inhibitor. We've also said publicly that our plan sometime in this calendar year is also to target non-proliferative diabetic retinopathy for which there is -- effectively, there is no used treatment at this point.

Okay. Good. Thank you. So during the earnings call, there were some changes to the study. So take us through here's what we were doing and here's what we changed, and here's why we're doing this?

Yes. The bottom line of what we -- the change, which is an amendment to the SPA is that it allows us to get to the finish line much faster, much cheaper and with a better label. And let me explain that. What we had in the superiority study, the SOL-1 study was a primary endpoint at month 9. We didn't have anything else after that. And as you know, what the FDA requires is a certain number of patients to be followed for 2 years for safety reasons. So we had to overpower our second study named SOL-R in order to satisfy that FDA requirement. And what we did was we requested an amendment that was approved to extend SOL-1 to satisfy the FDA's requirement, we also could now reduce the size of SOL-R. So effectively, what we did was to reduce that delta between the card turn of SOL-1 and SOL-R. Remember, we need both studies to be positive before we can submit to the FDA. And effectively, we can now submit to the FDA with 2 positive studies a lot faster than we could have without the amendment. So -- and by the way, I'm sorry, Marc -- we gave up absolutely nothing, and that's the really important part. We gave up absolutely nothing. The primary endpoint remains exactly the same, which is 9 months in SOL-1, and the statistics have not changed. So again, recapping the end result of this, we will get to the finish line a lot faster, a lot cheaper and with a much better label.

So it's basically numbers of patients is what we're talking about?

We shifted from every all the safety follow-up being in the second study to some being in the first study. Therefore, we could reduce the size of the second study.

Why now?

Yes, that's a great question. So -- and that's been asked with me often, which is to say, look, why did you do it now? If you knew that, why do it now? Why not do it in the very beginning? And the answer is very simple. In this -- what I'm very proud of and what we did in this company is to have what we call an All-Planet team. We've got a whole bunch of people here that have been doing clinical trials for 20 to 30 years. In our experience in retina and doing clinical trials, what we noticed undermasking, of course, is retention rates like we've never seen before, the best retention rates that we've ever seen, which has been phenomenal. We've got fantastic retention in SOL-1. And without having fantastic retention, we would have never proposed this amendment because we needed to have the confidence of saying we absolutely will get that number of patients to the finish line of 2 years. So why now is because we needed to see that retention number.

Okay. That makes sense. So maybe it's a good time to talk about what the market needs, which is kind of where you started, which is this duration. So talk about how you think the product will be used in the real world. And then also talk about there are some other TKIs. We didn't talk about it's a TKI, but talk about when we have a TKI, there's some other TKIs and how you differentiate your product from the others in the market.

Okay. There are a lot of questions there, but let me just answer the first one. First in terms of how it will be used. First of all, one of the really important things is that it will be adopted the very next day after it's approved. There's going to be a very simple and very quick and very seamless adoption. And that's because of logistics and it's also because of economics. The logistic part is very simple. Nothing needs to change for the doctor. There's not a single piece of new equipment. There's absolutely nothing that needs to change. The patient flow doesn't need to change. The doctor simply reaches out and gets a better medicine without having to change one thing in his or her office whatsoever. So it will be very, very easily and seamlessly adopted. The whole experience for the doctor and the patient is going to be no different than injecting Eylea or Lucentis. It's just a better drug with a better outcome that lasts longer. Now from an economic point of view, it's a win-win-win for everybody involved. As I said, let's talk about payers first. As I said earlier on, 40% of patients in this country alone are actually dropping out of treatment. Those patients don't drop out of the payers' insurance policy. Those patients are going blind. And having been in boards of payers, they're one of the costliest types of patients, and I know this sounds very cold, or blind patients. They use an enormous amount of resources, have all kinds of accidents, things like that. And to be able to reduce that by even 10% means because now we have a more sustainable treatment means that there are about 0.25 million more patients that are being treated in this country alone. That's a huge cost savings for payers and much better for patients, obviously. The payers will love this. That means that we'll be able to certainly be eligible for premium pricing. That also means that the ASP will be higher, so the doctors will get paid more per injection. So from an economics point of view, it makes complete sense. Doctors oftentimes don't know economics as well as they should. And if you ask a lot of them, they'll say, well, it's a better drug. It's going to be much better for patients, but I make my money by injecting and I may be injecting less. That's absolutely not true. They'll actually be injecting a heck of a lot more, not the same patients, but the attachment of patients will be much greater because the dropout we're convinced will be less. Again, even if the dropout is reduced by 10%, that's 250,000 more patients in this country, they'll be eligible for treatment. So they can inject all they want. They'll inject with a better drug. They get paid more, and they potentially will have other targets for which there is no injection at this point, which is non-proliferative.

Everybody understands. So how are the docs making money? How has that changed? I mean.

Well, the ASP changes because the higher the price of a drug, any drug.

And what's the ASP?

That's the actual pricing that.

No, what is it plus now, though? It's ASP plus.

Right now, it's 2%...

2% -- it used to be higher...

Exactly...

Because the pricing will be higher.

Yes.

So I'm just saying that it used to be ASP plus 6 and now it's...

Down -- so they like...

So I'm saying they like the...

Exactly. The drug could be higher. Because on an absolute basis, that's what they're...

Correct. Yes, yes. Okay. So let's come back to how you see this product in the real world. So it's launched, it's...

So again, it will be adopted very quickly for the reasons that I mentioned. And I think the way that it will be used in the very beginning is what we call treat and extend. And for those of you who are not familiar with treat and extend, what we do is to go ahead and treat a patient with, say, Eylea, Lucentis, what have you Vabysmo. And then for every patient, we wait to see when that drug loses effectiveness. For some patients, it may be after a month, for some maybe after 2 months or 3 months. And then we go ahead and keep doing essentially trial and error until we find the proper cadence for that particular patient. That's treat and extend. And I think that's exactly what we'll do with this drug. And the reason for that is very simple. We're used to doing it. We're very familiar with it. However, the treatment extend will be moved, the needle will be moved very much to the right. And what I mean by that is if there's a patient that requires Eylea, say, every month, that patient may now require AXPAXLI every 6 months. If somebody requires Eylea every 2 months, it may be every 10 months with AXPAXLI. So I think it still will be treat and extend, but it will be moved very much to the right. My prediction, and this is just my prediction, is that after a little bit of time, I think we'll all move to fixed treatment. And the reason for that is, again, quite simple. It's because treat and extend as useful as it is now, is very, very difficult on the patient and scheduling for the doctor.

A lot of experiments.

It's a lot of exactly -- and scheduling-wise, it's a nightmare for both. And I think what people realize is to say, look, this is a great drug, and it lasts for this longer period of time. It's perfectly safe and it's very effective. And most of us like to see patients with chronic diseases every 6 months. I think they'll come in every 6 months. The burden is coming in. It's not the injection, right? They'll already have taken the burden of coming in. And I think they'll be just treated every 6 months on a fixed basis. The scheduling will be easy for the doctor and it will be easier for the patient as well.

So today, it's VEGF, obviously, what you're talking about the treat and extend. So the goal here is maybe someone's been on Eylea for a certain amount of time. They've had the loading dose. They're comfortable with this 1 month or 2 months or whatever it is that they're comfortable on in year 1 and then why not bring your product in kind of is that how you see this like later in year 1? Or is it a year 2 or even out of the gate, why not just -- how do you.

So Marc, quite honestly, I do believe that -- I think what you're asking is, is this a first-line drug? Or is this a maintenance?

Yes, I think that's...

And it's a fair question. And what I would say is really simple. I mean my flippant answer is why would I care because if somebody has to use Eylea once or twice and then uses AXPAXLI for the next 20 years, it's still going to be the most impactful drug. And that's the worst-case scenario. However, I firmly believe that this is the only drug that will be needed. I believe it is a first-line drug. And why do I say that? It's simple. One is because we've got great studies to show that steady state is established within 24 hours. And we have patients in our study in Australia, where this drug was used as monotherapy in treatment-naive patients, the only thing that was used. And what we saw were responses that were akin to what you'd expect to see with commercial grade Eylea or Lucentis as quickly as quick.

Exactly. So there's no reason to even wait...

That's what I think. Now having said that, even the worst-case scenario, if it wasn't, this still will be by far the most impactful drug in our field. So somebody will do that study. Maybe it will be us, maybe it will be others. But I believe that this will be the only drug that will be required.

Yes. So I think a frequently asked question, I'm sure, as well, you have competition kind of going after your space a little bit as well, doing with the same -- we'll call it the same business model, same 6 months. Talk about just the differences between your product and their product?

Well, look, people ask me about the biosimilars for the anti-VEGFs and Vabysmo and so on and so forth. As far as the anti-VEGFs are concerned, we're agnostic to that. It really doesn't matter because we're in a different orbit. When we talk about a Vabysmo or high-dose Eylea, we're talking about adding another 2 weeks or what have you. And by the way, we will have data that we will have -- that's not nonstatistical data because there is a masking arm versus high-dose Eylea in the SOL-R trial, the third arm. And it's nonstatistic numeric data that we'll have. But nonetheless, again, these drugs add another couple of weeks. We're talking about a different orbit. We're talking about 9 to 12 months. So we're not worried about that fight whatsoever. As far as other TKIs are concerned, look, we're very different. Our TKI and what is known to be the most potent by 200-fold or so, the most selective by about 100-fold. Our data is completely different than others. And very importantly, the format is completely different. We have a tunable hydrogel. There are no carpuses floating around. There's nothing left behind. When the drug is gone, the hydrogel is gone. So it's an entirely different product.

And what about the clinical studies that everybody is pursuing? Like this is the part that I didn't quite understand, the sham versus the not sham. Can you just explain to people?

Yes, absolutely. So what people don't realize is that when you numb the eye to give an injection, you just numb the skin of the eye, what we call the conjunctiva. That's all you know. You don't numb the optic nerve. And the consequence of that is the vision doesn't change at all. And you can imagine people notice tiny, tiny floaters. They certainly notice when a huge amount of water or drug is coming in. So typically, in clinical trials, and this happens all the time, patients would say, "Oh, I saw it come in. I see the drug come in because they see a whole bunch of stuff coming in because the optic nerve, again, functions just as well as it always did. And in sham, what you do is you touch the skin of the eye with the hub of the syringe. There's nothing going in at all. So patients can easily say, look, doc, you didn't do anything. I don't see anything. And or they'll say, "Oh, you inject it. I can see the whole thing coming in. So the FDA knew this all along and said, look, sham is not proper masking period. And they set very clear guidelines and what they want. So if you want to go down a regulatory pathway that is risk-free, this is what you do for non-inferiority. This is what you do for superiority. And we followed the guidelines exactly. And we're rewarded with a SPA with the SOL-1 study and written Type C letter for SOL-R. So we're doing exactly what the FDA wants us to do. We believe that our path for regulatory approval is completely derisked.

Right. You nailed both studies, you're there. Right. Let's talk about SOL-1. Looking at the percent of patients who make it out to this 9 months without rescue, I think this would be interesting. There's no rescues. I guess this is kind of an interesting question, right, because you worry about, I guess, what's the right word, off-protocol rescues. Is that the right word? Just somebody who's just because it's the right thing for -- I mean, how does that work here in this study?

So let me talk about the statistics and the powering and then we'll talk about what we see right now. As far as the powering is concerned, with very good modeling as well as with studies that are publicly available, such as TALEN, for instance, we believe that with a single injection of EYLEA at most 20% of patients will get to that 9-month mark. Remember, the primary endpoint remains at 9 months, and it's the percentage of patients who maintain vision, right? We believe that most with EYLEA that's going to be 20%. Based on our U.S. study, we believe that, that's going to be at least 70% with the AXPAXLI group. So the delta is 50% and all we need is a 15% delta to be statistically significant. So we're quite well powered as far as that's concerned. On top of that, per RSPA, what the FDA has said is that as far as rescues are concerned, nobody will be censored. That's really important. So every rescue, whether on protocol or off protocol has to be counted for the primary analysis. And that's very much in our favor because there will be many more of those in...

Work in your favor -- is that fair?

Well, we're happy to have that. But there will be many more in the EYLEA arm than in the AXPAXLI arm. So clearly, as far as the powering is concerned and the statistics are concerned, we are very much favored, I believe. So we're in very good shape. Now what I have said publicly is, obviously, with SOL-1, we're masked. But we are -- our #1 priority in this company is the conduct of the trials. And the way we look at the conduct of the trials is by looking at the number of rescues, the cadence of the rescues and whether the rescues are on protocol or not. And what I've said publicly is when we look at those 3 parameters, we couldn't be happier. We're absolutely thrilled. I've also said publicly that the vast, vast, vast majority of rescues, and I've said 3 vasts are absolutely on protocol.

Interesting. Okay. And just remind us like where are we in enrollment of these studies? So...

With SOL-1, we have completed randomization in December, and we announced that publicly. With SOL-R, we haven't guided you as to the most recent updates. What we did say at the time of JPM, which was in January, is that we had 311 patients who are enrolled in various stages of loading and randomization. Now obviously, with 1/3 of the patients now being reduced, right, because we've gone from 825 patients to 555 patients in SOL-R based on the recent amendment, we believe that, that randomization, the completion of SOL-R is going to be much faster.

Right. Okay. So the timing now of when we're going to get data for these studies is what?

So again, it's a little bit too early to say for SOL-R. We will guide you when appropriate, but we haven't done so as yet and SOL-1.

And SOL-1.

And SOL-1, what we've said because of the amendment, remember, we want to -- we need to remain masked in order to get the 12-month data. Now what we will have is the card turn in the first quarter of 2026.

So in a sense, SOL-1 is going to take a little longer and SOL-R is going to take a little shorter. And at the end of the game, it doesn't really matter because they both have to be done to file.

Well, not quite. So SOL-R, because we have to keep masking is going to be -- instead of being in the fourth quarter of 2025 is going to be in the first quarter of 2026. So a very slight...

SOL-1.

SOL-1, right whereas SOL-R now will be reduced in size and will be a lot faster. We haven't guided as to when that will be. However, we need both studies to be able to apply to the FDA. And the application process because SOL-R now is going to be so much faster is also going to be a lot faster.

Okay. Good. NPDR. Talk about that program and just a little bit of the saga with it and big picture and then kind of come down to your program and where we are?

So non-proliferative diabetic retinopathy is a huge unmet need. There are about 6.5 million patients in this country. What we know with that is that these are patients that are asymptomatic, are working age typically. However, the risk of vision-threatening complications is about 30% to 40% year upon year. There is a very effective treatment that's never used, which is the anti-VEGF. That has to be given every month to every other month. And it's -- and less than 1% of patients are being treated, less than 1%. So there's a humongous need. There's a well-known target. And there's -- and unfortunately, patients continue to go blind.

And they're not getting VEGF.

And they're not getting...

Not approved.

It is approved but patients just can't come in every month. These are asymptomatic patients, and they're not going to be leaving their work to come in every month or every other month. So effectively, nobody is getting treated, although there's a very well-known target, right? So it's a fantastic opportunity. What we did was a study called HELIOS, which is primarily a safety study. What we saw there at week 48 was that in the control arm, 37.5% of patients developed what we call vision-threatening complications, right? This is diabetic macular edema or proliferative diabetic retinopathy, which is right in line with the natural history. I said 30% to 40%. However, what to me was absolutely remarkable was that in the AXPAXLI arm with a single injection of AXPAXLI at week 48, 0% of patients, 0% of patients have vision-threatening complications. I mean that is remarkable. As a physician, I can sit there with a patient and say, if you come in to see me once a year, like you go to your dentist for teeth cleaning, I can reduce your chance of having a potentially blinding condition from 30% to 40% to absolutely 0. I mean that is remarkable. So we absolutely will go after nonproliferative diabetic retinopathy and diabetic macular edema. And I say and diabetic macular edema because every patient who is enrolled, every single patient who had diabetic macular edema with a single injection improved at week 48. And what we've done is to show you not just every single patient, we've shown every single eye. And the more we analyze this, the better and better and better that data gets. As you saw maybe in the Angiogenesis presentation, which was a few weeks ago, when we looked at different layers of fluid, there was clearly a separation in favor of AXPAXLI. So we will go after nonproliferative diabetic retinopathy and diabetic macular edema. We will meet with the FDA in the first half of this year. We've said we'll do that, and we'll guide you as to the study when appropriate. It's a clear and open target for us, and it's -- there's clearly a huge need as well.

So there was confusion. You had the 40-week data, and then you showed the 48-week data...

That's right?

Right? So what was the confusion?

Yes. So I don't know there was much confusion...

What was the debate? What was the question?

Yes. We unmasked the trial at week 40, right, because the primary endpoint was reach. It was a safety study, and there are absolutely no safety issues, and there have never been safety issues. The data was so good, we said, look, let's try and follow the patients as much as we can. And the most -- once you unmask the trial, it's difficult to follow the patients, right? So we went ahead and follow the patients up to week 48, and we showed everything.

Right. That's the data that you were just talking about...

Yes. The week 40 is just as good as well. The week 48 gets even better.

Yes. It's just interesting how like -- I don't know, I guess, the response was different, I suppose, people understanding the data better.

I think what you're talking about is the share price, right?

Yes.

That's what we're talking about. Okay. So that's the confusion. So yes, so what ended up happening is very simple. This was a safety study, right? And the patient population was really not controlled and was not super selected. And I think what people did was to look at that and say they compared it to what's called the PANORAMA study where EYLEA was given every month or every other month, and they looked at something called a 2-step difference, right, which is an arbitrary profile that we have in terms of response. And they looked at that and they said, "Wow, yours is different, your is not as good as Panorama's. Well, it wasn't because of a safety study. It wasn't designed for that. It was a small safety study. Now if it was -- patients were selected specifically for that, we're convinced with the data that we have that we can go ahead and be as good. But again, it wasn't selected for that. One should really look at the effect of a single injection over 48 weeks in the vision-threatening complications as well as if you look at the DRSS changes, everything also there is in favor of the drug.

Yes. Let's come back to SOL-1 and SOL-R. And obviously, you need both studies to be successful to file whatever. So talk about, okay, the first one comes out, how do we think about the second one with respect to derisking and...

That's a great success. So we are convinced with a lot of work internally that with a positive SOL-1 study, the chance of SOL-R being successful is through the roof. And we are absolutely confident of that. And there are many reasons why, but what it really boils down to is if the drug is going to last for 9 to 12 months, why would it not last for 6 months? And that's really what it is, is repeating every 6 months in SOL-R. So we're very confident that with a positive SOL-1, we'll have a positive SOL-R.

Yes. And so I guess, right now, you're thinking the second study will be when again? Because the first study will get the data, as you said?

So the first study, SOL-1, will have the card turn in the first quarter of 2026. And the second study, SOL-R, we haven't guided.

It will be in '26, though.

We haven't guided you to that as yet, but we certainly feel it will be much faster now with the amendment.

Right. Okay. Got it. Got it. What have we not hit on in our last couple of minutes? What else?

Well, I think the most -- I feel the most misunderstood or not understood part of our trial designs is the patient selection. What we do not do in retina is we don't talk about patient selection all that much, but we do realize that we have in wet macular degeneration, an extremely variable diverse disease population. Some patients are treated every month. Some patients are treated every 6 months. We do something called treat and extend. When you're doing massive studies like we used to do with 2,000 and 3,000 patients, it comes a wash. But when you're doing studies of our size, it's extraordinarily important to pick the proper patients to allow the best chance of success in your study. And I think that's what we've done with a great deal of thought and in a bespoke manner for each study. In a superiority study, what we've done is pick patients with very good vision, who have the most amount of VEGF receptors. We've tested those receptors to make sure they function by requiring an improvement of 10 letters or visual acuity of 20/20. So it's the perfect patient population to go ahead and load up and allow the drug to fail once, right? It's perfectly selected for that. It's very different than SOL-R, which is a noninferiority study. Here, what you want is absolute stability. And what we have is 3 loading doses. And then we've put in something that nobody else has, which is 2 opportunities to observe the patient. And what are we observing for -- we're observing for fluctuations because we want stability. We have 2 opportunities to weed out unstable patients. We have 2 more injections of loading and then we randomize. It's much harder to go through that kind of patient selection. It's much easier to just let everybody come in. But what we've done and what I hope people understand is that we've reduced all these variabilities painstakingly, derisk the patient population and increase the chance of success of the study in a bespoke manner for each study.

I'm glad you brought that up. And then just lastly, just give us the cash position just so we understand...?

What we said in our earnings call is that we're well capitalized into 2028. So certainly, the completion of studies...

Okay. Good. Thank you. Thanks for joining us...

Thank you, Marc. Thank you for the opportunity.

Thank you so much.

Yes. Good to see you.