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

Well, welcome Pravin. Great to have you here.

Jessica, thank you. It's an honor to be here. Thanks for inviting us.

I hear it's just over a year that you've been at the company. Perhaps you could give us a little bit of background and what attracted you to Ocular.

Well, it's been a year, but it seems like it's been a dozen years, but you're right, it's been a year. Well, look, I was very happily retired after my last company. And I think what I had no intention at all of getting another job, although I love my time at Iveric Bio. I think there was several things. First of all, I knew about the technology. We -- in the previous company, we had a drug for geographic atrophy. So it's natural to look for a platform that would be a long-acting type platform. We had 2 independent groups look at that time for the best platform available and both came up with what we have here, which is the ELUTYX technology. So technology was certainly one reason. The other was the regulatory pathway. The fact that this company had a SPA and a clear regulatory path that followed the guidelines of the FDA as per their latest guidelines in February 2023 was a bit big attraction. And finally, it was the opportunity. I, as a clinician who's practiced for 30 years, know the need and the importance of having something that is more durable and has a better outcome. So it was a combination of those 3 things that brought me here.

Great. Well, perhaps we can dive into your lead program AXPAXLI and give the audience a little bit of background here in the market that it's addressing.

Sure. So AXPALI is a TKI that is in a hydrogel, a tunable hydrogel. We're trying to solve 2 problems here. One that's fairly obvious and one that may not be quite as obvious. So the one that's fairly obvious is that of sustainability. We know that in this country alone, despite having a treatment for wet macular degeneration, 40% of patients discontinue treatment within the first year. And that's an enormous number. Imagine that 40%. And these patients end up going blind. If we're able to decrease that dropout rate by even 10%, that means 0.25 million patients more in this country alone would not go blind. So the need is enormous. We have a known proven target. So we're certainly trying to cure that problem, that of sustainability by having something that stays longer, so patients don't have to come in every month or every other month for needle in the eye. The second one is that we also know that even in those patients, who do stay with the program, with the treatment that after 5 years, almost inevitably, these patients end up losing vision over time, getting worse than baseline. And it's not because of rebleeding, it's because of fibrosis and atrophy. And what we know now is that the way we give these medicines in a pulsatile fashion causes the back of the eye to get thicker and thinner and thicker and thinner. So that's what causes fibrosis and atrophy. And there's good evidence that if you can minimize the pulsations as we would by having these zero-order kinetics and suppress on a constant basis, we will have better outcomes. So the 2 problems we're going to be solving are that of better sustainability as well as better long-term outcomes.

Great. Thanks very much. Now you have a very comprehensive clinical program for AXPAXLI. Perhaps you can dive into the 3 trials that you have, including...

[indiscernible]. Yes, absolutely. So what we've announced is in wet macular degeneration, we have 2 Phase III trials, both of which are now completely recruited. The first trial is a superiority study called SOL-1. We believe that this will allow us to get a superiority label. That trial will read out in the first quarter of 2026. We also have a non-inferiority trial. So these aren't the same trials duplicated, but these are complementary trials. So this is a non-inferiority trial called SOL-R, and that goes up against Eylea 2 milligrams. And we have said that, that is expected to read out in the first half of 2027. We've also announced an open-label extension, and the most important part about that open-label extension is that this drug will be dosed every 6 months. There are numerous things we'll look at. But for reasons that are very strategic, the one that we're most interested in are the crossover patients. We believe that we're on track to get a superiority label, which is extremely important to us for various reasons that I hope we'll discuss. Not only will we -- do we believe that we'll get that, but we believe that those crossover patients because they've been on the pulsatile therapy that I've described now for 2 years before crossing over, will really never catch up to those patients that started on AXPAXLI from the beginning. So we believe that we'll have data to show that to get the best results, one has to start on AXPAXLI from the very beginning. And having a superiority label, we believe that we have the potential to be immune from pricing pressures as well as from step therapy. And with this additional data, we believe it will put the drug in a very good position.

Perhaps you can just give a little bit more granularity on step therapy and kind of how your drug would be introduced with the superiority label.

Sure. So again, as I said, with the SOL-1 study, we have a SPA with SOL-1. It's a superiority study where we're following exactly the guidelines of the FDA, their latest guidelines as of February 2023 and again, validated by a SPA. We believe that with positive results, that will put us in a very good position to have a superiority label. It will be the first and only of its kind in our field. In fact, I don't know of another study that's a superiority study that's either active or even being contemplated. So that puts us in a special position for quite a long time. What does that mean? What does the superiority label mean? Well, frankly, if you ask a doctor and ask them, look, does the superiority label matter, 10 out of 10, I assure you will say, look, I never look at the label. It doesn't mean anything to me. It's the wrong question to ask. The right question to ask a doctor is to say, look, does it matter to you that you get to decide what drug you want to give to your patient? Does it matter to you that you don't have -- you're not forced to use an inferior drug and wait until it fails to step up to the drug that you want. And every one of them, 10 out of 10 will say, yes, that absolutely matters to me. Well, that's what a superiority label does. It makes you potentially immune from step therapy where you're forced to use an inferior drug, allow the patient to fail and then apply to hopefully get to use the drug that you wanted to use in the first place. And that's really what step therapy is. And we believe that with a superiority label, we'll be immune to that. In addition to that, as I said earlier on, we'll have data from our open-label extension that will show, we believe that if you don't start on AXPAXLI from the very beginning, you won't get the best outcomes with the crossover patients. So not only will we be in a different level, shall we say, with the superiority label, not only will we not be subject to pressures of pricing and step therapy, but we'll have data to support that as well.

Great. And just maybe to remind the audience in terms of the primary endpoint, the actual clinical trial design of SOL-1 would be great.

Yes. So for the superiority study, the primary endpoint is at month 9. And the primary endpoint is the proportion of patients who maintain vision. Those who are counted as failure are patients who lose 15 letters of vision or more. And again, the primary endpoint is at month 9. However, we do have -- we will have alpha protected data up to month 12. And the reason for that is that we believe that we have a very good chance of getting flexibility in our label as well. So we'll have a superiority label with the flexibility of dosing every 6 to 12 months with repeatability based on these 2 studies.

Okay. Great. And then from a time line standpoint, you'd be releasing the first data set from SOL-1 at the 9-month time period...

We will have access to all the data at that point. And in the first quarter of 2026, we'll have access to the primary endpoint, obviously, the 9-month data as well as the alpha protected 12-month data.

Okay. Okay. Great. Okay. And then in terms of the SOL-R equivalency study, a non-inferiority study, perhaps again, go through the details.

So SOL-R is, again, completely enrolled as we've announced. The primary endpoint for SOL-R the noninferiority study is at week 56. Now it's a singular endpoint. It is not blended. And that's very important. We believe that it's an optimal endpoint for us. It is 2 months after the last dose for both AXPAXLI as well as for Eylea. We also have a masking arm. Now we followed the guidelines of the FDA to a T and the FDA has specifically said verbally as well as in written documents as well as in their guidelines that sham injections, which is what we used to use is not proper masking. And it's not proper masking because patients can see it. Remember, when you're numbing the eye for an injection, you're numbing the front part of the eye, the conjunctiva, you're not doing anything to the optic nerves. The patients can still see very well. So patients can absolutely see when the drug comes in and doesn't. So for that reason, the FDA has said sham is not proper masking. And if one uses sham, you're doing the study at risk. Now we're not willing to take any risk. So we have no sham in either of our study. So in order to avoid using sham, you have to have a masking arm. And that masking arm in the SOL-R study is required to have the same cadence as well as the same rescue criteria as your drug. You can choose anything you want. The FDA really doesn't care. It's for numeric analysis. It's not for any analysis that would be statistically significant or anything. We specifically chose to go up against high-dose Eylea. So we'll have numeric analysis against high-dose Eylea, which we will use to our commercial advantage.

Okay. Okay. And I believe that you've used patient enrichment in terms of patient targeting, et cetera. Perhaps you can comment on that.

Yes. I think that's one of the most important things, Jessica, that we've done. I don't -- having done this for 30 years, I don't know that I've been in any program that has been as thoughtful as we have been, and I don't take credit for this. This is my colleagues who are absolutely fantastic in designing trials that are so very carefully designed and patients that are selected to be completely derisked in a bespoke manner. I think few people realize how variable macular degeneration is. If you talk to retina specialists, they'll tell you there are some patients that they can get away with injecting even with regular Eylea or Lucentis once every 6 months, but there are others that they have to inject every 2 weeks. And they all look the same. We're 75 years behind oncology, for instance. We don't have any genetic biomarkers. We don't have any anatomic biomarkers. And you can imagine that years ago, when we used to do very large studies with 2,000 patients or so, this would have balanced out. But when you're doing smaller studies as we are, the patient selection is absolutely key. There are companies that have been blindsided because unintentionally because of patients that were super VEGF dependent, for instance, that were biased on one side or the other. So we wanted to avoid that. So what we did in the superiority study is specifically have patients that would be VEGF dependent. It's very important that they don't have any fibrosis. It's very important that they don't have any atrophy. And it's very important that they'd be treatment naive. So we took patients that had good vision that were treatment naive. In other words, no fibrosis, no atrophy, 20/80 or better. Presumably, they would have the most amount of VEGF receptors that would be active. But that wasn't enough. We tested them. In other words, we required that they improve by 10 letters or more or got to 20/20. And we loaded them up and allowed them to fail once. They were rescued after the first failure. That's the SOL-1 study and failure meaning a net of 5 letters of vision, which amounts to 15 letters in the absolute. So that's a patient -- perfect patient population you would need for a superiority study, specifically choosing patients that are VEGF dependent. Now that is very different from SOL-R. In SOL-R, what we want in a non-inferiority study is absolutely rock-solid patients. And here, what we've done is to get treatment-naive patients, have 3 loading doses. And if you look at any anti-VEGF study after 3 loading doses, the vision stabilizes, but we've gone further. We've had 3 loading doses and then we have 2 periods of observation. And this is unique. Nobody has this. It's never been designed before like this. So 2 periods to observe the patient, 2 periods, right? We're looking for is any kind of fluctuations. We want absolutely stable patients. And if there are any fluctuations, those patients are weeded out. And once we're assured that we have absolutely stable patients, 2 more loading doses and then we randomize. So we have super selected and derisked patient population that is appropriate for each study in a very, very thoughtful manner. And we're very proud of that. That is very different than what others have done. Obviously, it's much harder to recruit when you're this selective, but it also derisks the trial entirely.

And so when you talk about the complementary nature of these 2 trials, and ultimately, what label are you looking for? How broad is the coverage in terms of wet AMD patients?

Yes. So what we're hoping to get is the first and only superiority label against the drug. Again, this will put us in a different orbit. There's no one else that has it. There's no trial going on or even contemplated with a superiority label. So we're hoping to get a superiority label with the flexibility of dosing of every 6 months to 12 months with repeatability based on a combination of both those studies. We're also hoping that all the questions that doctors and patients and payers would have will be answered by both those studies together. If a doctor wants to know, for instance, how long this drug actually lasts, SOL-1 will tell him or her, right? If a doctor wants to know how this drug will do against the standard of care, well, SOL-R will tell him or her. If the doctor wants to know, for instance, is this drug repeatable, well, SOL-R will tell him or her. In addition to that, because of the masking arm of SOL-R, we'll also have in our back pocket the comparison to high-dose Eylea. Now that's, again, for numeric analysis only, but we'll have that data, and we'll be using that for commercial advantage. That will also provide a lot of data. So we think that with a combination of these 2 studies, we will be able to provide all the answers that doctors, patients and payers will need regarding our drug. I will also say that, look, I really do believe that this is going to be a landmark of how thoughtful trials are designed. Up to this point, everybody repeats the trial again, right? It's the same study done again. I think everybody expected us to do SOL-2. And when you think about it, the second trial is good to -- for approval. It's good to validate the first trial, but really provides no additional information. And in my mind, that's a wasted opportunity. Here, with the second trial that's complementary, we've provided additional information that's going to be very valuable. I know that the FDA loves it, and we have -- we collaborate with them very, very well. Having 2 different trials of 2 different designs come to the same conclusion adds much more validity to the data.

Great. Any questions for Pravin on trial design. Great. Well, you mentioned the SOL-1 data will be available first quarter '26. So maybe you can just dig down a little bit in terms of what you're specifically looking for? And then how does that translate, if at all, to what you might expect to see in SOL-R?

Yes, it's a great question. And I've spent a lot of time here talking about how the patient population is different, right? But on the other hand, here's what I know we have to do. First of all, when the SOL-1 data is positive, when you hit statistical significance, we also realize that the primary endpoint, which is the loss of 15 letters of vision or those -- the percentage of patients who maintain vision, may not be entirely clinically applicable. We know that in real life, doctors really don't wait for a 15-letter loss. I totally understand that. The goal that we have is to take parts of that data of SOL-1 and translate that into data that will provide confidence to people that, look, this can be translatable to SOL-R, and this gives me a great deal of confidence that SOL-R will succeed. And I totally understand that, and that's what we aim to do. We aim to go ahead and get data from SOL-1 and specifically be able to say, look, this translates into success for SOL-R. And we will do that. We will provide that data. We're completely aware of that. And that's the way we'll narrate that story and provide that data. However, having said that, there's a lot already available that should give a lot of confidence in the success of SOL-R. And one we've talked about, which is the patient selection. It has a longer ramp than any study that I know. It assures, I think, as much as the study can that the patients who will be randomized will be completely stable. 3 loading doses, 2 observation periods, 2 more loading doses. The other thing also about the trial design is the primary endpoint. The primary endpoint is at week 56. It's not a blended primary endpoint. It's a singular primary endpoint. It is optimal for us. It's 2 weeks -- I'm sorry, it's 2 months after the last dose of each drug.

Okay. Great. You mentioned that there's a masking involved here. Obviously, the data for SOL-1 is available first quarter '26, but I believe there's -- you've had some commentary in terms of what you've looked at on a blinded basis.

Yes. So on a masked basis, what we have looked at are -- and we've said this publicly, and this is a population basis, right? These certainly are not individual patients, which would be impossible to distinguish anyway because the target is the same and there's no telltale sign of anything because the mechanism is the same. So -- we've looked at the general population under masking. And what we've looked at is the following. We've looked at the number of rescues. We're very satisfied with the number of rescues. We've looked at the cadence or the pattern of rescues. We're very satisfied with that. There are no alarming signals. The alarming signals would be if it was -- if there are a whole bunch of rescues very early or a whole bunch of rescues very late, and that's not happening. We're very, very happy with the pattern of rescues. And lastly, last but not least, we've looked to make sure that the rescues are on protocol. And I've said this over and over again, the vast, vast, vast majority of rescues are on protocol, and we're very, very happy with that. So under masking, that's what we're looking at. That's all we're looking at, and we're very happy that we're seeing what we're seeing with those 3 parameters that I just described.

Great. And then in terms of SOL-R, is there any -- I mean you obviously indicated that accrual has been completed, expected data first half of '27. Any interim reviews that we will be before that.

Yes. We haven't guided you to any, Jessica, as yet, but it's really too early. As you know, that ramp is very long as it's a 6-month ramp, and it's just really too early to comment on any mass data for SOL-R.

Okay. Great. And then just in terms of timing with respect to the actual filing, perhaps you could comment on that.

So we will -- we expect to have 2 successful studies upon filing. That's the traditional requirement of the FDA. And we will file as soon as we hit the 56-week mark in SOL-R with successful results. We believe that our filing will be very efficient for 2 reasons. On the front end, because we'll be filing a 505(b)(2) because both axitinib and the hydrogel are approved products. So that will save us at least 2 months. On the back end, because we have a SPA, much of the work has already been done. So we believe the filing will be very efficient.

Great. Excellent. And you mentioned the long-term extension study. How does that incorporate into the filing? Does it have any impact at all? Or what type of data timing would that will be visible.

That has no impact on the filing whatsoever. It's for safety purposes primarily. It also gave us the information that I mentioned, but that will not hinder the filing in any way whatsoever.

Okay. Great. And then I'm sorry, I didn't ask the question. So from a patient standpoint, are these only U.S.-based patients? Or how is the trial -- or how do we think about the global opportunity?

It certainly is a global drug, right? I mean -- and it's been very, very well -- just came back from a meeting in Europe. It's been very well received throughout the world. It is -- obviously, the market is enormous out there as well. As far as the clinical sites are concerned, most of the patients, the vast majority are from the U.S., also from Argentina, some from India and Australia.

Okay. Great. So in terms of pursuing ex U.S. regulatory approvals, what would we envision for that?

Well, those discussions are ongoing. We haven't guided you as to the formal conversations as yet. What you can see, though, is that there are some things that we've done to completely align with OUS regulatory agencies. One of the things being the modification we had in our rescue criteria for SOL-R that we announced in our last earnings call. So that, in part, was done to align entirely with OUS regulatory agencies, and we've done so. We believe that we have a very clear path to file outside the U.S. as well.

Okay. Great. One thing that I really enjoyed when I myself understood how the drug ultimately would be used is kind of what physicians are doing today in terms of the treat and extend versus how, again, [ AXPAXLI ] would be incorporated. I think this is fascinating and very helpful in terms of getting out there quickly.

Yes. So right now, what we're doing is we're doing something called treat and extend for the reasons that I mentioned earlier on. We're about 75 years behind oncology and rheumatology and all the other fields. We just don't have any genetic markers. We don't have any anatomic markers. Patients come in, they all look the same. We have no idea really what cadence to treat them. So we do what really is trial and error. And that's a difficult thing because we wait until failure before we treat again and we figure out a cadence, which can change. As far as frequency is concerned, we have no idea how frequently we'll have to treat a patient. So from a scheduling point of view, it's very difficult on the physician. It's very difficult on the patient as well. What we believe we will provide here is a drug that is -- and our comfort zone, by the way, is to see a patient every 6 months or so for chronic disease. What we believe we'll provide here is an extremely reliable every 6-month drug. If the drug lasts for 9 to 12 months, that's exactly what you need for every 6-month visit. If a patient gets sick, there's a safety net if the doctor is not there, there's a safety net. I believe these patients will be seen every 6 months. And eventually, I believe that patients will be treated on a fixed basis every 6 months. Now I don't think that will happen right away. We are very used to doing treat mixed in. And in the beginning, we'll probably still continue to do treat mixed in. But at a certain point, I think doctors will feel very comfortable with saying, let's come back every 6 months, and I'll go ahead and inject you every 6 months. It will be much easier on the patients. It will be much easier on the doctors. And my prediction is that that's what will eventually happen.

Great. So I think it's reasonable to talk about commercialization because it's rather near term here. And obviously, there's been a lot of successes in the wet AMD from a stand-alone basis. Maybe just how -- what would you need to do from an infrastructure standpoint for the United States first, and we can talk about Europe after that.

Yes, that's a great question. And we're doing it now. Well, as you know, it's a closed loop. We manufacture this ourselves. So we're investing. We have been and continue to be investing heavily in scaling up with the manufacturing in terms of automation, in terms of buildings, and that's going on now. And that's a big, big investment for us, and it's going very well. It's not something we haven't done before. As you know, we already have a marketed product in DEXTENZA, which is the same hydrogel. So we're used to scaling up our manufacturing, and that's just being done in a much grander scale at this point. The other advantage that I have in this company that I didn't have previously is that we have a commercial team. We have a tested and proven commercial team that sells DEXTENZA. And you may or may not realize that the commercial team, the salespeople doesn't -- don't have to be huge for our field. At the high dose, the Lucentis sales, I think there were about 55 salespeople. It's not a lot. We already have that. The salespeople just have to be very experienced and networked and connected, and we have that with the folks that we have with DEXTENZA. We've got a great commercial team. So we'll be ready and set to go. We already are.

Fantastic. So you also are looking beyond wet AMD. We've got diabetic retinopathy and diabetic macular edema. I saw some recent congratulation SPA news on the diabetic retinopathy standpoint. Let's talk about those 2 programs.

So what we had was a small study called HELIOS, and it was primarily a safety study. And when we looked at the results, we, as clinicians, and there are lots of clinicians in our company, were all unanimously astonished. We are astonished because every single parameter in that study, every single parameter favored the drug. Everybody who got better had the drug, everybody. Everybody who didn't get better, didn't have the drug. Every patient with diabetic macular edema that was non-center involving improved. I mean, every single patient. If you look at the control arm, the most clinically relevant factor to look at is something called vision-threatening complications. And these are potentially blinding progression of the disease. Now natural history shows that, that occurs between 30% and 40% year upon year. In the control arm, it was 37.5%, so right in line with the expectation. In the treatment arm with a single AXPAXLI injection, a single injection after week 48, that was reduced literally to 0, 0. And that's astonishing. And from my point of view, as a clinician, what that means is that I can sit down with a patient and say, Ms. Smith, you've got diabetic retinopathy, your chance of having a blinding complication is 30% to 40% year upon year. And if you come to see me, but once a year, as often as you go to your dentist for teeth clean, I can reduce that risk literally to 0. That's really doable. That is sustainable. And the population for nonproliferative diabetic retinopathy is about 3.5x bigger than wet macular degeneration, and they're pretty much untreated, less than 1% are being treated because the treatment, which is very effective, the anti-VEGF, it's just not sustainable. Nobody is going to come in who's asymptomatic every month or every other month. But to have somebody come in and reduce their risk of going blind if this repeats to 0 once a year is doable. And based on that, we said, look, there's an enormous opportunity. There's no competition whatsoever. The regulatory road is wide open for us. Why don't we go ahead and think about doing this and collaboratively work with the FDA. So we apply for a SPA, and we are very, very happy and proud that we got a SPA. We believe that we have a clear regulatory path forward. We're very happy with the feedback that we have. We believe that we have a novel and very exciting and doable primary endpoint. We'll announce that, and we'll announce the clinical trials. Very shortly. Very, very shortly. We have an Investor Day coming up at the end of this month, and we will do so, but we are very, very, very excited to do the diabetic retinopathy DME program.

And in terms of starting that trial, is that 2026? or is that something that...

We'll be announcing that in our Investor Day, very, very shortly. Otherwise, we wouldn't have anything to announce. So there we go. This is a teaser.

Great. Okay. And we've got also diabetic macular edema that...

Right. We'll be studying both. And because in the HELIOS trial, look, every single patient with diabetic macular edema got better. I mean, every single patient, we absolutely will be studying that as well.

So will you look for a SPA there also?

No, that is -- as you hear about it, but that -- the SPA that we have will allow us a study where we'll be able to capture everything.

Maybe why did you need a SPA?

So it's a great question. I mean, look, what we have done from the very beginning is to say we will do everything according to the FDA's guidelines, and we will not take any regulatory risk whatsoever. We've been adamant about that. And we've been, again, rewarded with a SPA for SOL-1. And in every single conference, the FDA has reiterated what we've said about sham, which is that sham is not proper masking and sham is done at risk. That's why we got a SPA for the SOL program. For the diabetic retinopathy program, we have a novel primary endpoint. We wanted to make sure that it was exactly what the FDA would validate, and that's why we have a SPA. And again, this really just shows the company's commitment to collaborating with the FDA, making sure that we're doing everything according to their requirements and not taking any regulatory risk whatsoever.

Now will there be any additional indications beyond these 3 that you might pursue?

Well, there might be. Jessica, as you know, every single anti-VEGF that has been approved that has worked in wet macular degeneration, has also worked in diabetic macular edema, diabetic retinopathy, retinal vein occlusion, retinopathy of premature, et cetera, et cetera. It's the same receptor. It's the same target. There's no reason to believe that it wouldn't work in those other diseases as well.

Okay. Great. Well, you mentioned your Investor Day. Any other teasers that we might be hearing that...

Well, there are a lot of catalysts to come. Again, we're working very hard to make sure that Investor Day, which is on the 30th of September, will be as robust and as exciting as possible. And I hope everybody tunes into that, and I hope everybody comes to that.

Great. Well, thank you very much.

Thank you.

It's a lot on the horizon.

Thank you for inviting us. Thank you so much.