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

Maybe we'll get started. My name is Biren Amin. I'm one of the biotech analysts here at Piper Sandler. I'd like to welcome -- we're going to do a fireside chat this morning with Ocular Therapeutix and their Executive Chairman, President and CEO, Dr. Pravin Dugel. Welcome, Pravin.

There's been a lot that's been going on in the retina space over the last 24, 48 hours. But maybe before we get to talk about some of your competitors' datasets, if you could maybe just provide, I guess, an update from a company standpoint in terms of where Ocular is regarding the regulatory process for AXPAXLI. Any additional color you can provide on your FDA interactions? I know you gave us a substantial update at your R&D Day a few months ago, but anything you could provide in addition to that?

Biren, first of all, thank you for having me here. It's always a pleasure and honor to talk to you, and we really appreciate the opportunity to tell our story any time at all. So very grateful for the opportunity and the time. The bottom line is, look, our job is to execute and execute and execute, and that's what we do all the time, and we've been doing that since this team came in. I know that we're going to talk about some recent news, but what I'll tell you is nothing has changed in terms of our execution with that news. We have continued to do what we said we would do, which is that we would have a pre-NDA meeting in the third quarter of this year, and we would submit the NDA filing at the fourth quarter of this year. Everything is absolutely on track. I couldn't be happier with the results. One of the things that we don't talk about and I'm happy to talk about this is what we're doing in terms of CMC and commercialization. And there's a huge amount of effort there. We are ready to launch this product. We're ready to go. We are absolutely prepared, and I couldn't be happier with the progress that we've made.

And I guess with the planned NDA submission, what items remain for completion in order to get the filing in the fourth quarter?

Well, a lot of it is largely logistics, operational, right? I mean, I think I've said it earlier on that a pre-NDA meeting sounds ominous. I mean I've been involved in quite a few of these. It's actually not. It's purely operational. There are things such as what size [ spot ] one wants, where you want the graphs, et cetera, et cetera. Probably the most important thing, quite honestly, is the hyperlinks. You want to make sure the hyperlinks are where they should be, so it doesn't slow you down in terms of getting references and things like that. So it's operational logistics, things like that. And obviously, what we also are going to do, as we've said, is we're going to use some patients from SOL-R to satisfy the FDA's requirement of having 300 patients who are exposed to the drug for safety purposes. We're going out of our way to make sure that the integrity of SOL-R is completely protected. In other words, we will never see that safety data at all. It's only safety data that is going to go through a third party to the FDA so that the integrity of SOL-R is absolutely and completely protected. Although SOL-R may not be -- will not be necessary in our opinion and in our belief and in terms of all our interactions with the FDA, for the U.S. FDA, we believe that SOL-R will still be very important for OUS regulatory agencies. And it's vitally important that we protect the integrity of SOL-R. So we're going out of our way to make sure that we protect SOL-R from any kind of loss of masking.

And I guess with NDA submission around the corner, I'm sure there's a significant amount of prep going on in the commercial side of things. Can you just talk about how you're thinking about commercial launch in the U.S. and the enthusiasm in the retina community? And any read-throughs you can make, I guess, from the open-label expansion of SOL-1 that would support that enthusiasm in the retina community?

Yes. So let me just talk about the preparation internally first and then maybe the retina community thereafter. Internally, look, it wasn't long ago, and I remember this very well, when we came in and we had absolutely no money and the company was struggling where it was very tempting to go ahead and spin off DEXTENZA. And the people wondered why we didn't do that. And people said, "Look, you rebranded yourself and had the identity of this company as a company for retina, by retina and DEXTENZA is not a retina product." And they're right. And the reason for that, and I've kept on saying this, was not just the product, but really having a commercial team. The importance of having a commercial team is incredibly underestimated, and I learned that in my last company. You can't just create a commercial team overnight. And now that decision to keep the commercial team, to keep DEXTENZA is paying off. The fact of it is that we are ready to launch because we've got such a great commercial team. And we're very fortunate to have David Robinson, who has, as you know, launched EYLEA, the most successful launch in the history of retina, leading this launch. So in that respect, we are very well prepared commercially. From a CMC point of view, as you know, following our last raise, we said we're going to be investing heavily in CMC in terms of not only the hardware, but also in terms of automation, et cetera. We have done so. We're more than prepared for wet macular degeneration. Our inventory is stocked completely for quite a long time after launch, and that's been well prepared for quite a long time. We are scaling up now for diabetic retinopathy, which is 3.5x the size, as you know, of wet macular degeneration. As far as the retina community is concerned, look, I couldn't be happier with the way that our message is going out there. We are emphasizing the important clinical parts of SOL-1, which is safety, disease control as well as durability, I think, is resonating extraordinarily well. Remember how quickly we recruited SOL-1. The people that recruited for us are the same people that will be the customers for this drug. So I think the retina community is more than well prepared for this. The -- I will tell you that there are some questions that are not necessarily answered by us. And this is -- if you would ask what is the source of discussion in the retina community, the source of discussion is actually things that are quite appropriate and quite legitimate, which is, look, is this drug a first-line agent? Or is it a maintenance drug? And I think that's a very legitimate conversation. We haven't proven either, right? I mean I would argue that this would be a first-line drug based on the studies that we have in Australia, albeit with a few patients where we showed that the results in treatment-naive patients with monotherapy was what you would expect from commercial grade Lucentis or EYLEA, but that's a small study. And those kind of studies will be done in the community. I'm thrilled that those discussions are ongoing because that means that there's no doubt in the retina physicians' mind that this drug will be in their hands, that this drug will be approved. So I don't think the discussion any longer is, will this drug be available to us. I think the discussion is how will we use this drug, which is great. That's exactly what we want.

And do you feel that the retina community would want to see data from SOL-R before they start to adopt in the first-line setting?

I laugh when people ask me that. Of course, they want to see data from SOL-R. They want to see data from everything. It's sort of like asking me, do I want more hair and do I want to be taller? Of course, I do. Who would say no to data? That's really not the question to ask. I think the question to ask is, look, if you believe in the SOL-1 data, as I really believe that everybody does, especially now, will you not use AXPAXLI until you get SOL-R? And the answer is no. I've not met a single retina physician who says, "Look, I really love the SOL-1 data, but I'm not using it until I get the SOL-R data." Nobody is going to say that. So the question has to be asked properly. Everybody wants more data. Of course, everybody wants more data, but is SOL-R a gating item? Absolutely not. There's more than enough information in SOL-1 for its use today. And again, what retina physicians want to see are three things. One, they want to see safety. We've shown patient-level safety in SOL-1. Physicians want to see disease control, specifically OCT changes. That's our barometer of disease control. And what we've shown is that with a single injection, there's a stability in the OCT in this difficult patient population within 30 microns after 9 months, which is remarkable. They also want to see durability. And what we've shown is that with a single injection in this most difficult patient population, 2/3 of patients are rescue-free. I think we've answered all the questions they need to go ahead and use this as soon as they get this in their hands.

On SOL-1, the company is enrolling patients now in the year 2. When do we start to see data updates from that year 2 portion in SOL-1?

Yes, it's a great question. Look, we haven't guided you as to the milestones as yet. But what we've said so far is to say what I just told you, which is when our pre-NDA meeting is going to be, when we're going to have the NDA filings. We will guide you to other milestones as appropriate. I've also said very clearly that we're not getting any credit for diabetic retinopathy. That's also something that is something that I'll be working on, that the company will be working on in order to fold into our valuation.

I did also want to pivot and talk a little bit about EyePoint, they had data yesterday from the LUGANO Phase III trial in wet AMD. They reported top line data. A lot of times, when I talk about AXPAXLI, investors kind of lump AXPAXLI with DURAVYU. So I guess my question is, what would you say to an investor that believes AXPAXLI is more like DURAVYU than the two programs are different. Maybe if you could kind of elaborate on that, and then we'll go into kind of the data that they presented yesterday.

Yes. Look, the data that they presented yesterday could not have been better for us, right? It's exactly what we predicted. I mean, again, it's exactly what we predicted. We've always said that TKIs work. We've always said that their drug has a signal. And that's exactly what it showed. What it showed was that there was a signal, which is what we predicted. It also showed that the drug didn't meet the primary endpoint, which is also what we predicted because we believe the drug is not nearly as potent. We have -- there's plenty of evidence to show that their drug is 100x less potent and 200x less specific. We also believe that their format for the drug is suboptimal. And their previous data supports that, and I'm not really sure why people overlook that. But if you look at the only time the drug was ever used by itself where you could really see the drug, it was in the same patient population as our HELIOS patient population, exactly the same. And whereas with our HELIOS study, the results were so good that we launched into a Phase III program based on that. In their study, they completely failed. And why they failed has never been answered. And the reason is very simple is what we said from the very beginning. Their drug simply doesn't last. So again, the results couldn't have been more aligned with what we predicted and couldn't have been better for us, which is that there clearly is a signal. However, their drug is simply not strong enough to last long enough to meet the primary endpoint, and that's exactly what it showed, and that's why they failed.

And do you think it's the potency of the TKI? Or do you think it's their implant versus your hydrogel and the release mechanisms around -- or is it a combination of both?

Well, it's a combination of both. It really starts with the TKI selection itself, right? I mean, again, we've said for -- since this team has been here that the drug is not nearly as potent and not nearly as selective, and that's been borne out in several studies now. And we've also said that the format simply is not sustainable from a commercial point of view. And that's also been borne out. Remember there are four filaments in the eye. The needle gauge is 22 gauge, which is not self-sealing. That causes all kinds of issues potentially. And I think probably has. If you look at the infection rate and -- in DAVIO and hopefully, they'll come out with further information to see. But regardless, look, it's a failed study. But clearly, TKIs show a biological signal. And as I said, the results couldn't have been better for us, and it's exactly what we predicted.

And I'd love to get your thoughts. EyePoint provided an analysis yesterday during their investor call, where they excluded 9 patients that had greater than a 15-letter vision loss that was deemed unrelated to wet AMD. This -- all 9 patients were in the DURAVYU arm. They had 0 patients that experienced a 15-letter or greater loss in the aflibercept arm unrelated -- for those that were unrelated to wet AMD. So when they excluded that analysis or those patients, I mean, they report that they hit the primary endpoint in terms of meeting non-inferiority. So I guess question is, is the patient population that they're excluding, those that have disease unrelated wet AMD like GA or glaucoma, I think about 1/3 of patients at baseline in the trial had that. Is that something that, that patient population would be considered irrelevant where a drug sponsor should exclude those patients from efficacy analysis?

Yes. Look, I don't want to make light of that, but you know as well as I do, Biren, that excluding patients from a clinical trial is sort of a ludicrous argument, right? I mean, again, I'm not making light of this, but at the end of the day, I mean, that's going down a crazy hole that nobody should go down. But let me just kind of pause and backtrack a little bit. We're in a very difficult business. There are very few businesses where companies spend hundreds of millions of dollars knowing that 9 out of 10 times they're going to fail. And the first thing we've got to look at with this is I take no joy in people's failures here. There are humans that are involved, and we have to sort of pause and look at the human aspect of this. I know a lot of people in that company. I've done this for over 30 years. The vast majority of what I've been involved with have failed. And there are people that I've known, as I know people there, where their lives changed, their families changed, their children's schools change. I mean it takes a big toll. So we can never forget that. And I feel very bad for them. And I don't want to make light of this, but it is a human side that we can't ignore. The second part of this is the scientific part. There's a great contribution that's made from failure as well as from success. We can only build success in our community from learning from failures. So I think one of the obligations that we have in this community is to be as transparent, as honest and as open as possible. None of us should be spinning data. None of us should be hiding data. None of us should be making something that's not there. It's just not right and it's not good for patients at the end of the day, right? So I was actually very grateful to EyePoint that they went ahead and said, "Look, we did not hit our primary endpoint, and we failed." They said that very directly. They said that very clearly, and I'm very grateful that they said that. That's exactly what they should have said. But they should have stopped there. Whatever said -- they said after that, I don't understand, and I don't even understand why they went there. And maybe people that are a lot smarter than me can explain that to me. But from what I understand, they said that there were asymmetric patients. I have no idea what asymmetric patients mean. I've never heard that term. It's not a term that we're familiar with. And from what I can gather, asymmetric patients mean patients that are bad patients. I don't know how you figure out who are bad patients in a study, right? What's the criteria? Why are there 9 and not 12 and not 20 or not 6 or 7? I have no idea how you take those patients out. That's never been done before. And that's totally foreign to any clinical trial. And then what I understand they said was that they got really unlucky because out of 240-some-odd patients, these 9 patients that were really bad patients, however they got these 9 patients, all happen to be in their arm. I mean, what are the chances of that? I mean it just makes this so incredible that it's disappointing, right? I mean, if I were to ask you to reach into your pockets and get a coin and keep flipping it and keep flipping it, how long would it take you to get 9 tails in a row? A long, long time. And they're asking us to believe that just by chance, all of these really bad patients, however they were bad, all ended up in their arm. I mean statistically, that's just simply not possible. And on top of that, what they're saying is that these patients lost on average, more than 20 letters of vision, but it was not due to wet macular degeneration. Well, even if that's true, it doesn't mean that it wasn't due to the implant. And the possibility of it not being due to the implant is totally improbable based on what I just told you. I mean what are the chances you're going to flip 9 tails in a row for it not to be due to the implant. It's practically impossible. And then even following that, they said that the reason for the loss of vision was glaucoma and geographic atrophy. If you look at our textbooks, these are the two classic diseases that are described as being slow progressive diseases. And to have 9 out of 9 patients in less than a year lose more than 20 letters of vision each due to this slow progressive disease that all happen to be in their arm just seems statistically impossible. Again, look, I am grateful that they admitted that they failed. I think they should have stopped there. And I'm also happy that they have a very, very good Scientific Advisory Board. They have people that are also -- that we also have in common. These are great doctors that are great advisers. Speakers come from their group. And I have every confidence in the world that when these speakers speak and when this information gets disseminated, it will be done in a way that will be credible, that will be transparent and that will be scientific and that will help us all learn what happened and why they failed. But until then, I suspect it is aligned with what we've always said, which is that this drug simply is not one that is strong enough to last for this period of time. It has a signal, but it simply is not strong enough to go ahead and meet the primary endpoint.

So your point on patients with glaucoma and GA is a good one in terms of they have slow progressing disease. By chance, have you -- or Ocular, have you looked at in SOL-1 patients that have had -- that came into the trial with a baseline of glaucoma or GA and how those patients fared compared to the overall population?

Yes. So Biren, I'll answer your question, but you see this is the danger of spinning stories, and this is the danger of throwing mud and hoping something sticks. It does not do any benefit to the scientific community, to science and to patients. Again, I'm not trying to make light of this but it's about as legitimate as saying, have you stratified for patients that are 6 foot or taller? Have you stratified for patients that have long hair. There is no association whatsoever between TKIs and glaucoma or GA. There never has been, there never will be. TKIs have been here for a long, long time. Glaucoma and GA have been here for a long time. There's never been such an association. And to simply spin that is just irresponsible. But the answer to your question is, yes, I guess we're forced to look because people would ask, and there's absolutely no association in SOL-1 whatsoever. Let me just repeat, there's absolutely no association whatsoever.

Great. I mean, so that's -- yes, your point is well taken there. And I also wanted to ask your impression on BCVA, they clearly missed on non-inferiority in the overall population. What are your impressions of how DURAVYU behaved in the LUGANO trial compared to the aflibercept arm? And any key takeaways that you or Ocular have regarding how aflibercept is behaving in LUGANO and read-throughs to SOL-R?

Yes. So look, here's -- it's a great question, and I can answer it in several levels. I don't -- let's just be scientifically pure and let's just be data-driven, right? What we know is that in a hierarchical analysis, if you miss the primary endpoint, all the other sub-analyses really are meaningless, they're nominal. So let's just take that -- take everything that comes after this with a grain of salt. What it shows, I hope, in general, and I'll step back a little bit, is how good the results were in SOL-1. It's really difficult to beat EYLEA. It really is difficult to even be non-inferior to EYLEA. EYLEA is a fantastic drug. We know that. And the fact that in SOL-1 AXPAXLI beat that with a p-value of 0.0006 and in every single analysis ended up being better is remarkable. I don't think we've gotten nearly the amount of credit for that. And I hope that -- again, I don't mean to ride on somebody's failure, but I hope that this puts the spotlight again on how good those results were. And now pivoting to SOL-R. Let me just say, it's important to understand that SOL-R in our opinion and in everything we've heard from the FDA is not going to be necessary for approval in the U.S. at all for the U.S. FDA. So that's removed off the table. If you look at the timing, the timing of the card turn of SOL-R is going to be about 6.5 months after AXPAXLI is approved. However, SOL-R is going to be very important in our opinion for OUS. We're not pushing aside SOL-R at all, but I want to make sure I make it very clear that this is not for the U.S., this is for OUS purposes. What I hope the EyePoint results do is highlight the importance of patient selection. We have been extraordinarily careful in both studies in selecting the proper patients, in derisking our patient population. People laughed at us when we said, look, we've got a 6-month ramp with 2 opportunities to simply observe patients to see if they fluctuate. Now people aren't laughing anymore. We are hoping that with this kind of thoroughness that our standard deviation will be narrow. We are hoping and we're expecting that our patient population is going to be much more predictable, much more reliable and much more derisked to go ahead and achieve the primary endpoint, which we are more confident than ever that we will achieve.

So based on LUGANO, it feels like you feel that you've designed the right study with SOL-R in terms of excluding patients with early persistent fluid, for example, that would minimize standard deviation, standard variability. Is that a fair assessment? Or are there learnings that you might take from LUGANO that you would incorporate into SOL-R?

Look, we knew this way before LUGANO, right? And again, I'm not riding on anybody's failure. We knew this way before LUGANO and that we've done exactly what we have done way before LUGANO at all. And I think what these results show is that what we have done has been absolutely correct. And what we are doing is derisking patient populations in a proper way, in a bespoke manner for each trial. And I'm hoping that with this failure that EyePoint has unfortunately had that the focus can be on us. Look, it's a failed study. They had a failed study. Let's move on. I don't want to get into a situation of trying to hypothesize why they failed, why we should exclude a group of patients. I mean those kind of discussions are insane. I mean nobody excludes patients in a clinical trial. That doesn't happen, right? So let's not legitimize things that are non-sensible. Let's just talk about data. Let's talk about science. And I'm hoping that rather than talk about somebody's failure, now we can shift the conversation to talk about our success.

That's fair. Maybe one last question on treatment reduction. EyePoint reported about a 42% reduction when you exclude loading doses. We've had this debate, I think, and I've asked you many questions around this in terms of whether one should include or exclude loading doses in their analysis. Typically, if you're running a week 52 or week 56 trial, you should be including loading doses. But can you talk about -- like they reported a 42% reduction, excluding it. But when you include loading doses, it's about a 27% reduction. What's the right method for drug sponsors and for industry?