Opus Genetics, Inc. (IRD) Earnings Call Transcript & Summary

Greetings, and welcome to the Opus Genetics Corporate Update Call.[Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Jenny Kobin, Investor Relations. Ma'am, the floor is yours.

Good morning, and thank you for joining us today for a corporate update to highlight recent clinical milestones and upcoming catalysts for Opus Genetics. Before we begin, I would like to remind you that during today's conference call, we will be making certain forward-looking statements. Various remarks that we may make during this call about the company's future expectations, plans and prospects constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2024, our quarterly report on Form 10-Q for the quarter ended March 31, 2025, and our other SEC filings available on our website. In addition, any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so even if our views change. On the call today, we have Dr. George Magrath, Opus' Chief Executive Officer; Dr. Jay Pepose, Chief Medical Adviser; and Dr. Ben Yerxa, President. A replay of this call will be available on the Investors section of the Opus website at opusgtx.com. I would now like to turn the call over to Dr. Magrath.

Thank you, Jenny, and thank you all for joining us this morning. For our call agenda, I will make the opening remarks about today's positive data announcement and how it fits into our overall corporate strategy. Then I will turn the call over to Dr. Jay Pepose, our Chief Medical Advisor, who will summarize the top line results from our VEGA-3 and LYNX-2 Phase III clinical trials. I will conclude our prepared remarks with a summary of our gene therapy programs and our many upcoming catalysts. At Opus Genetics, our singular focus is on restoring vision for patients. We are developing gene therapies for inherited retinal diseases and small molecule treatments for other vision-threatening eye diseases. These include inherited genetic diseases, age-related conditions and complications from corneal refractive procedures such as LASIK. We believe we have a diversified and well-positioned pipeline with meaningful near-term catalysts. Today, we are thrilled to share the positive top line results from our VEGA-3 Phase III program. Our latest program was Phentolamine Ophthalmic Solution 0.75%. Phentolamine was approved in September 2023 as the only commercially available FDA-approved product that reverses pharmacologically induced mydriasis, more commonly described as reversing dilation of the pupil in the eye. Phentolamine is being marketed by our global development and commercialization partner, Viatris, under the brand name Ryzumvi. Phentolamine is also being evaluated for the treatment of presbyopia and mesopic or dim light disturbances, which are related to trial results we will discuss today. The positive Phase III trial results announced this month from VEGA-3 and LYNX-2 continue to demonstrate the potential for phentolamine to improve vision in multiple indications. I am pleased to report that both trials met their respective objectives. The studies achieved the primary endpoints with statistically significant outcomes, demonstrating rapid and sustained improvement for participants. Importantly, Phentolamine demonstrated a safety profile consistent with previous clinical trials and no treatment-related serious adverse events were reported. In both VEGA and LYNX trials, we also saw strong patient-reported outcomes. The VEGA-3 trial results reinforce our belief that phentolamine can offer once-a-day dosing to improve near vision for millions of adults affected by presbyopia, which is the progressive loss of the ability to focus on near objects that typically becomes noticeable in the early to mid-40s. As the eye ages, the ability to focus decreases for reading and other near distance tasks cause the blurred vision and eye strain for many people. Presbyopia is one of the most prevalent ocular conditions and is estimated to impact 128 million Americans with over 2 billion people worldwide and this number is only expected to grow as patient population ages. Current solutions like reading glasses or surgical intervention are often inconvenient or invasive and we believe phentolamine may offer a differentiated option for individuals living with this condition. The positive results from both our Phase III VEGA-2 and VEGA-3 trials support the submission of an application to the FDA, which we plan to file in the second half of 2025. We have a compelling innovative pipeline with significant potential commercial opportunities, and our small molecule phentolamine program is an important driver to our overall corporate mission. Through this program, we have demonstrated our ability to successfully advance assets through clinical development to regulatory approval. Based on our co-development agreement with Viatris, we are eligible to receive up to $130 million upon achieving certain specified regulatory or net sales milestones. We received $10 million upon approval for Ryzumvi. We are also eligible to receive tiered royalties starting in the low double digits up to the low 20s in the United States and low double digits outside the U.S. based on certain sales metrics. We are pleased to partner with Viatris and continue to leverage their commercial expertise as these programs may deliver additional future upside for Opus' royalties and milestone payments providing non-dilutive funding to advance our pipeline. Now I'd like to provide a brief introduction of our Chief Medical Advisor, Dr. Jay Pepose, and turn the call over to him to summarize our VEGA-3 and LYNX-2 results. Following Dr. Pepose's remarks, I will provide an update on our gene therapy programs and upcoming catalysts. Dr. Pepose is the founder and former Medical Director of Pepose Vision Institute. He's a Board-certified cornea and vision correction surgery specialist and served as Bernard Becker Professor of Ophthalmology at Washington University School of Medicine and Barnes-Jewish Hospital. As a pioneer in laser eye surgery to correct nearsightedness, farsightedness, and astigmatism, Dr. Pepose was among the first surgeons in the United States to conduct clinical trials for LASIK. Dr. Pepose earned both his MD and PhD from UCLA and completed his ophthalmology residency at the Wilmer Eye Institute at Johns Hopkins University, followed by specialty training at Georgetown University Medical Center. Jay, thank you for being with us today. Please go ahead.

Thank you, George, and good morning, everyone. I'm excited to report our latest results for Phentolamine Ophthalmic Solution 0.75%. Phentolamine is a nonselective alpha-1 and alpha-2 adrenergic antagonists, designed to reduce pupil size. It is designed to work by uniquely blocking the alpha-1 receptors found on the muscle in the eye responsible for widening the pupil. This sympatholytic mechanism of action, avoids engaging decelerating muscle potentially reducing risks such as retinal tears or detachment associated with other agents. Today, we announced positive top line results from our VEGA-3 trial which is the second pivotal Phase III trial, evaluating the safety and efficacy of phentolamine for the treatment of presbyopia. As George described, presbyopia is the progressive loss of ability to focus on close objects that results in blurred near and intermediate vision and eye strain. VEGA-3 was a multicenter, randomized, double-masked, placebo-controlled Phase III study that enrolled 545 patients across 40 sites in the United States. Subjects were randomized in the 3 to 2 ratio to receive either phentolamine or placebo administered once daily in the evening. The VEGA-3 trial met its primary endpoint with a statistically significant 27.2% of participants treated with phentolamine, achieving a 15 or greater letter improvement and binocular distance-corrected near visual acuity with less than a 5-letter loss in binocular best-corrected distance visual acuity at 12 hours post dose on day 8. This compared to 11.5% of participants on placebo thereby demonstrating a strongly significant p-value of less than 0.0001. In addition, there were several other positive outcomes. First, 20.6% of participants in the Phentolamine arm achieved a 15 or greater letter gain in distance-corrected near visual acuity at 1 hour post dose on day 1, compared to 6.1% of those receiving placebo, with a p-value equal to 0.0002. Second, significant patient reported functional benefit at days 3 and 8 and week 6 was observed with patients reporting satisfaction with near vision upon awakening and improvement in their near vision. Both with p-values of less than 0.0001. Third, there was no evidence of tachyphylaxis observed after 6 weeks compared to the primary endpoint at day 8, 12 hours post dose. This means that phentolamine has shown that it can maintain the response after successive doses of the drug after -- over 6 weeks. And finally, regarding safety. Phentolamine demonstrated a safety profile consistent with previous trials with no new safety signal identified and no treatment-related serious adverse events recorded in this study. The most common treatment-emergent events -- adverse events, at 5% or greater included conjunctival hyperemia or redness, instillation site irritation and dysgeusia or a metallic taste, all of which were predominantly mild. There was a very low rate of headache reported by 2.6% of participants over the study period. For the study protocol, VEGA-3 participants will continue to be monitored for long-term safety over 48 weeks, which will be part of the overall long-term safety data package required by the FDA. I'd also like to highlight the recently announced positive top line results from our LYNX-2 trial for the treatment of decreased vision under mesopic or low light conditions following keratorefractive surgery. The LYNX-2 trial achieved its primary endpoint and built on earlier results from LYNX-1, providing evidence for efficacy in keratorefractive patients experiencing glare, halos and reduced functional vision in dim light environments. As we announced in February, the FDA granted fast track designation for phentolamine as a treatment for significant chronic night driving impairment in keratorefractive patients with reduced mesopic vision. This is a condition which currently has no FDA-approved therapies and is addressing an unmet need. We look forward to initiating our next Phase III trial known as LYNX-3 later this year. LYNX-2 was a randomized, double-masked, placebo-controlled Phase III trial evaluating the safety and efficacy of phentolamine in 199 participants who have previously undergone keratorefractive surgery and reported decreased visual acuity under mesopic low contrast conditions. Participants were randomized to receive either phentolamine or placebo, self-administered in both eyes nightly, treated and observed over 6 weeks. LYNX-2 was conducted under a special protocol assessment with the FDA. The LYNX-2 trial met its primary endpoint with a 15 or greater letter gain for phentolamine and keratorefractive participants in mesopic, low contrast distance visual acuity or MLCVA. In this study, 17.3% of participants in the phentolamine arm achieved greater or equal to 15 letter gain in mesopic, low contrast visual acuity at day 15 compared to 9.2% of those receiving placebo. This was statistically significant with a p-value of less than 0.05. During the course of the study, participants were assessed by the validated vision and night driving questionnaire, a self-reported questionnaire. The patient-reported outcomes at day 15 were also statistically significant for phentolamine with a p-value of less than 0.05, reporting less difficulty seeing the road because of oncoming headlights and less difficulty seeing due to glare when driving at dawn or dusk. In addition, there was no evidence of tachyphylaxis after 6 weeks of nightly dosing. And phentolamine demonstrated a safety profile consistent with previous trials with no new safety signal identified. For the study protocol, LYNX-2 participants will continue to be monitored for long-term safety over 48 weeks. In closing, I would like to say that over decades of my career as a physician who's treated patients with presbyopia, dim light disturbances and post-LASIK surgery outcomes, I am truly excited about the potential for phentolamine to make a meaningful difference in the lives of patients living with these conditions. I will now turn the call back over to George to walk through the company's progress on its gene therapy programs and review upcoming catalysts.

Thank you, Jay. The recent successes in the VEGA-3 and LYNX-2 trials underscore the potential versatility of phentolamine, which is already FDA approved for reversal of pharmacologically induced mydriasis and now has positive Phase III data in presbyopia and dim light disturbances, large markets with high unmet needs. These achievements strengthen our pipeline and position Opus as a leader in developing ophthalmic therapies. In addition to our small molecule program, we are leveraging our expertise in developing innovative gene therapies to address rare inherited retinal diseases or IRDs. With more than 350 genes associated with retinal degenerative diseases, our strategy is to use our patented modern AAV vector approach to advance a series of programs targeting various genetic defects. We believe this could lead to consecutive approved products rolling out over the next 5-plus years. Specifically, our gene therapy programs are focused on developing and advancing treatments to address mutations and genes that cause a loss of vision. We are utilizing a validated patented approach of delivering a onetime treatment to address these rare conditions. Our approach is based on many years of clinical research by our Scientific Advisor and Board of Directors, Dr. Jean Bennett, who was the pioneering force that led to the first U.S. FDA-approved gene therapy, Luxturna for an inherited RPE65 mutation-associated retinal dystrophy. In the near term, we are targeting diseases including Leber congenital amaurosis, bestrophinopathy and retinitis pigmentosa. These conditions affect thousands of patients worldwide. We will continue to leverage this approach in effect in NGEN-2 efficiently solve for many inherited blinding conditions and expand our pipeline to address additional genetic targets across the IRD spectrum. I'm pleased to report that earlier this week, we announced that the retinal degeneration fund of visual philanthropy arm of the Foundation Fighting Blindness is providing non-dilutive funding to support the advancement of our OPGx MERTK program. Mutations in the MERTK gene cause the Rod-Cone Dystrophy with early macular atrophy with retinitis pigmentosa being the most common genotype. This funding supports our advancement of OPGx MERTK through preclinical development towards investigational new drug-enabling studies. Looking forward, we have a number of key near-term catalysts coming up. First, in our OPGxLCA5 program, we expect to report initial data in the third quarter of 2025 from our pediatric cohort of patients in our ongoing Phase I/II trial for the treatment of LCA. OPGxLCA5 is targeting mutations in the LCA5 gene, which causes an early onset severe hereditary retinal degeneration. Early results have been encouraging, and we are optimistic about the potential to address this ultra-rare vision-driven condition. Importantly, the FDA recently granted the Regenerative Medicine Advanced Therapy designation to OPGxLCA5 based on the early data from the first 3 participants treated. The RMAT designation program offers the potential for expedited development and review of regenerative medicine therapies that demonstrate the potential to address serious or life-threatening diseases based on preliminary clinical evidence. The designation provides sponsors with early interactions with the FDA guidance on efficient development and manufacturing, and the opportunity to discuss surrogate endpoints to support accelerated approval. In our OPGx-BEST1 program, we plan to file an investigational new drug application with the FDA and begin a Phase I/II trial this year. This promising gene therapy asset is being developed for treatment of IRDs associated with mutations in bestrophin, the BEST1 gene, which affects approximately 9,000 individuals in the U.S. Beyond these programs, we are progressing preclinical work on additional AAV-based gene therapy targeting IRDs caused by mutations in RHO, RDH12, MAT1 and CNGB1. For our phentolamine projects, we are coordinating with Viatris on plans for upcoming regulatory submissions for presbyopia in the second half of 2025 and the initiation of LYNX-3 trial later this year. With our recent funding investment from the RD Fund and several leading health care investors, we believe our cash position will be sufficient to fund operations into the second half of 2026 based on current projections. In summary, these near-term catalysts, combined with the recent clinical successes position Opus for significant growth. The first half of 2025 has been incredibly productive and I want to recognize and thank our team, our stockholders, the clinical investigators and the many patients who have contributed to these achievements. We remain committed to developing innovative therapies for vision-threatening diseases. We will now open the call for questions.

[Operator Instructions] Our first question is coming from Matthew Caufield with H.C. Wainwright.

Thank you, Dr. Pepose for the positive update. It was mentioned that the therapy can avoid effects on the ciliary muscle, and I was wondering for the 2.6% rate of headache, does that imply that there is any effect on the ciliary muscle or what could be driving the observed low incidence of headache? Thanks for any clarification there. And then I just had one follow-up, if that's possible.

Well, thank you for that question. I mean, the mechanism of action really is distinct for phentolamine in that we're not engaging the ciliary muscle. And we think that, that may be playing a role in the low prevalence of headache in the trial. So we do think that, that finding is consistent with the mechanism of action.

Okay. That's great. I appreciate the clarification there. And then in addition to that component, are there any other important highlights about the phentolamine mechanism in the context of pilocarpine or the other novel mechanisms that are currently in development?

Well, as mentioned, phentolamine has a distinct mechanism of action and that it's working uniquely by blocking the alpha-1 receptors found on the radial iris dilator muscle, which are activated by the alpha-1 adrenergic receptors. It's really reducing the pupil diameter with a sympatholytic mechanism of action and that may potentially reduce risks such as retinal tears or detachment associated with some of the other genetic therapies.

Our next question is coming from Debanjana Chatterjee with Jones Trading.

Congrats on the positive data. I was -- would you be able to give us a little more color on the competitive positioning that you are expecting for the therapy? And I had 1 other follow-up.

Yes. Thanks, Deb. So we think that this is a -- may offer a great option for patients. And we're working with our -- with Viatris and the commercialization team there for how it truly defined the position.

Okay. And so I was also curious to trials behind. So as we have seen with some of the competitor data set, there is a more of a time course that you shared like with onset at 30 minutes and then different time points at 3 hours and then, of course, the durability endpoint. Could you maybe explain a little bit more about the rationale for design of directly looking at 12 hours and at 1 hours? Or will you be sharing any additional data for other time points at the future medical conference?

Yes, good question, Deb. That is really important, and we're going to -- we will be sharing that in upcoming medical conference and we'll make sure that, that gets widely disseminated at the time.

Okay. And maybe 1 final thing. Now that you might receive a potential label expansion into a larger indication. Does that expectations for pricing?

I'm sorry, I missed your question, Deb. Do you mind repeating it?

I meant now that you might have potential label expansion for Ryzumvi in larger indications. Does that change anything in terms of pricing expectations compared to reversal of mydriasis?

Yes, yes. So that will be the responsibility of the Viatris. But certainly, the chronic indications that we're talking about today would be differentiated from the onetime use Ryzumvi product that's out there now.

[Operator Instructions] Our next question is coming from Dev Prasad with Lucid Capital Markets.

Congrats on the progress. I have one regulatory question. With both VEGA-2, VEGA-3 yielding positive results. What are the next step ahead regarding the filing the sNDA in the second half? Basically, additionally, do you expect any potential delay at the sNDA, given so much uncertainty going on?

Yes. Dev, that's a great question, and we're sort of always tracking that. To date, we have not seen any delays at the agency. And we certainly hope that continues. For the VEGA program for presbyopia, we are on track, and we expect to file the sNDA in the second half of 2025. And then we also are expecting to initiate LYNX-3 for the dim light disturbance, which should hopefully be the last study for the LYNX program.

As we have no further questions on the line at this time, I would like to hand the call back over to Dr. Magrath for any closing comments.

Thank you all for your time and attention this morning. We look forward to updating you on our progress as we continue to advance our pipeline focused on innovative therapies for vision-threatening diseases. Operator, you may now disconnect.

Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.