Outlook Therapeutics, Inc. (OTLK) Earnings Call Transcript & Summary

Hello, and welcome to the Outlook Therapeutics Corporate Update Conference Call and Webcast. [Operator Instructions] This webcast is being recorded at the company's request and a replay will be made available on the company's website following the end of the event. At this time, I'd like to remind our listeners that remarks made during this webcast may state management's intentions, beliefs, expectations or future projections. These are forward-looking statements and involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the safe harbor provisions of the federal securities laws and are based on Outlook Therapeutics' current expectations, and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from these contemplated by such forward-looking statements are discussed in the periodic reports Outlook Therapeutics files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on the Securities and Exchange Commission's website. We encourage you to review these documents carefully. Joining us on today's call from the Outlook Therapeutics executive team are Russ Trenary, President and CEO; Larry Kenyon, CFO; and Dr. Jennifer Kissner, SVP, Clinical Development and Regulatory Affairs. I would now like to turn the call over to Russ Trenary, President and CEO. Please proceed, sir.

Thank you, operator. We appreciate everybody joining the call this morning. As you know, our PDUFA date was yesterday for FDA's review of our BLA submission for ONS-5010, an investigational ophthalmic formulation of bevacizumab under development to treat wet AMD. And earlier this morning, we announced in our press release that the FDA has issued a complete response letter to the company's BLA. We are disappointed and we're certainly not expecting to receive a CRL back from the FDA. While we are limited in what we will be able to discuss until we complete the planned Type A meeting with FDA, I will highlight what we know and then open it up for questions. So to summarize, based on the FDA letter, the agency acknowledged that our NORSE TWO pivotal trial met its safety and efficacy endpoints, which were highly statistically significant. Yet did not approve our BLA due to several CMC issues that we believe to be manageable, pre-approval inspection observations that require satisfactory resolution and need for further substantial evidence. The next step for us is to request a formal meeting with FDA as soon as possible to further understand the deficiencies of the BLA and how best to resolve them. We know that you have a lot of questions for us as do we with FDA. Following our planned Type A meeting with the agency, we believe we will be in a much better position to discuss further next steps as well as further line of sight into the potential timing for resolution and our expected resubmission. I would like to sincerely thank the OTLK team, our clinicians, our KOLs and collaborators for their tireless efforts as we collectively continue to believe in the public health need to provide the retina community with an FDA-approved bevacizumab treatment option for patients. I believe we will get there. I wanted to keep this straightforward so we can get right to your questions. Just as a reminder, we will be limited in providing a lot of detail as we still need to have our Type A meeting, but I'm happy to answer any questions as we can. Operator?

[Operator Instructions] Our first question is coming from Julian Harrison from BTIG.

Sorry to hear this update. First, are you able to talk more about the nature of the CMC issues and what the FDA is specifically looking for in regards to further confirmatory clinical evidence? And then I have a follow-up.

Yes. Thank you, Julian. The Type A meeting is going to reveal during that discussion, just exactly, I think, what it is that we have in front of us. But as we look through the CMC issues, they all appeared addressable. Many of them looked like the type of issues that you would normally get in an information request. So we don't see any showstoppers there. And it will be -- ultimately, it will be the conversation that we have with FDA in the Type A meeting. I think that will reveal exactly what it is that they're looking for to confirm the results of NORSE TWO, which were highly statistically significant. As you all recall, we met the primary safety and even secondary end points in a very impressive fashion. So we believe that there is a pathway for confirming those results.

Okay. And then curious how you plan on addressing your debt going forward, your debt that's scheduled to mature in January 2024?

Yes, Larry, could you please handle that one?

Sure. Happy to do that, Julian. Thanks for the question. Obviously, we need to have the Type A meeting and understand what the exact next steps are, but there's no immediate cash crunch for us. Obviously, we've got -- we just reported results for our fiscal third quarter. We had $33 million on hand at the end of June. And that cash easily gets us through the end of calendar 2023. When it comes to the debt, we've got a long-term relationship with the lender. We frequently in the past, extended the maturity. They've been willing to work with us. Obviously, everybody wants to understand what the next steps are after the Type A meeting. But we think we'll have the ability to negotiate some type of an extension there. So sitting here today, I'm not terribly worried about the debt that's currently due on January 1, 2024.

Okay. And finally, sorry if I missed it, timing of the Type A meeting, do you have a good sense for that now?

Yes. Thank you, Julian. And I'll have -- I'll go ahead and pass it to Jennifer to talk about the process for setting those up.

Thank you for the question. So yes, we are in the process of putting together our questions and briefing document to submit to the FDA. For a Type A meeting, the agency has a 30-day clock to give us a meeting. So as soon as we can get the briefing document submitted within 30 days, we will have that meeting.

Next question is coming from Kristen Kluska from Cantor Fitzgerald.

Also sorry to hear about this news. Just wanted to ask on some of these items. I know that you've had frequent dialogue with them in the past and also withdrew your initial filing to address questions that they have now. First, can you comment if some of the items that were brought up were essentially new relative to those previous discussions?

Yes. Thank you, Kristen. I think as we read through that, it looked like there were a couple of new things, but a couple of clarifications that FDA was looking for on old items. And so I think there -- I think for us, the good news was it appeared that everything that they had in their required either a clarification or some additional information from us or some new information from us because it was a question that had never been received before. So a little bit of a mix there, but I think the -- our read as we went through the CMC section was we can handle this.

Okay. And at this stage, are you able to comment anything relative to their comments about a lack of substantial evidence?

Yes. I think it's probably more accurate to refer to that as a -- as further additional evidence. And I think that's what we need to kind of get nailed down in the Type A meeting.

Okay. And then last question for me. Clearly, they did acknowledge what they saw in NORSE TWO, but I'm curious if they gave you any overlying comments about the need for this kind of therapy if they also acknowledge what they're seeing with off-label utilization of bevacizumab as well.

Thank you, Kristen. I think the agency's position typically is that this is one of the few times in your life when it's all about you. And so any -- I don't think I've hardly ever seen the agency very often tread into times where they're talking about someone else's therapy pursuant to your technology. But I think we all acknowledge and agree that having a marketplace that is 50% off label in many people's minds is not ideal. And we believe we are still on the side of proper clinical and regulatory pathway to provide a solution for bevacizumab that would get all patients on level. So we still view this as a right submission, and we continue -- and we're -- we want to continue to put the type of evidence in front of the agency that we'll be convincing enough for them to approve this.

Next question is coming from Eddie Hickman from Guggenheim.

Can you talk about where the evidence questions were focused? Do you think they were more around the number of patients treated or sort of around the dosing schedule that was used? And then can you sort of talk about if the EMA is engaged in similar questions or concerns regarding your ongoing discussions with them?

Yes. Eddie, we had no questions around the structure of the NORSE TWO. So there was never any issue around dosing or anything like that. And you'll recall that the control arm for NORSE TWO was an FDA-approved regimen in the Lucentis labeling in the [ Palace of truth ], that control arm could have been sham or placebo that would have been consistent with regulations. So we felt like having our bevacizumab compared to an FDA-approved version on the Lucentis labeling was certainly in scope, and there were no questions that came out from FDA in the CRL pursuant to NORSE TWO. So we continue to believe that NORSE TWO results were highly statistically significant, with our p-values measuring into the 0.005 range. So hard to argue that those results were by chance. In terms of questions around the EU, that document is still under development, and we'll be submitting our next level of submission for that will be coming up soon.

And then could you just remind us about sort of the CMC issues like where the manufacturing is done and sort of how it's done differently from sort of Avastin and the other Avastin biosimilars?

Well, I think the -- I think our drug substance manufacturing location has been in College Station, Texas with FUJIFILM Diosynth and also with Ajinomoto for the drug product in San Diego, California. We're not aware of either one of those factories having any business with producing Avastin.

Next question is coming from Zegbeh Jallah from Capital One.

I'm sure this is really disappointing, but just trying to wrap our heads around the comments around additional clinical evidence. I wanted to know what you thought about the number of patients that were included in the data package you submitted relative to what others have submitted for either a biosimilar or for a new drug approval and how that might compare. And I have one follow-up.

Yes. I think our clinical package was consistent with what we believe the requirements were in discussions that we had with the FDA in 2018 at the end of Phase II meeting. So we believe we understood the number of patients that were required and delivered the proper end for that. We don't have any thoughts around comparing what we're doing to what the biosimilars are conducting Zegbeh because their requirements are different. Ours is a 351(a) pathway and therefore, would not necessarily resemble what the requirements are for biosimilars.

And I know you guys have SPAs in place for the 2 other indications. Was this also under an SBA as well?

I'm going to hand that over to our history expert, Larry Kenyon; and Jennifer, our Head of Regulatory, for that one.

No, well, we do not have an SPA in place for wet AMD. The SPAs belong to DME and BRVO.

Got it. Helpful. And I suppose we'll talk about some of these things later regarding, if you will move forward with these additional studies for the other indications because it sounds like we know the drug works, they may just want some additional things, so you could still move forward with those. So I'm not sure if you're in a position to comment on them yet or you prefer to withhold that until your Type A meeting. But I do have a follow-up regarding the EU opportunity. Curious to see if there's anything you could do to perhaps increase the odds of success there? I know Russ just mentioned that you do have an opportunity to submit additional data coming up. And so just wondering is there anything that you think you can do with that data update to kind of optimize. Obviously, you could probably increase your odds of success on the CMC side.

I'll go ahead and make an introductory remark on that and then pass it to Jennifer. But as you know, Zegbeh, the requirements for the EU and the FDA do differ, but there's also overlap. And anytime that we have information that's being developed either for our EU submission or our FDA submission, we do look at an opportunity to repurpose that information for both the EU as well as FDA. Whether there's anything that comes out of this particular work that would be helpful for the EU will all be dependent upon just what those EU requirements are and whether additional information FDA would also be helpful to EU. We have employed in the EU as well as in the United States, an expert team who have a lot of experience with these submissions. And so any time we've got an opportunity like this where we are developing additional materials, we do obviously socialize it with that team and then make a determination on whether we want to buttress our submissions with that additional information. Jennifer, do you have any other -- any additional color on that?

So well said, Russ. We strive to ensure that the data we provide is the same with both agencies. So if a question gets asked, we try to incorporate that into both applications. But the requirements are different. So we also have nuances between the 2. But I agree with Russ, it's hard to say at this point whether any of the questions that we have received now will need to be added, but certainly, we strive to ensure that both data packages are the same.

And then the very last one here. I know there is just some pre-approval steps in place to support a launch before the end of the year. Just can you comment on maybe did they pause some of those and still have it ready for a later launch?

Yes, it's a great question, Zegbeh, and there -- we have been building inventory. Obviously, that inventory comes with some pretty long dating. So we'll be just having that available and ready for final packaging and labeling once we ultimately get an approval. The timing around all of that will just -- we'll wait for final determination until we get on the other side of the Type A meeting and have a better understanding of just what exactly it is that the FDA still needs from us.

Appreciate it. And again, very disappointing, but looking forward to hearing updates about the path forward.

Next question is coming from Douglas Tsao from H.C. Wainwright.

And obviously, disappointing news. Just as a starting point, I guess, maybe Russ to clarify the comments around the need or the lack of substantial evidence [ of effect ]. I mean, is there any reason to think that the agency, I mean, just the way the press release read, it would seem that they were acknowledging that you hit statistical significance, but perhaps didn't think that, that was NORSE TWO sort of demonstrated clinical effect. I mean is it your interpretation that, that implies the need for an additional study or studies? Or is there any way or reason to think the agency is just questioning whether that study itself or the value or weight that they're willing to place on that individual study? And I've got a follow-up.

Yes, it's a great question, Doug. I think the Type A meeting will help reveal that. I think the package that we had produced originally, aside from the excellent results from NORSE TWO provided on what we believe was adequate confirmatory evidence. The CRL, I think, has a question around that. But we think that there's a potential that by curing some of the CMC issues, there's a pathway for providing that additional confirmatory evidence. If FDA on the other hand, required some sort of additional clinical evidence we would need to understand what the nature of that was and whether those could be animal studies or some other opportunity, but it will be type -- our briefing package and a Type A meeting that will get us to a better understanding of what that additional confirmatory evidence needs to look like.

Okay. Great. And then just as a follow-up, on the DME and the BRVO studies or the spas that are in place, do you -- can you remind us what the dosing regimen that is included in those for the comparator arms?

Russ, this is Larry. I'm going to handle this one, if you don't mind. So Doug, we haven't disclosed the details of the dosing regimens for DME or BRVO or what the control arms are, but that's something that when we're ready to take it to the next step, we'll be able to make that public.

Our next question is coming from Kemp Dolliver from Brookline Capital Markets.

First question is, what was the powering of NORSE TWO? Was it 90% or 80%?

Jennifer, you want to take that?

It was -- let me -- give me a moment, and I can get back to you on that one.

While she tracks that down, let me just add to that, that the -- you'll recall that on the primary endpoint was the percentage of 3-line gainers. We had almost 42% of the patients were 3-line gainers and the p-value of that was just a touch better than 0.005. So that does not look like it was a chance result. Additionally, over 56% of our patients gained 10 letters or 2 lines and almost 70% of our patients gained 5 letters or a line. And again, the p-values for those also trended in that -- with that extra digit of 0.004-0.005. The key secondary endpoint that we had was best corrected visual acuity and the number of letters gained there was 11.2. Again, an extra digit of p-value. I think that one was 0.004. So those key primary and secondary endpoints. I just think that any doctor that looked at that -- the results of that study came to the conclusion that none of those results were by chance.

Right. And my recollection from -- and this is from talking to clinicians, is the approval for off-label Avastin was done on a single trial. And I've heard some clinicians criticized the trial design and the circumstances, et cetera. So I'm trying to understand why FDA would potentially subject you to running 2 trials when they created this situation based on a single trial, which I think was investigator initiated.

Yes, it was. But I think the -- I think one thing worth mentioning is off-label Avastin was never approved in ophthalmology. They did a clinical trial. It was with the National Eye Institute. It did produce data, but there was never an approval for off-label Avastin in ophthalmology.

Correct. And I'll add in you are correct, it was an investigator-led study that evaluated Avastin off-label in the ophthalmic space. That was an NIH study called CATT, C-A-T-T. So that was not for an approval that was not submitted to the FDA. Our study was 90% powered.

Thank you. That concludes our question-and-answer portion. I'd like to turn the floor back over to Russ for any closing remarks.

Thank you, operator. Well, listen, we really appreciate everybody joining us today. We are reviewing carefully the CRL that came in. We will be requesting a Type A meeting once we have produced the briefing document that we think will be appropriate for that. We do have retained at Outlook, a number of former FDA reviewers and former FDA attorneys to help us ensure that we understand what all the questions are and have a chance to vet all of the answers that we're producing. And I think we've got an outstanding technical team who will be able to address all of the CMC issues. And we would anticipate that once we get on the other side of the Type A meeting, we'll be in a better position to outline what the path is forward. So we really appreciate everybody joining us. We believe we've got an outstanding therapy that America needs and our plan is to continue in this development, in the development of it and ultimately gain an FDA approval. Thank you, everybody, for joining us.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.