Ocugen, Inc. Q2 FY2024 Earnings Call

Good morning, and welcome to Ocugen's Second Quarter 2024 Financial Results and Business Update. Please note that this call is being recorded at this time. All participants lines are in a listen-only mode. Following the speakers' commentary, there will be a question-and-answer session. I will now turn the call over to Tiffany Hamilton, Ocugen's Head of Corporate Communications. You may begin.

Thank you, operator, and good morning, everyone. Joining me on today's call and webcast is Dr. Shankar Musunuri, Ocugen's Chairman, CEO, and Co-Founder, who will provide a business update and an overview of our clinical and operational progress. Michael Breininger, our Corporate Controller, is also on the call to provide a financial update for the quarter ended June 30, 2024. Dr. Huma Qamar, Chief Medical Officer, will be available to answer questions following the presentation. This morning, we issued a press release detailing associated business and operational highlights for the second quarter of 2024. We encourage listeners to review the press release, which is available on our website at ocugen.com. This call is being recorded, and a replay with the accompanying slide presentation will be available on the Investors section of the Ocugen website for approximately 45 days. This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. We may, in some cases, use terms such as projects, believes, potential, proposed, continue, estimates, anticipates, expects, plan, intend, may, could, might, will, should, or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Such statements include, but are not limited to, statements regarding our clinical development activities and related anticipated timelines. Such statements are subject to numerous important risk factors and uncertainties that may cause actual events or results to differ materially from our current expectations. These and other risks and uncertainties are more fully described in our periodic filings with the Securities and Exchange Commission (SEC), including the risk factors described in the section entitled Risk Factors in the quarterly and annual reports that we file with the SEC. Any forward-looking statements that we make in this presentation speak only as of the date of this presentation. Except as required by law, we assume no obligation to update forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise after the date of this presentation. Finally, Ocugen's quarterly reports on Form 10-Q covering the second quarter of 2024 have been filed. I will now turn the call over to Dr. Musunuri.

Thank you, Tiffany, and thank you all for joining us today. We are excited to discuss the substantial progress of our modified gene therapy platform across all three clinical programs. And to continue driving these programs, we recently completed a successful fundraising effort with net proceeds of $32.6 million, extending our runway into the third quarter of 2025. Our scientific advances and the strategic growth of the company were further acknowledged by our inclusion in the Russell Index in June. This ranking demonstrates the value of our pipeline and supports Ocugen's dedication to creating long-term shareholder value. Additionally, the recent offering was led by a premier mutual fund along with participation from leading life sciences investors, which further strengthens our shareholder base. We're actively recruiting patients in our OCU400 Phase 3 liMeliGhT clinical trial for the treatment of retinitis pigmentosa (RP). And just this week, we announced FDA approval for an expanded access program (EAP) for the treatment of adult patients aged 18 and older with RP with OCU400. This is the first-ever gene therapy candidate to treat patients with RP regardless of mutation approved for EAP. We also progressed into the OCU410 Phase 2 ArMaDa clinical trial for the treatment of geographic atrophy, an advanced stage of dry age-related macular degeneration. Following completion of dosing in patients in Phase 1, I will discuss these pivotal milestones in greater depth later in the presentation. Additionally, we are about to conclude Phase 1 of the OCU410ST Phase 1/2 GARDian clinical trial for the treatment of Stargardt disease. OCU400 is making remarkable strides in clinical development, and we are actively dosing patients in the Phase 3 liMeliGhT clinical trial. As announced earlier, OCU400 has received key regulatory approvals, including expanded orphan drug designations for RP from the FDA and the European Medicines Agency, as well as Regenerative Medicine Advanced Therapy (RMAT) designation from the FDA. With Phase 3 dosing, OCU400 remains on track to meet the 2026 approval targets for a biological licensing application (BLA) from the FDA and for a Market Authorization Application (MAA) from the European Medicines Agency. We're very encouraged that more than 60% of the intent to treat patients from the Phase 1/2 clinical trial, including patients with RHO mutation, meet the responder criteria established for Phase 3. The Phase 3 mobility test responder rate for the only FDA-approved product to treat one mutation in RP was 52%. The Phase 3 study is powered greater than 95%, assuming a 50% responder rate. The OCU400 Phase 3 study includes pediatric patients eight years of age or older and adults with early, intermediate to advanced stages of RP. The study has a sample size of 150 participants. One arm has 75 participants with the RHO gene mutations and the other arm has 75 participants with the mutations in any of several other genes, randomized 2:1. A mobility test, The Luminance Dependent Navigation Assessment (LDNA), is the primary endpoint of the study. In this assessment, a participant navigates an obstacle course that constitutes a more sensitive and specific measurement of visual function than the mobility measurement used in previous Phase 3 clinical trials. The Phase 3 liMeliGhT study will focus on the proportion of responders in treated and untreated groups who achieve an improvement of at least 2 Lux levels from baseline. Let me take a moment to discuss the unmet need and underserved market for RP patients. There are approximately 300,000 patients in the U.S. and EU that are affected by the disease, which is caused by mutations in any of approximately 100 different genes. The only other treatment currently on the market addresses mutations in one gene associated with RP. OCU400 has the potential to treat multiple gene mutations because of its gene-agnostic mechanism of action, and in this way, it will fulfill a significant unmet medical need. We continue our extensive campaign to educate the ophthalmology community about the concept of modified gene therapy, and we recently presented supporting data at a variety of conferences, such as the Annual Meeting of the American Society of Retina Specialists, which convened in Stockholm, Sweden last month. At the conference, Dr. Benjamin Bakall, who serves as the Director of Clinical Research, an associated retina consultant, and as Clinical Assistant Professor at the University of Arizona's College of Medicine in Phoenix, presented Phase 1/2 data on OCU400. With the initiation of our EAP for OCU400, RP patients with early, intermediate to advanced RP with at least minimal retinal preservation and who may benefit from the mechanism of action of OCU400 may be eligible to receive treatment prior to the approval of the BLA. The decision by the FDA to endorse the use of OCU400 in any patients with RP reflects the agency's position on the safety, tolerability, and benefit profile of OCU400 for any mutations relative to any risk of treatment. The approval of an Expanded Access Program for OCU400 further supports the gene-agnostic mechanism of action for this novel modifier gene therapy. We look forward to working with clinicians, patients, and the RP community to provide access to OCU400 for eligible patients through our EAP. Now let's move on to our developments in OCU410 and OCU410ST, which aim to treat geographic atrophy secondary to dry age-related macular degeneration and Stargardt disease, respectively. These modifier gene therapies leverage a nuclear receptor gene called RORA, which stands for RAR-related orphan receptor A, as a potential one-time therapy for life with a single subretinal injection. OCU410 specifically designed to address multiple pathways implicated in the pathogenesis of dry age-related macular degeneration, offers a distinct advantage for current treatment options that target only one pathway, the complement system, and require frequent intravitreal injection, about six to 12 doses per year, accompanied by various safety concerns, such as roughly 12% of patients developing issues with AMD. OCU410 has the potential to regulate all four pathways related to disease progression: lipid metabolism, inflammation, oxidative stress, and the complement system, thereby addressing the underlying causes of the disease with a single subretinal injection. An ArMaDa clinical trial update providing further insights into the safety and efficacy of OCU410 is anticipated later this year. Our approach with OCU410 is to provide a comprehensive and durable solution with a potential one-time treatment. There are 2 million to 3 million geographic atrophy patients among the 19 million people affected by dry age-related macular degeneration in the U.S. and Europe, demonstrating a considerable market opportunity. In July, we announced the completion of dosing in the third cohort of the OCU410 Phase 1/2 ArMaDa clinical trial for the treatment of geographic atrophy. To date, nine patients with geographic atrophy have been treated with the low, medium, and high doses. The Phase 2 dose expansion, assessor-blinded clinical trial has been initiated and will assess the safety and efficacy of our OCU410 in a larger group of patients who will be randomized into one of three groups: a medium dose treatment group, a high dose treatment group, or a control group. Participants must be aged 50 or older, be able to identify 24 letters or more on the BCVA, which is like those charts you read at an optometrist's office, and have a total geographic atrophy area between 2.5 and 20.5 square millimeters. Turning now to OCU410ST, which has received orphan drug designation from the FDA for the treatment of ABCA4 associated retinopathies, including Stargardt disease. The Phase 1/2 Guardian clinical trial for the treatment of Stargardt disease is actually enrolling patients in the high dose cohort and the dose escalation portion of the study. Stargardt affects approximately 100,000 people in the U.S. and Europe, and there are no approved therapies available. These efforts represent our commitment to advancing treatments for blindness, focusing on innovative gene therapy solutions that aim to provide lasting benefits to patients. We look forward to sharing further updates as we continue to advance these promising therapies through clinical development. With that, I will now turn the call over to our Corporate Controller, Michael Breininger, to provide an update on our financial results for the second quarter ended June 30, 2024.

Thank you, Shankar. The company's cash, cash equivalents, and restricted cash totaled $16 million as of June 30, 2024, compared to $39.5 million as of December 31, 2023. The company had 257.4 million shares of common stock outstanding as of June 30, 2024. Total operating expenses for the three months ended June 30, 2024, were $16.6 million, which included research and development expenses of $8.9 million and general and administrative expenses of $7.7 million. This compares to total operating expenses for the three months ended June 30, 2023, of $24 million, which included research and development expenses of $14.5 million and general and administrative expenses of $9.5 million. As stated earlier, we recently completed a successful fundraising effort with net proceeds of $32.6 million, extending our runway into the third quarter of 2025. As always, we are constantly exploring strategic and shareholder-friendly opportunities to increase our working capital and continue to pursue strategic partnerships that will drive our long-term strategy. That concludes my update for the quarter. Tiffany, back to you.

Thank you, Mike. We will now open the call for questions. Operator?

Our first question comes from the line of Sean Lee. Please go ahead.

Hi, good morning. This is Sean from H.C. Wainwright, standing in for RK. How are you?

Good morning, Sean.

Thanks for taking my questions. My first one is on the OCU400 expanded access program. So I was wondering what is the EAP primarily targeted towards, since I'm sure you are still actively recruiting a lot of patients into the Phase 3 study?

Huma?

Yes. Thank you for the question. So the expanded access program is targeting the population that do not meet the inclusion exclusion criteria of our Phase 3 or they would have to have an option meeting a little bit more flexibility based on what we have not offered in our Phase 3, because that is mandated by the FDA regulatory process. So in this trial, our inclusion criteria would be 18 years of age, anyone that has a clear certified genetic diagnosis of RP, and those who have photoreceptors left. And also discretionary by the treating physician, this is the decision that individually will be taken by the treating physician and the patient.

I see. Thanks for that. Regarding the OCU400 Phase 3, could you share the expected difference between the treatment and untreated groups and how the study is designed to measure this?

Yes. In the study comparing treated and untreated groups, the untreated group is not entirely untreated due to the assessor-blinded nature of the study, which involves sub-retinal surgery. The study is structured with a 2:1 ratio, meaning that out of 150 patients, 50 will be in the untreated group. The study is designed to have a power greater than 95%, assuming a response rate of 50%. Responders are defined as participants who can achieve two levels or higher on our proprietary LDNA mobility test.

Okay, understood. So 95% to detect a 50% difference? Got it. And then finally for the OCU410 study update expected later this year, could you elaborate a little more on what can we expect at the update? What will you provide? What kind of data will you provide?

So yes, for the OCU410 geographic atrophy secondary to dry age-related macular degeneration study, we are hoping to provide preliminary safety and efficacy updates later this year.

So we can expect both safety and some efficacy results then?

Yes.

Great. Thanks. That's all the questions I have. Thanks again for taking my questions.

Thank you, Sean.

Your next question comes from the line of Robert LeBoyer with Noble Capital Markets. Please go ahead.

Good morning. My question has to do with OCU400. And you'd mentioned that you're on track for the 2026 BLA. So I was wondering if you could give any details on upcoming milestones or data presentations for the trial?

Robert, good morning, Robert. Since it's an assessor-blinded study, updates we'll be providing on the recruitment rates, how we are meeting the BLA timeline. Since we do have RMAT designation, as well as orphan designations in the U.S. and EU, that will allow us to do a ruling submission of our BLA and MAA. So that's the process potentially we're going to take starting from late next year. And when the clinical recruitment is done early next year, that will take one year for us to complete the last patient, which is the duration of the trial. And when the data comes out, we'll close the clinical sections and then that will trigger the accelerated path of six months in 2026. So that will allow us to potentially get approvals in both U.S. and EU late 2026.

Okay, great. Thank you very much.

Thank you, Robert.

Our next question comes from the line of Daniil Gataulin with Chardan Capital Markets. Please go ahead.

Hi. This is Janani on behalf of Daniil. So my first question is on OCU200. So can you tell us where you are in the process for getting the clinical hold lifted for OCU200? And once the hold is lifted, will you be launching the trial right away or are you focusing on the gene therapy programs at this point? Thank you.

We are currently collaborating with the FDA to submit the requested information and work towards lifting the clinical hold. We have designed a straightforward Phase 1 study, and once the FDA removes the clinical hold, we will outline the next steps for the program.

Okay. And for…

I mean, again, I just want to reiterate, our focus has been primarily gene therapies, but the OCU200 is a good program. As soon as the FDA lifts the clinical hold, we'll provide a direction on that program.

Okay. Thank you. So I have another question on OCU400. So are there meaningful differences in achieving responder criteria with the LDNA compared to the mobility assessments used in previous Phase 3 trials?

Yes. As we stated and showed today, intent to treat population data we analyzed from the Phase 1/2 that means patients who will qualify for Phase 3 based on our criteria, and we clearly showed a 62% response rate based on patients who can reach two levels or more. And then the approved product, they have a 52% response rate. And I think one of the questions earlier we addressed, we powered the study at a 50% response rate. That means we actually powered it lower than what we achieved in Phase 2.

Okay. Thank you.

This concludes the question-and-answer portion. I will now turn the call back over to Chairman, CEO, and Co-Founder, Dr. Shankar Musunuri. Please go ahead.

Thank you, operator. Thank you everyone for joining us today. We appreciate your continued support as we move forward with our groundbreaking scientific and clinical initiatives. We look forward to the second half of 2024 as we continue to solidify Ocugen's position as a biotechnology leader. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.