Ocugen, Inc. Q3 FY2024 Earnings Call

Good morning and welcome to Ocugen's Third Quarter 2024 Financial Results and Business Update. Please note that this call is being recorded at this time. All participants' lines are in 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. Ramesh Ramachandran, our Chief Accounting Officer, who is transitioning from Mike Breininger, Interim Chief Accounting Officer, is also on the call to provide a financial update for the quarter ended September 30, 2024. Dr. Huma Qamar, Chief Medical Officer, and Dr. Arun Upadhyay, Chief Scientific 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 third 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 predicts, believes, potential, proposed, continue, estimates, anticipates, expects, plans, intends, may, could, might, will, should, are 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 factors, risks, 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 filing with the Securities and Exchange Commission, the SEC, including risk factors described in the section entitled Risk Factors and 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 the presentation. Finally, Ocugen's Quarterly Report, Form 10-Q, covering the third quarter of 2024, will be filed next week. 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 share the ongoing progress of our novel modifier gene therapy platform across all three clinical programs, as well as a recent announcement regarding our OCU200 Biologic Candidate, which I will highlight later in the presentation. During the third quarter, we accomplished notable clinical and regulatory milestones, including approval from Health Canada to initiate the OCU400 Phase 3 liMeliGhT Clinical Trial in Canada, and approval from the U.S. FDA for an Expanded Access Program, or EAP, for the treatment of adult patients aged 18 and older with Retinitis Pigmentosa, RP, using OCU400. These accomplishments and consistent trial enrollment are bringing the company even closer to providing a potential one-time treatment for life to patients living with RP. Our modifier gene therapy programs leveraging the RORA gene, OCU410 and OCU410ST are advancing through their respective clinical trials as planned. We are currently dosing patients in the OCU410 Phase 2 ArMaDa clinical trial for the treatment of geographic atrophy, GA, an advanced stage of dry age-related macular degeneration, dAMD. We completed the Phase 1 dosing in the Phase 1/2 OCU410ST GARDian clinical trial with a favorable safety and tolerability profile. The Data Safety Monitoring Board, DSMB approved enrollment for the second phase of the Phase 1/2 clinical trial. Stargardt disease is the most common inherited retinal disease, and there remains a large unmet medical need with no currently approved FDA treatment. I'm encouraged by these achievements and confident in our path forward to achieving our near-term inflection points. This week, we announced the closing of a debt financing that secured $30 million from Avenue Capital Group. This funding is expected to extend our runway into the first quarter of 2026. Dosing is well underway in the pivotal Phase 3 liMeliGhT Clinical Trial for OCU400, our lead gene therapy candidate that utilizes the NR2E3 gene. As previously mentioned, we received Health Canada's approval to initiate the Phase III clinical trial for OCU400 in Canada. Expanding the clinical trial to Canada is a significant opportunity for Ocugen, as it will allow us to reach a broader patient population, encompassing numerous gene mutations associated with RP. We plan to enroll subjects across a maximum of five sites, expediting recruitment and broadening the commercialization potential of this gene agnostic treatment in the United States and Europe. OCU400 also received FDA approval for an EAP for the treatment of adult patients with RP aged 18 and older. The EAP is a meaningful step forward, as it makes OCU400 available to qualifying patients beyond our Phase 3 clinical trial, offering hope and optimism for a wider population of patients desperate for a therapeutic option. This approval also serves to validate the positive safety data generated in the previous Phase 1/2 OCU400 clinical trial. Furthermore, this is the first Phase 3 gene therapy candidate to treat patients with RP, regardless of mutation. The Phase 3 clinical trial is on track to complete enrollment in the first half of 2025, file the Biologics License Application, BLA, and Market Authorization Application, MAA, in Europe in the first half of 2026, and pursue commercialization in 2027. Let me take a moment to highlight the unmet need and underserved market for RP patients. There are approximately 300,000 patients in the US, Europe, and Canada that are affected by the disease, which is caused by mutations in roughly 100 different genes. The only approved gene therapy on the market and one currently in development each address one mutation associated with the disease. Other candidates in development, including Optogenetics, are intended only for a very small patient population. OCU400 has showcased its potential to provide a totally new category of treatment using its gene agnostic approach. Rather than a one-to-one approach, modified gene therapy targets many genes associated with this underserved disease through the use of master gene regulators, resetting the functional network of the retina and restoring overall health. We continue our extensive campaign to educate key stakeholders about the differentiated mechanism of action of our modifier gene therapy platform and its advantages over current therapies. During the third quarter, we had the opportunity to provide updates on our three clinical stage modifier gene therapies to significant investor audiences, as well as industry decision makers during meetings like the cell and gene meeting on the Mesa hosted by the Alliance for regenerative medicine. Now let's move on our development in OCU410 and OCU410ST, which aim to treat GA secondary to dAMD and Stargardt disease respectively, with a single subretinal injection that could be a one-time treatment for life for patients living with these debilitating blindness diseases. OCU410 is specifically designed to address multiple pathways implicated in the pathogenesis of dAMD and offers distinct advantages over current treatment options that target only one pathway, the complement system. Currently approved treatment options require frequent intravitreal injections, about six to 12 doses per year, and are accompanied by various safety concerns. For example, roughly 12% of patients develop wet AMD following treatment. 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 approximately 2 million to 3 million GA patients in the US and Europe combined, OCU410 represents a considerable market that is primed for new entrants, given the shortcomings with the current therapies. Additionally, there is no approved product for GA in Europe. We are currently in Phase 2 of the Phase 1/2 ArMaDa clinical trial and plan to complete dosing in early 2025. A preliminary safety and efficacy update on the OCU410 Phase 1/2 ArMaDa clinical trial will be shared at the upcoming clinical showcase next week. To date, nine patients with GA have been treated with the low, medium, and high doses in the OCU410 Phase 1 study, and 410 demonstrated a favorable safety and tolerability profile. To date, no serious adverse events related to OCU410 have been reported. The Phase 2 dose expansion, SSR-blinded clinical trial is recruiting patients and will assess the safety and efficacy of 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, and an untreated control group. Participants must be aged 50 or older, be able to identify 24 letters or more on a BCVA which is similar to the charts you read at the optometrist's office, and have a total geographic atrophy area between 2.5 and 20.5 square millimeters. Turning on to OCU410ST, which has received orphan drug designation from the FDA for the treatment of ABCA4-associated retinopathies, including Stargardt disease. Phase 1 dosing of the Phase 1/2 GARDian clinical trial has been completed, and OCU410ST demonstrated a favorable safety and tolerability profile. To date, no serious adverse events related to OCU410ST have been reported. The Data and Safety Monitoring Board has approved proceeding to Phase 2 of the clinical trial. Stargardt disease affects approximately 100,000 people in the US and Europe, and no approved therapy is available. This condition is the most common form of inherited macular dystrophy, with symptoms of bilateral central vision loss typically forming during childhood and gradually worsening over a person's lifetime. A preliminary safety and efficacy update on the OCU410ST Phase 1/2 GARDian clinical trial will also be featured at the upcoming clinical showcase. Lastly, I’d like to call attention to our biologic platform OCU200, which possesses unique features to treat vascular complications of Diabetic Macular Edema, DME. In recent news, we announced that the FDA cleared the investigational drug application for the Phase 1 clinical trial evaluating OCU200, a recombinant fusion protein consisting of tumstatin and transferrin for the treatment of DME. DME causes blurriness in vision and progressive vision loss as the disease advances. Approximately 746,000 patients in the United States are affected by DME. The condition is becoming more prevalent as the number of people with diabetes in the US rises, making it more imperative to address. Approximately 30% to 40% of DME patients are refractive to current anti-VEGF therapies, and we believe that OCU200 has the potential to provide a new treatment option for a significant percentage of people living with DME, including non-responders to the current standard of care. We plan to initiate the Phase I clinical trial of OCU200 this quarter. Our efforts across platforms represent our commitment to treating blindness diseases, focusing on innovative solutions that aim to provide lasting patient benefits. We look forward to sharing further updates as we advance these therapies through clinical development. I will now turn the call over to Ramesh Ramachandran to provide an update on our financial results for the quarter ended September 30, 2024.

Thank you, Shankar. The company's cash and restricted cash totaled $39 million as of September 30, 2024, compared to $39.5 million as of December 31, 2023. Total operating expenses for the three months ended September 30, 2024 were $14.4 million and included research and development expenses of $8.1 million, and general and administrative expenses of $6.3 million. This compares to total operating expenses for the three months ended September 30, 2023, of $16.1 million that included research and development expenses of $7 million, and general and administrative expenses of $9.1 million. As stated earlier, we recently completed a successful debt financing of $30 million, extending our runway into the first quarter of 2026. As always, we are proactively exploring shareholder-friendly opportunities to increase our working capital, including partnerships that will drive long-term strategy for our scientific platforms. That concludes my update for the quarter. Tiffany, back to you.

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

Our first question comes from Jason McCarthy with Maxim Group. Your line is open.

Hi everyone. Thank you for the question and congratulations on the quarter. At the upcoming clinical showcase, we are expecting some initial data in GA. Could you help us understand what to look for regarding the criteria for success, particularly in relation to gene agnosticism?

Huma?

So thanks for the question. So in the upcoming clinical showcase, we will be presenting the geographic atrophy in our other gene therapy trials, preliminary safety and efficacy. Particularly for the GA, we have established the safety at this point. And what we will be showcasing the efficacy endpoints like geographic atrophy lesion and other parameters would be functional as well as structural. So we will be presenting that data in the upcoming clinical showcase on November 12 at NASDAQ.

Okay. Great. Thanks. And then for the Stargardt study, when could we expect to see data? And then also as a follow-up with a couple of small molecule drugs in Stargardt and late-stage development. How do you sort of see those fitting in with OCU410ST, if they are approved?

Okay. That's a great question currently. Just to address that there are no approved therapeutic or any treatment approved for Stargardt, so there is significant unmet medical need out there. In our upcoming clinical showcase, we will also be presenting the safety as we have already apprised the market through our DSMB press releases. But for efficacy, we will also be presenting that in our upcoming clinical showcase. So stay tuned for all the updates.

So Jason, I know there are some couple of products in the development. However, we are planning for a treatment option, only treatment option with our therapy. At this time, we're not thinking about any co-therapies in the first-line.

Got it. Yeah. I wanted to bring up something relevant. Given the recent challenges with current gene therapies, such as Pfizer’s exit and bluebird facing safety concerns, could you discuss how modifier gene therapies can sidestep some of these issues that are affecting the broader field?

Yes, that's a great question, Jason. When considering gene therapies, there are two key factors to keep in mind. First, product quality is crucial. Over the past few years, we've conducted three parallel clinical trials in the ophthalmology sector, making it one of the largest gene therapy endeavors in this field. Importantly, we haven't experienced any serious adverse events related to our product, which indicates that it is both safe and effective. Quality remains our top priority as we consistently produce high-quality products. Second, we focus on subretinal surgeries to deliver this gene therapy into the retina. We have formed a strong network of highly skilled and experienced retinal surgeons for our clinical trials, which is vital for the success of the procedure. It's also worth noting the distinctions between systemic gene therapy and ophthalmology gene therapy. Our target dosage in the ophthalmology field is typically between 10 to the 10th and 10 to the 11th gene copies, while systemic gene therapies can go up to 10 to the 14th and beyond. This represents a significant difference, with an increase of nearly 1,000 to 10,000 times, and introduces different challenges when dealing with systemic gene therapies.

Okay, thanks. That was helpful.

Our next question comes from the line of Daniil Gataulin with Chardan. Your line is open.

Hi, good morning guys. Thank you for taking my question. And congrats on the progress. I had one question on the geographic atrophy program. So given there are still no approved options for it in Europe, how are you thinking of taking advantage of the opportunity? And have you had any interactions with the regulators regarding your program? Thank you.

Great question, Daniil. Yes, we will begin interactions this year in the next few quarters with the EU. Of course, Phase 2 is limited to the US. EU regulators are looking for some functional improvement or stabilization for geographic atrophy patients. The current therapies on the market in the US use structural endpoints for approvals. Therefore, we’ll definitely be looking for functional endpoints, and some of that data will be shared next week in our showcase.

Got it. And a quick follow-up on the OCU410ST program. Do you see any potential for modifying your Phase 2 trial or the Phase 2 portion of the trial to make it pivotal, given that it is a rare disease?

Yes, that's a great question. That's why after the Phase 1 clinical trial, we are taking a pause even though the DSMB gave approval to move forward with the Phase 2, with the previously designed study approved by the FDA. We are going to take a pause. We're going to spend a few months for discussions with the FDA because there are some new guidance. There is an opportunity for orphan disease gene therapies to convert Phase 2 into a pivotal trial for a registration trial. So we are going to closely work with the agency and seek their advice and guidance before we move forward with the Phase 2 confirmatory trial.

Got it. Thank you. And again congrats on the progress.

Thank you.

This concludes the Q&A portion. I will now turn the call back over to Chairman, CEO and Co-Founder, Dr. Shankar Musunuri.

Thank you, operator. We appreciate the continued interest and involvement of our key stakeholders as we move forward with our transformative initiatives. We look forward to closing a successful fourth quarter of 2024, as we continue to solidify Ocugen’s position as a biotechnology leader in ophthalmology. Have a great day.

Ladies and gentlemen this concludes today's conference call. You may now disconnect.