Earnings Call Transcript - OCGN Q3 2021

Operator, Operator

Good morning, and welcome to the Ocugen Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the presentation. Please note this conference is being recorded. I will now turn the conference over to Ken Inchausti, Head of Investor Relations and Communications for Ocugen. You may begin.

Ken Inchausti, Head of Investor Relations and Communications

Thank you, operator. I'd like to welcome you to our conference call. With me today are Ocugen's Chairman, CEO, and Co-Founder, Dr. Shankar Musunuri, who will provide a business update, and our Chief Financial Officer and Head of Corporate Development, Sanjay Subramanian, who will provide a financial update. Earlier this morning, we issued a press release including a business update and third quarter 2021 financial results. We encourage listeners to review the press release, which is available on our website. This call is also being recorded and a replay along with accompanying slide presentation will be available on the Investor section of the Ocugen website for approximately 45 days. As always, we need to advise you that this call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual events or actual results to differ materially from expectations, including, among other things, the uncertainties inherent in research and development of our product candidates, risks to our business related to the ongoing COVID-19 pandemic, uncertainty regarding whether the FDA will grant us emergency use authorization for Covaxin in ages 2 to 18, and when we will be able to submit a Biologics License Application for Covaxin to the FDA. You should read carefully the risks and uncertainties described in today's press release and accompanying slide presentation, as well as the risk factors included in our filings with the SEC. Note that we intend to file our Form 10-Q with the SEC today. I will now turn the call over to Ocugen's Chairman and CEO, Dr. Shankar Musunuri.

Shankar Musunuri, Chairman and CEO

Thank you, Ken. Good morning, everyone, and thank you for joining. We hope you and your family are safe and well. Today, we're here to review a rapid succession of milestones from this Company that I feel privileged to lead. It reminds me of a famous Margaret Mead quote, "Never doubt that a small group of thoughtful committed citizens can change the world." Indeed, it's the only thing that has happened here. These words remind me that just one year ago, Ocugen was less than 20 individuals. We all had a vision to bring new therapies that could tackle serious diseases and provide new options for people wanting a choice. We completed three quarters of 2021, and our Ocugen family has grown significantly, committed to bringing Covaxin BBV152, our COVID-19 vaccine candidate, to the United States and Canada, along with our lead candidate for blindness diseases OCU400, which is part of our modifier gene therapy platform. Today's update is a result of their hard work, along with the efforts of our global partners Bharat Biotech and CanSinoBio. Thank you all for your contributions. This slide outlines the major events that transpired over the recent months, including the third quarter of 2021. First, we want to congratulate our partners at Bharat Biotech for securing an emergency use authorization for Covaxin by the World Health Organization. This is exciting news. It's a tremendous accomplishment and a critical validator for broadening the global portfolio of COVID-19 vaccines and is recognized by regulatory authorities around the world. Closer to home, Ocugen took significant steps to progress Covaxin BBV152 with the U.S. Food and Drug Administration. Last week, we submitted Covaxin for emergency use authorization that the FDA is considering for use among those aged 2 to 18 years. We believe there is a significant unmet need within this age group, knowing there is a lack of choice for different vaccines within the U.S. market. Particularly, in ages 2 to 5, there is currently no approved option. We believe the data presented in our November 5th press release make a compelling efficacy and safety case to the agency, and we look forward to further discussions with them. In late October, we filed an Investigational New Drug Application to support the initiation of the Phase 3 immuno-bridging study between the U.S. population and the results of Bharat Biotech's Phase 3 clinical trials, involving nearly 25,800 participants. This Phase 3 bridging trial, designated OCU-002, will involve a few hundred subjects. The primary objective will be to compare neutralizing titers between the U.S.-based participants who receive two doses of Covaxin and those who received two doses in the Phase 3 efficacy trial in India. Secondary objectives include measuring the immunogenicity of two doses of Covaxin over time in those aged 18 to 65 and those over 65, as well as determining its immuno-broadening effect, including in those who previously received an mRNA vaccine. Such a broadening effect could include antibody responses against multiple antigens, such as spike and nucleic acid proteins. We're also preparing for the possibility of conducting a safety bridging trial if required. Finally, we are hearing from many individuals about their interest in participating in this clinical trial if approved. We're very appreciative of their enthusiasm and continue to tune in for further developments. Our engagement with Health Canada continues as we prepare responses to deficiencies noted. As a reminder, we applied for approval under the interim order, and our application was automatically transported to a new drug submission process. I now want to update you on our progress with our modifier gene therapy program. I'm pleased to announce that yesterday, Ocugen filed an Investigational New Drug Application for OCU400, our lead candidate in the modifier gene therapy platform for the treatment of Retinitis Pigmentosa resulting from genetic mutations Nr2e3. This proposed safety and dose-finding Phase 1, 2 clinical trial will involve a small number of patients. We have already successfully completed manufacturing at commercial scale at 200-liter scale to support clinical studies. As part of the clinical trial, patients will be observed for at least 12 months. From there, OCU400 could advance into a Phase 3 clinical trial, evaluating its ability to address multiple inherited retinal disease mutations. This is the beginning of a new journey, one started by our partner, Dr. Neena Haider from Harvard Medical School, and we look forward to sharing the progress of our trial throughout 2022. Following closely behind OCU400 is our next candidate OCU410. IND-enabling pre-clinical studies have commenced to support a future Phase 1, 2 clinical trial. OCU410 is designed to address dry age-related macular degeneration. It's the most prevalent chronic form of AMD, accounting for approximately 90% of total AMD cases, and is characterized by slow progression to dysfunction of the retinal pigment epithelium, photoreceptor loss, and retinal degeneration. With about 150 million people suffering from dry AMD around the globe with no available treatment options, there is a significant unmet medical need. Preclinical data presented at the Dry AMD Therapeutics Conference in October suggest that OCU410 plays a role in the genes associated with dry AMD, and we will continue to explore this area throughout 2022. We are pleased to share that to support the manufacturing of OCU410, we have expanded our arrangement with CanSinoBIO to be our partner responsible for chemistry, manufacturing, and controls development and manufacturing. They will now support the CMC development and manufacturing for both OCU400 and OCU410 programs. Our agreement with CanSinoBIO was amended in September to include this program. Rounding out our ocular portfolio, OCU200, our transferrin somatic infusion protein, is progressing well. We are on track with our preclinical activities to explore how it can help those with diabetic macular edema, diabetic retinopathy, and wet age-related macular degeneration. With OCU400 moving into the clinic and OCU410 and OCU200 continuing their IND-enabling studies, our focus on ocular therapies remains very strong. This indeed has been a busy quarter. There's much going on to advance Covaxin and uplift our portfolio, and there is much more ahead. I will now turn the call over to Sanjay to provide our third quarter 2021 financial update.

Sanjay Subramanian, CFO and Head of Corporate Development

Thank you, Shankar, and good morning, everyone. I will now provide an overview of key results for the third quarter of this year. Our research and development expenses for the quarter ended September 30, 2021, were $6.3 million, compared to $1.5 million for the same quarter ended September 30, 2020. The increase is primarily driven by Covaxin development and regulatory activities, OCU400 preclinical activities, as well as employee-related expenses due to an increase in R&D headcount. General and administrative expenses for the quarter ended September 30, 2021, were $4.5 million, compared to $1.7 million for the same quarter ended September 30, 2020. The increase in general and administrative expenses relates to increased infrastructure costs to support the growth of the organization. Our net loss was $10.8 million or $0.05 net loss per share for the quarter ended September 30, 2021, compared to a net loss of $10.5 million or $0.07 net loss per share for the previous year's quarter ended September 30, 2020, which included a $7 million write-off of an asset held for sale. We ended the quarter with cash, cash equivalents, and restricted cash totaling $107.5 million as of September 30, 2021, compared to $24.2 million as of December 31, 2020. That concludes my update.

Ken Inchausti, Head of Investor Relations and Communications

Thank you, Sanjay. With that, we will open the call for questions. Operator?

Operator, Operator

Your first question comes from the line of Keay Nakae with Chardan.

Keay Nakae, Analyst

Good morning. Four questions for you, Shankar.

Shankar Musunuri, Chairman and CEO

Good morning, Keay.

Keay Nakae, Analyst

The first question relates to timing for the adult population in the U.S. So as you convene the bridging study, and hopefully that will set you up to file maybe in the middle of next year. Should we think about possible approval in Q1 of '23? Is that an appropriate way to look at the timing?

Shankar Musunuri, Chairman and CEO

Yes. If you follow the regulatory path other companies have pursued, we believe the FDA will also consider us for fast track. We were planning to initiate that at the right timing, and based on that, we are planning to file the BLA in the second half of next year. So sometime in 2023, the first half, if we do get fast-track designation, that seems reasonable.

Keay Nakae, Analyst

Okay, great, and then under your agreement with Bharat, under a scenario where the U.S. would like to purchase your vaccines to help distribute outside of the U.S., again because of its many attractive characteristics, is Bharat precluded from selling the vaccine to the U.S. for that purpose, and do you exclusively have the right to sell the vaccine to the U.S. government for any purposes?

Shankar Musunuri, Chairman and CEO

Yes. We have rights in the U.S. and Canada, and any procurement from the U.S. government must go through Ocugen.

Keay Nakae, Analyst

Okay. Great, and then for the most recent EUA filing for the pediatric group, given that you're running the bridging study for adults, how do we think about whether you'll need to run a bridging study for pediatrics as well before you could give any type of approval?

Shankar Musunuri, Chairman and CEO

Again, we have filed an emergency use authorization for the 2 to 5 age group. Currently, there are no approved vaccines for that age group, and there is a significant unmet medical need. Those factors will be considered when applying for emergency use authorization. That's the reason, based on compelling data we have from the pediatric population, we decided that American kids do need a choice, and we believed in the 2 to 18 age group, that is the data we have, so we filed the EUA based on unmet medical need.

Keay Nakae, Analyst

Okay, and then just two more questions. One, for Canada, how should we think about the potential timing there to get approval? Having filed in Q3, at least anticipating a full review again, is first half '22 or maybe mid '22 an appropriate timing for that potential approval?

Shankar Musunuri, Chairman and CEO

I think the process for Canada, again, as we stated, there is no emergency use authorization; that's called an interim order, it expired, and the file transitioned to the new drug submission process. It typically takes some time, and I cannot comment on exact regulatory timing or date. However, we are closely working with Health Canada throughout the review process and addressing any questions that arise.

Keay Nakae, Analyst

Okay, and then congrats on the filing for OCU400. Nice to see those programs will be entering the clinic around the end of the year. So that's great. That's all I have.

Shankar Musunuri, Chairman and CEO

Thank you, Keay.

Operator, Operator

Your next question is from Zegbeh Jallah with Roth Capital.

Zegbeh Jallah, Analyst

Good morning. Thanks for taking my questions and congrats on all the regulatory updates. I have a couple of quick questions. The first is on the pediatric EUA. I was just curious if you will hear any kind of update on an acceptance of the EUA before a decision is made. Or should we expect to hear from the FDA something within a week or two from now?

Shankar Musunuri, Chairman and CEO

Good morning, Zegbeh. Again, the review process is ongoing. When we get updates, we'll pro-rate those updates to the market. At this time, I cannot comment further.

Zegbeh Jallah, Analyst

Okay. So you're not expecting to receive a letter about acceptance or anything like that prior to an update on whether or not the EUA is approved?

Shankar Musunuri, Chairman and CEO

No, typically, the EUA goes through the process; it's based on the pathway other companies have taken. Typically, it heads toward the outcome before any market notification, so that's a standard process. We're working closely with the agency on that.

Zegbeh Jallah, Analyst

Then the next one here. I know you said for Health Canada, you can't really comment on the timing, but I think you also mentioned that you haven't received any questions or comments from them, is that correct?

Shankar Musunuri, Chairman and CEO

Can you repeat the question, Zegbeh? Sorry.

Zegbeh Jallah, Analyst

For Health Canada, I was just stating that so far after your submission, you haven't received any guidance back or any follow-ups, nor have you had to submit additional information. You're just waiting to hear from them.

Shankar Musunuri, Chairman and CEO

Zegbeh, this is a normal course of the business review process. Any submissions you make to regulatory agencies involve back-and-forth communication, and that's a standard part of the process we are dealing with in Canada as well.

Zegbeh Jallah, Analyst

Thanks, okay. So you have had some back-and-forth with them. The next question regards the potential to expand your agreement with Bharat. I know you have the opportunity to do so for more territories, but I was just wondering what it is that you need to see before you make the decision to do so.

Shankar Musunuri, Chairman and CEO

Yes. To clarify, you're asking about our opportunity to expand territories with Bharat and what would catalyze that? Is that correct? Zegbeh, those options are always open, and we are focused on the U.S. and Canada at this stage. We keep those options available with our partners.

Zegbeh Jallah, Analyst

Moving on to OCU400; I’m really excited to see that IND is submitted. I was just curious about any updates regarding study design or any kind of clinical updates we might get from that program.

Shankar Musunuri, Chairman and CEO

Once the IND gets accepted and goes through the process, Zegbeh, we will launch the information on ClinicalTrials.gov, and that will aid all stakeholders, potential patients, and others. This trial will be small, similar to other trials in the retinal space.

Zegbeh Jallah, Analyst

Okay. Also, I know you expanded the CanSino agreement to include 410. I wonder where you are in terms of development? Is CanSino doing anything right now for 410? Are you conducting IND-enabling studies? Where exactly are you in the process?

Shankar Musunuri, Chairman and CEO

Yes. CanSino has started working on the development, just as they did for 400. We have a roadmap from the FDA on OCU410, and currently, the team is executing those plans.

Zegbeh Jallah, Analyst

Okay, thanks for the update.

Shankar Musunuri, Chairman and CEO

Thank you, Zegbeh.

Operator, Operator

Your next question is from Robert LeBoyer with Noble Capital.

Robert Leboyer, Analyst

Good morning.

Shankar Musunuri, Chairman and CEO

Good morning.

Robert Leboyer, Analyst

Hi. Congratulations on the results and all the progress you've made in the last quarter. My question pertains to the booster shots and the durability of Covaxin. Is there any data showing the need or lack of need for a booster shot 6 months or 12 months post-vaccination? Additionally, was there any discussion on using Covaxin following one of the messenger RNA vaccines to enhance protection or offer any benefits?

Shankar Musunuri, Chairman and CEO

So, Robert, regarding longevity effects, our partners are generating data, and once available, it will be published. However, the date clearly indicates a pattern: scientifically, more discussions are warranted around cellular responses. The T-cell response creates a memory, and that's where you achieve prolonged protection with any vaccine. Our partners have shown and published articles in clinical journals indicating that Covaxin elicits strong cellular responses, suggesting potential long-term protection. We will continue sharing updates with the markets as more data becomes available. Regarding individuals vaccinated with mRNA vaccines, we will generate data. Our immuno-bridging trial does not exclude anyone who received mRNA vaccines. In fact, it includes individuals vaccinated with mRNA vaccines, with the caveat that it must be at least 6 months post-vaccination. These individuals will be part of our clinical trial, and we plan to generate data involving them.

Robert Leboyer, Analyst

Great. Thank you very much.

Shankar Musunuri, Chairman and CEO

Thank you, Robert.

Operator, Operator

I'm sorry. Your next question is from Sean Lee with HC Wainwright.

Sean Lee, Analyst

Good morning, guys, and thanks for taking my questions.

Shankar Musunuri, Chairman and CEO

Good morning.

Sean Lee, Analyst

My first question is on the supply agreement with Bharat. Does that cover potential commercial supply if your EUA for the pediatric population is approved? How much supply would you have access to? Regarding the tech transfer to Jubilant, what's the progress and expected timeline for that?

Shankar Musunuri, Chairman and CEO

Yes. Following the EUA, our supply agreement does include adequate doses, Sean, and our partner has significantly increased their capacity this year. Additionally, there are no export restrictions, so we'll have ample supply as needed post-EUA in the U.S. As for the technology transfer to Jubilant HollisterStier, the program is progressing well, and we anticipate completing the establishment of that, including process validations, in the first half of next year. We will switch the supply, and during the initial phase, we will source products from Bharat Biotech, our partners, which will include U.S. packaging and testing from a U.S. release site that has been established.

Sean Lee, Analyst

Once the tech transfer is completed next year, will you need additional CMC validations from the FDA to ensure that the clinical and commercial batches are the same?

Shankar Musunuri, Chairman and CEO

Yes, that's a standard part of the process. When you add additional sites, you always have to show product compatibility, and that will be the case.

Sean Lee, Analyst

All right, and my next question is on OCU410. You demonstrated some promising preclinical results back in October; I'm curious about the development timeline and when we can expect that to enter the clinic.

Sanjay Subramanian, CFO and Head of Corporate Development

Is it related to OCU410?

Sean Lee, Analyst

Yes, OCU410.

Sanjay Subramanian, CFO and Head of Corporate Development

For OCU410, again, we have the roadmap from the FDA, and we must follow the process typical to other gene therapy products, just as we did for OCU400. Two crucial steps are involved in filing the IND: developing and manufacturing the product and conducting preclinical toxicology studies, as agreed with the FDA. This is a major program and focuses on larger populations, unlike OCU400, which targets rare diseases. Thus, the workload in terms of preclinical toxicology and other factors will take a bit longer. We have a roadmap from the FDA, and we're executing it; our goal is to be able to introduce that in the clinic in the next 12 to 18 months.

Sean Lee, Analyst

Great. That's all I have. Thanks for the additional clarity.

Ken Inchausti, Head of Investor Relations and Communications

Thank you, Sean.

Operator, Operator

At this time, there are no additional questions. I would like to turn it back over to Ken for closing remarks.

Ken Inchausti, Head of Investor Relations and Communications

Thank you very much, and thanks everybody for taking the time to join this call this morning. We look forward to providing further updates in the coming months, and we appreciate your time.

Operator, Operator

Thank you, ladies and gentlemen. This concludes today's conference call. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.