Ocular Therapeutix, Inc Q2 FY2024 Earnings Call

Good morning, and welcome to the Ocular Therapeutix second-quarter 2024 earnings conference call. As a reminder, this conference call is being recorded and will be available for replay on the Investor Relations section of the Ocular Therapeutix website. I would now like to turn the call over to Ocular's Vice President of Investor Relations, Bill Slattery.

Good morning, everyone, and thank you for joining us today. Earlier this morning, we issued a press release outlining our financial results for the second quarter of 2024. To make the best use of your time today, Ocular's Executive Chairman, President, and CEO, Dr. Pravin Dugel, will briefly provide a summary of recent business highlights so we can quickly get to your questions. Joining Dr. Dugel for the Q&A portion of the call will be Donald Notman, Chief Financial Officer; Dr. Nadia Waheed, Chief Medical Officer; Dr. Sanjay Nayak, Chief Strategy Officer; and Steve Meyers, Chief Commercial Officer. We refer everyone to this morning's press release and our Form 10-Q for a comprehensive update of second-quarter financial and business results. During today's call, we will be making certain forward-looking statements, and our actual results may differ materially. Please see the Risk Factors section of our annual report on Form 10-K and our other SEC filings for details on the risks and uncertainties relating to our business. With that, I'd like to hand the call over to Dr. Pravin Dugel to review our recent updates.

Thank you, Bill, and thank you to everyone for joining us today. We know this is a very busy time of the year for everyone, so let's jump right in. When I assumed responsibility as Ocular's Chairman of the Board, President, and CEO in mid-April, the goal was simple: transform this organization into a retina-focused company and execute, execute, execute. Ocular's number-one priority today is to bring AXPAXLI to market for wet AMD as soon as possible, given the large market size and the unmet need both in terms of the need for a more sustainable treatment option and the need to improve long-term outcomes. As of this morning, we can now confirm that the FDA has advised us that the two wet AMD studies in which we are currently enrolling patients, SOL-1 and SOL-R, are both appropriate as registration-enabling studies. This is a momentous achievement for the Ocular team that has been working diligently to surpass all expectations. In a few short months, this team has achieved four tremendous accomplishments that I'd like to outline today. First, we set a decisive vision for the company and streamlined the organization. This year, we've invested in the areas of the business that are most value-creating and are aligned with our vision to be a leading retina company. We've invested in highly credentialed retina experts with unmatched experience in clinical development, regulatory affairs, biostatistics, and other key functions. To put this dream team in context, members of the ocular team have played a role in nearly every major advancement in retinal diseases over the past three decades. We are fortunate today to be well-financed, with approximately $460 million in cash at the end of the second quarter. Based on our current operating plans, we believe this gives us a cash runway into 2028 beyond the anticipated top-line readouts for both the SOL-1 and SOL-R studies in wet AMD. Our commitment to the investment community is to stay financially disciplined, which included making the difficult decision earlier this quarter to reduce headcount in areas of the business that are not aligned with the vision of the company. Our second significant accomplishment relates to the SOL-1 study, where the rate of enrollment continues to accelerate and exceed our expectations. SOL-1 is the first of two registration studies for AXPAXLI and wet AMD. The single biggest challenge I saw when I first came to Ocular was how to effectively communicate the benefits and advantages of the SOL-1 study to the retinal community as well as patients. In our June Investor Day, we shared the success of our communication campaign by announcing that 60 sites have been activated and over 150 patients were in various stages of loading and randomization. As many of you know, enrollment in clinical trials is not always linear. When you hit a critical mass of sites activated, enrollment starts to accelerate in an exponential fashion. And today, we believe we're in that exciting phase of enrollment in the SOL-1 study. In short, we continue to be delighted with the enrollment following our Investor Day announcement. The third substantial accomplishment is the initiation of our repeat dosing study, SOL-R, for wet AMD. Over the course of just three months, the Ocular team developed the concept for SOL-R, activated study sites, and, as of last week, began enrolling patients. To take it one step further, we can now share that the FDA has officially confirmed to us in writing that SOL-R is acceptable as a registrational study for AXPAXLI in wet AMD. Let me say that again, SOL-R was taken from concept to clinic in just three months. This is simply exceptional and, in my experience, unprecedented. When we talk about SOL-1 and SOL-R, what's most important for everyone to understand is how well these studies complement each other and how much thought has gone into patient selection and study design to reduce disease variability, de-risk the patient population, and improve the likelihood of a successful outcome in both pivotal studies. The bottom line is when taken in its totality, SOL-1 and SOL-R are designed to meet our regulatory requirements while providing commercially meaningful data. The fourth accomplishment is the presentation of results from our Phase 1 HELIOS study in non-proliferative diabetic retinopathy, or NPDR. What's remarkable about these results is that every single metric and parameter favored AXPAXLI. These data show that with a single AXPAXLI implant, literally zero patients in the trial were observed to have developed vision-threatening complications at 48 weeks versus the 20% to 30% year-over-year historic rates. In other words, not a single patient after a single injection of AXPAXLI developed a potentially blinding complication after 48 weeks. These impressive results have been well noted by our retina colleagues. In fact, they were viewed as significant enough to warrant a late-breaker presentation at the recent ASRS meeting. Ultimately, we believe the positive initial data from HELIOS not only provide us with a remarkable opportunity in NPDR, but also build on our US and Australia studies in wet AMD, giving us further database confidence for the success of both the SOL-1 and SOL-R pivotal studies. As we conclude the prepared remarks on today's call, I'd like to leave you with these key messages. We are dedicated to becoming a leader in the treatment of retinal disease and improving vision in the real world. We have assembled an expert retina team to accelerate the development of AXPAXLI for wet AMD, which now includes two registration-enabling studies that are enrolling patients. We have very thoughtfully designed both SOL-1 and SOL-R with an emphasis on enriching the patient selection appropriately for each trial and on derisking each study to improve the probability of success. SOL-1 and SOL-R are strategically designed to provide meaningful data for both regulatory and commercial purposes. We are executing extremely well, exceeding our highest expectations based on the enrollment pace for SOL-1 and the rapidity of initiation of enrollment in SOL-R. And we believe, based on our current operating plans, that our cash runway takes us into 2028 and fully funds SOL-1 and SOL-R top-line results. We look forward to updating you on our progress with the sincerest thanks for your engagement and ongoing support. Operator, I would now like to open the call for questions.

Our first question comes from Tazeen Ahmad of Bank of America.

Hi, good morning. Thank you for taking my questions. Congratulations on achieving alignment with the FDA. Pravin, I wanted to ask you about your SOL-1 study, which has been recruiting much faster than anticipated. At your R&D Day, you mentioned that this could also accelerate recruitment for the SOL-R study. Have you discussed with the FDA whether both studies need to be submitted simultaneously for approval, or is a potential rolling submission an option? That’s my first question. Secondly, regarding the time intervals for the SOL-1 study, you've mentioned an average of every nine months. Could you elaborate on the variability or flexibility that physicians might have in terms of dosing frequency and where you see the average dosing frequency ultimately settling? Thank you.

Good morning, Tazeen, and thank you for your question. I appreciate your thoughtful inquiries. First, I want to emphasize that we are extremely pleased with the FDA's written response. It confirms that our understanding is completely aligned with FDA requirements, and we now have formal documentation supporting everything we've shared with you. Additionally, it confirms that these two studies may qualify for approval—one being a non-inferiority study and the other a superiority study. These studies have been meticulously designed to address regulatory questions while also considering commercial implications. Importantly, as I've mentioned before, the SOL-R study is specifically aimed at enhancing recruitment in SOL-1. I must say that we are very satisfied with the ongoing recruitment pace in SOL-1. As you're aware, recruitment isn’t always linear; once you reach a certain critical mass, it can accelerate significantly, and we are clearly in that phase. We are pleased with the recruitment levels of SOL-1. Regarding your question about the clinical use of AXPAXLI, our objective is to make this drug available to patients as quickly as possible. We believe that considering the entirety of SOL-1 and SOL-R allows doctors the option to dose every six months. For some patients, this might be necessary, while others may be treated every nine months, ten months, or even up to a year. It’s important to note that this disease is heterogeneous, and treatment will be personalized, similar to current anti-VEGF therapies. The crucial aspect is that the overall findings from these two studies answer numerous questions, providing a clear regulatory path and offering physicians the flexibility to create individualized treatment plans that may lead to better long-term outcomes. Thank you.

We'll take our next question from Biren Amin of Piper Sandler.

Yeah. Hi, guys. Thanks for taking my question. Congrats on the regulatory update. Maybe, Pravin, if I could start with SOL-1. I think the company previously guided to patient enrollment completing in the trial in the first half of 2025. Do you have an update on this timeline? And then second question is, you've got the FDA feedback. And I know there have been some discussions with EMA. Any update there in terms of the EMA's thoughts on the design of SOL-R and SOL-1?

Biren, thank you for your question. And good morning to you. Thank you. So first of all, you're right. We did guide in our previous filings the effective recruitment for SOL-1 being the end of the first quarter of 2025. We did also say that given the pace of enrollment for SOL-1, we will surpass that earlier. We have not changed any official guidance since then. It is too early to do so. When appropriate, we certainly will update you with the proper information. In regards to the EMA, clearly, AXPAXLI is a global drug. And we are in conversations with the EMA. We're very, very pleased with our conversations. And when the time is appropriate, we certainly will update you as to that as well.

And if I could have one follow-up on the SOL-R, what are the retreatment criteria that you're using for the trial?

As you know, this is a non-inferiority study. My expectation is that the retreatment criteria will be different than SOL-1 and in line with other non-inferiority studies. As of now, we're still discussing this with the FDA. And when it is finalized, we'll certainly update you.

Thank you. We'll take our next question from Tara Bancroft of TD Cowen.

Hi. Good morning. It's great to see the news on the FDA feedback here. So my question is if you can elaborate on the term that you put in the press release that's generally acceptable in the written response and if you believe there's any remaining risk to both studies satisfying the NDA requirements. And really, if so, if there's anything that you're doing to mitigate that proactively. Thank you.

Hi. Good morning, Tara. Thanks for your question. Look, the term that we use is a term that the FDA uses, and it's a term that's generally used. There's really nothing to read into that. The take-home message here is that we are absolutely thrilled with the alignment that the FDA has. And we have that now in writing; and I repeat, in writing. So this is not subject to any interpretation. It is in writing that their thinking, that their requirements are absolutely aligned with what we've been saying. For example, we have been saying, and this is aligned with the FDA and we have this in writing, that sham is not recommended, that it does not constitute complete masking. It has the ability to introduce bias. And any study done with a sham will be subject to review. That is what we've been saying all along. And now, we have that in writing from the FDA in a Type C response. As you know, we don't have any sham in any of our studies. We are not willing to do any of our studies at risk. We believe that we're in absolute alignment with what the FDA requirements are as of just a few days ago.

Thank you. We'll move next to Colleen Kusy of Baird.

Great. Good morning. Thanks for taking my question. Congrats on the progress. So with the FDA written feedback, would you expect to also plan to pursue a SPA for SOL-R? And then based on the feedback that you received, are there any changes that you plan to make to the SOL-R study? And can you just confirm how the FDA is viewing the role of the comparator arm? Do you need any statistical significance difference in terms of the EYLEA high-dose arm?

Colleen, good morning again. Thank you for your question. It's important to state that we requested a Type C meeting, and the FDA responded by saying that they know us and our drug well enough to have a written response. As you know, we have a SPA for the SOL-1 study. To answer your question directly, look, we believe we are in complete alignment with the FDA, as we've been saying. We believe that everything that we said, and I've just given you the example regarding sham, is absolutely validated in this written response. In regards to the potential for a SPA, the answer is I honestly don't know at this point. We've just received this written response a few days ago. What I will tell you is that our goal here is to get this drug to patients as quickly as possible. We will not do anything that will jeopardize that or will delay that in any way, whether the use of resources or time. We will give you an answer regarding the SPA discussion. At this point, I simply don't know it yet. Colleen, does that answer your question? Was there another one that I missed?

Can you confirm if there are any other changes planned for the trial design and what the role of the comparator arm will be, particularly regarding any required statistics?

Yeah. So we don't anticipate really any large changes whatsoever. The FDA has been very clear in its written response of saying that this trial is acceptable as a registration study. We really do not anticipate any great changes whatsoever here. This is absolutely a complete alignment with the FDA. In regards to the comparator arm, again, I say this as I said before, we have followed the guidelines to the T. As you know, the comparator arm or the requirement of the comparator arm is that the comparator arm have the same dosing frequency and the same rescue requirements as the treatment arm. It is purely for masking purposes. It is not for statistical analysis, and that has not changed, I believe, with the FDA at all. That has been absolutely in line with what we've been saying.

Our next question is from Kelly Shi of Jefferies.

Congrats on the great progress. Maybe, could you walk us to your expectation on how the two comparator arms might perform in SOL-R based on historical trial data and how the real-world dosing frequency of EYLEA for both the high dose and the low dose might differ in wet AMD? Thank you.

Good morning, Kelly, and thank you for your question. I don't want to predict how a study may perform, but I want to express our strong confidence in the arms that we selected. As you know, the SOL-R trial design includes a statistical analysis against the 2-milligram aflibercept arm. I believe our US study serves as the best comparator. In that study, which was not particularly selective or enriched compared to what we have in SOL-R, we found at the six-month mark that 100% of patients were rescue-free per protocol in the AXPAXLI arm. This significantly boosts our confidence based on our data, especially since our patient population in SOL-R has been carefully selected and enriched. We expect those results not only to hold but to improve. As I mentioned earlier, there is one comparative arm included for masking purposes and not for statistical analysis. However, considering the data from our US study, we feel very assured about the non-inferiority outcome of SOL-R.

Makes sense. Thank you. And maybe I can add a follow-up here. So now your wet AMD trials are well on track to advance. Wondering how should we think about the next step for AXPAXLI in diabetic retinopathy? What would be the key learnings on trial design from your discussion with FDA on wet AMD trial designs and also the DR trial designs in this space overall? Thanks.

Kelly, thank you again for that question. I want to be very clear. We, as a company, have made our priorities about as transparent and about as clear as possible. Our priority is SOL-1 and SOL-R. Our priority is to get this drug to patients as quickly as possible and have the potential to be approved as quickly as possible. We are thrilled with the HELIOS data set. This comes as the next priority. To be clear, we have not had a meeting with the FDA, formal meeting with the FDA, regarding the non-proliferative diabetic retinopathy study. However, our intention is to do so. The take-home messages from HELIOS are two. The first one is that the results of HELIOS, which I think are quite remarkable, which is that, as we mentioned earlier, that every single metric, every single parameter is absolutely aligned in favor of the drug. And that's quite remarkable, given the variability of this patient population. I don't think there's any doubt whatsoever that the drug is active, that it is safe and that it is absolutely working at 48 weeks with a single injection in patients with non-proliferative diabetic retinopathy. The take-home message is that we have a clear path forward to target this disease for which right now effectively there is no drug and patients are going blind. The vision-threatening complication rate, as you know, is 20% to 30% year upon year. So the first take-home message is that there's a clear path forward for us into this target. The second important is that there is a great line of sight that is data-based that should give us confidence based on HELIOS for the success of SOL-1 and SOL-R in terms of the activity of this drug. So I think those are the two take-home messages.

Our next question is from Sean McCutcheon of Raymond James.

Hi, guys. Thanks for taking my question. So maybe to pick on the SOL-R comparator arm a bit more and understanding that the 8-mg aflibercept is for masking only. But what strategic significance do you think it plays that you will have these data at hand and your competitors presumably will not? Does this give you optionality on the marketing front? Or maybe to widen the lens a bit, can you just walk us through the decision process as you design the study with the investigators? Thank you.

Thank you. Good morning. Thank you for your question. The first goal here is to make sure that from a regulatory point of view, we're about as clear as possible and as aligned as possible with the FDA requirements. I believe we've achieved that with the comparator arm. And as you rightly stated, the comparator arm is purely for masking, not for statistical analysis. That is the first goal. In terms of the read-through from a commercial point of view, we will be able to show here a comparison with what may be considered the next generation of EYLEA product, which is high-dose EYLEA. And I think that will be very valuable for physicians. Most importantly, when taking this totality, when you look at SOL-1 and SOL-R, SOL-1 is a superiority study. The SOL-1 will give us a great deal of information as to the durability of a single injection of AXPAXLI. SOL-R is a non-inferiority study. It gives us information regarding the ability it allows for flexibility of dosing. And it gives us commercial information in regards to how our drug does, which we are very confident about, with both the 2-milligram aflibercept as well as high-dose EYLEA. So I think taken in its totality, most of the questions that physicians, if not all of the questions that physicians have, will be answered by the accumulation of the data through both studies.

And we'll take our next question from Yi Chen of H.C. Wainwright.

Thanks for taking my question. With respect to the SOL-R trial, do you currently have an estimate as to when the trial could complete enrollment? And also for the five loading doses, does that apply to both patients who failed at randomization in the SOL-1 trial as well as patients who directly enrolled into the SOL-R trial? Thanks.

Thank you for your question. We haven’t provided any specific timeline for when we expect to finalize enrollment in SOL-R. In response to your second question, an important requirement for SOL-R was that it should not take patients away from SOL-1 but instead enhance recruitment in SOL-1. I want to stress that we are currently seeing strong recruitment in SOL-1, but we always aim for increased participation in that study. Currently, we are only including patients who do not qualify for SOL-1 into SOL-R. The most common reason for not qualifying could be that they achieve an eight- or nine-letter gain instead of the desired 10-letter gain, which creates an opportunity for them in SOL-R. This approach will indeed boost both traffic and recruitment in SOL-1. Once we confirm that SOL-1 has reached adequate enrollment, we will be able to manage the enrollment switch. This means that patients for SOL-R can come from outside sources rather than just those who didn't qualify for SOL-1. It is crucial to understand that the design of the study ensures SOL-R will always support, rather than detract from, the recruitment of SOL-1. This is significant for study sites as it allows coordinators and physicians to assure patients that they will qualify for one of the studies, which is an essential factor for all study centers. Thank you.

We'll take a question from Jon Wolleben of Citizens JMP.

Hi. This is someone on for Jon. I have a quick question about the SOL-1 recruitment. Can you provide an update on how many patients have been randomized? I know there was an update during the Investor Day. Also, do you have any guidance on the screen failure rate?

Thank you for the question and good morning. During Investor Day, we demonstrated that our team, which we refer to as the dream team, is not just a title but actively performing exceptionally well and working diligently. We presented data showing that in just two months, we significantly surpassed recruitment expectations. Specifically, we recruited 151 patients who are at different stages of screening and randomization. We have not provided detailed information beyond that. Additionally, we noted that the screen failure rate is lower than we had anticipated, which we are very pleased about. Given this, we expect that most patients in SOL-R will come from external sources rather than from the screen failures in SOL-1, due to the low screen failure rate. This guidance remains unchanged. As mentioned earlier, when we reach a critical mass, recruitment enters an exponential phase, which we are currently experiencing. We are very pleased with SOL-1 recruitment, and we believe that with the execution of SOL-R, the pace of recruitment will be further accelerated. We will certainly provide milestones when appropriate. Thank you for your question.

This concludes our question-and-answer session. I will now turn the call back to Dr. Pravin Dugel for closing remarks.

Thank you very much. And again, I'd like to thank everyone for taking the time to join our call today. We look forward to updating you on our progress. If you have any follow-up questions, please reach out to Bill Slattery, our Vice President of Investor Relations. Have a great day, and you may now disconnect the call. Thank you.

This does conclude the Ocular Therapeutix second-quarter 2024 earnings conference call. Everyone now can disconnect and have a great day.