IVERIC bio, Inc.
Q3 2018 Earnings Call Transcript

Published: 31 Oct 2018

[Operator:]

Good day, and welcome to the Ophthotech Corporation Third Quarter 2018 Results Conference Call. Today's conference is being recorded. At this time, I like to turn the conference over to Kathy Galante. Please go ahead.

[Kathy Galante:]

Good morning, and welcome to our third quarter 2018 earnings call. Representing Ophthotech today is, Mr. Glenn Sblendorio, Chief Executive Officer and President; Dr. David Guyer, Executive Chairman; Dr. Kourous Rezaei, Chief Medical Officer; Mr. Dave Carroll, Chief Financial Officer; Mr. Keith Westby, Chief Operating Officer; and Mr. Vishal Kapoor, Head of Business Development. I would like to remind you that today, we will be making statements relating to Ophthotech's future expectations regarding operational, financial and research and development matters, including statements regarding the implementation of our strategic plan; our projected use of cash and cash balances; the timing, progress and results of clinical trials and other research and development activities; the potential utility of our product candidates; our expectations with respect to the financial impact and benefits to us of the acquisition of Inception 4, and the potential for our business development strategy, including our collaborative gene therapy research programs and any potential in-license or acquisition opportunities. These statements constitute forward-looking statements for the purpose of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. These statements cover many events and matters that are subject to various risks that could cause actual results to differ materially from those expressed in any forward-looking statements, including risks relating to the initiation and the conduct and design of research and development programs and clinical trials; availability of data from these programs; expectation for regulatory matters; need for additional financing and negotiation; and consummation of in-license and/or acquisition transactions. I refer you to our SEC filings, and in particular to the Risk Factors section in our quarterly report on Form 10-Q filed on August 1, 2018, for a detailed description of the risk factors affecting our business. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we disclaim any obligation to do so even if our views do change. I would now like to turn the call over to Glenn.

[Glenn Sblendorio:]

Thanks Kathy, and good morning, everyone. We have a lot to report on this morning, and as always we appreciate you joining our call this morning. During the past year, we've made significant progress in developing and diversifying our pipeline with programs treating retinal diseases with both therapeutics and gene therapy. Today we are excited to announce the addition of two new programs, a therapeutic for an age-related indication, and a gene therapy for an orphan retinal indication. Further, we have now only expanded our therapeutic pipeline with two new programs, but also on track to hit our previously announced data readout time lines for the current Zimura programs, our complement C5 inhibitor, for wet AMD in 2018, for dry AMD in 2019, and for Stargardt disease in 2020. Our active outreach and business development over the past year resulted in multiple transactions leading to the expansion of our pipeline for the treatment of retinal diseases with both therapeutics and gene therapy. Today I'm pleased to share with you that Ophthotech has acquired Inception 4, a privately held company backed by Versant Ventures. This acquisition expands our therapeutic pipeline in age-related retinal indications. We are also excited to report that we have expanded our gene therapy pipeline with an exclusive option for a novel adeno-associated virus or AAV gene therapy product candidates to treat Best vitelliform macular dystrophy, an orphan inherited retinal disease, also known as Best disease. Our announcement today continue to demonstrate the momentum that we have created over the past year executing on our strategy to build a diversified portfolio of therapeutic and gene therapy programs for both age-related and orphan retinal diseases. Before sharing with you the details of our Inception 4 acquisition from Versant, an organization that is well known in the industry for creating start-up companies focused on scientific merit, I would like to point out that we are thrilled to welcome Versant as a shareholder of the company. With this acquisition we gain worldwide development and commercial rights to an inhibitor program for the treatment of retinal diseases. The HtrA1 protein is potentially implicated in a range of age-related retinal diseases, including geographic atrophy, an advanced form of dry age-related macular degeneration. As a major new investor with substantial global reach, Versant Ventures will also help us identify additional exceptional opportunities to potentially expand our pipeline. For the HtrA1 we are planning to initiate and conduct formulation development studies on the lead compounds for intravitreal administration, followed by IND enabling studies. Based on our current development plan and subject to successful completion of preclinical development, we are targeting to submit an IND with the US FDA for our new HtrA1 inhibitor program for geographic atrophy secondary to dry AMD in late 2020. Of course we will share with you the scientific rationale and Dave will review the terms of the acquisition in a few moments. We believe this acquisition is a compelling opportunity to create value for our shareholders. We believe gene therapy holds a tremendous promise for ophthalmic diseases offering a potential cure, but we also believe that therapeutics will continue to serve an important role in ophthalmic drug development and in the treatment of patients. We have also signed an exclusive option agreement for the rights to acquire a license to develop and commercialize novel AAV, gene therapy product candidate for the treatment of Best disease from the University of Pennsylvania and the University of Florida. This is our second series of gene therapy arrangements with both institutions. Best disease is caused by the mutation in the BEST1 gene is an orphan inherited retinal disease typically impacting both eyes of patients. In addition to our exclusive option agreement we also plan to sponsor research with [indiscernible] in Florida, to conduct preclinical and natural history studies in Best disease. We plan to commence IND- enabling activities and based on the current timelines and expect to submit an IND to the FDA by 2021. The HtrA1 and Best programs along with our commitment to further build upon our strategy to develop novel therapeutics and gene therapy treatments for retinal diseases. In addition to today's two announcements, this past year has been very productive for us. In 2018, we began to bring together a diversified pipeline of therapeutics and gene therapy programs for the treatment of large market age-related and orphan retinal diseases. The clinical trials involving our complimentary C5 inhibitor Zimura include age-related macular degeneration, that is wet AMD; geographic atrophy secondary to dry AMD, and autosomal recessive Stargardt disease. We are excited to report that by the end of this year we expect initial top line data for our dose-ranging, open-label, multi-center Phase IIa clinical trial of Zimura in combination with the anti-VEGF agent Lucentis in patients with wet age-related macular degeneration, who have not been previously treated with anti-VEGF. We completed patient enrollment for this trail in April of 2018. Also earlier this month we completed patient enrollment in our ongoing randomized, double-masked, sham controlled, Phase 2b trial assessing the safety and efficacy of Zimura monotherapy in patients with geographic atrophy secondary to dry AMD and expect initial top-line data in the fourth quarter of 2019. And initial top line data for our Phase 2b randomized, double-masked, sham controlled clinical trial assessing the safety and efficacy of Zimura monotherapy in patients with autosomal recessive Stargardt disease are expected to be available in 2020. This clinical trial began recruiting patients earlier in the year. Now moving onto gene therapy, in addition to today's Best disease announcement, we also are excited about our innovative gene therapy pipeline for treating retinal diseases. Today our gene therapy efforts are focused on orphan indications that include rhodopsin-mediated autosomal-dominant retinitis pigmentosa, Leber Congenital Amaurosus type 10, and Stargardt disease. In June 2018, we entered our first exclusive global license agreement with the University of Florida and the University of Pennsylvania for rights to develop and commercialize a novel AAV gene therapy product candidate for the treatment of rhodopsin-mediated adRP. We also entered into a sponsored research agreement with the University of Pennsylvania facilitated by the Penn Center for Innovation, pursuant to which we together plan to conduct preclinical studies with the product candidate as well as natural history studies in rhodopsin-mediated adRP. We expect to initiate a Phase I/II clinical trial in 2020. Also earlier in the year, we initiated a series of sponsored research agreements with UMass Medical School to utilize their minigene therapy approach and other novel gene therapy delivery methods to target retinal diseases. As a condition of each research agreement, UMass Medical School has granted an option to obtain exclusive license to any patents or patent applications that result from this sponsored research. We believe that our strategy of employing the latest scientific knowledge and know-how to develop a diverse portfolio of product candidates for the treatment of retinal diseases, integrating both gene therapy and therapeutics for orphan and large market indications, reinforces our commitment to address unmet medical needs of patients and retinal specialists treating these diseases. As we continue to move forward, our business development outreach will continue to be selective as we seek new opportunities that are in sync with our science-driven, retina-focused strategy. We believe that our expertise in drug development for retinal diseases and our clinical experience and execution are key to delivering on this strategy and creating tangible opportunities for the company and value for our shareholders. I'd now like to turn the call over to Kourous.

[Kourous Rezaei:]

Thank you, Glenn, and good morning, everyone. Our strategic goal is to create a diversified portfolio of therapeutics and gene therapy assets focused on treatment of retinal diseases, including both large market and orphan indications. The foundation of this portfolio is based on strong scientific evidence, presence of unmet medical need and future commercial viability. Today by acquiring the HtrA1 inhibitor program for age-related indication and an exclusive option for the BEST1 gene therapy product candidate we have come one step closer to reaching our goal. The addition of the HtrA1 inhibitor program to our Zimura complement C5 inhibitor program has broadened the spectrum of our portfolio for age-related indications. I would like to go into more detail with you regarding our new HtrA1 inhibitor program. Genetic linkage studies have demonstrated a strong correlation between HtrA1 and risk for AMD. A study published in Molecular Vision in 2017 demonstrated a specific correlation between the expression of HtrA1 and a certain set of genes comparing with AMD. The overexpression of HtrA1 has also been demonstrated in postmortem eyes of patients with AMD. HtrA1 is a serine peptidase that impacts both cells and extracellular matrix. The overexpression of HtrA1 leads to alterations and disruptions in the physiological morphology and function of retinal pigment epithelial cells or RPE cells, and the Bruch's membrane, which is the baseline membrane necessary for the normal function of these cells. The demise in RPE cells leads to death of photoreceptors, which are responsible for perception of light and our eyesight. These scientific findings indicate that HtrA1 [overexpression] in age-related macular degeneration, and therefore molecules involved in the regulation and inhibition of HtrA1 are targets for therapeutic intervention in this disease. Our new HtrA1 inhibitor program currently consists of multiple lead compounds, which have shown high affinity and specificity in-vitro and target engagement in multiple animal models, as well as a number of backup compounds. As Glenn mentioned earlier, we are targeting to submit an IND for this program in geographic atrophy secondary to dry AMD in late 2020. We believe that this program is supported by strong scientific rationale and has the potential to address the high unmet medical need in age-related retinal diseases. Now I would like to turn our attention to gene therapy programs. Our current AAV gene therapy portfolio consists of rhodopsin-mediated autosomal-dominant RP, Best disease and minigene program for LCA due to mutation in CEP290 and autosomal recessive Stargardt disease due to ABCA4 mutation. Further we have initiated a comprehensive program comparing various AAV vector technologies for intravitreal and subretinal applications in the eye. The value of this portfolio is further strengthened by the collaborations we initiated with a select group of leading gene therapy scientists at the University of Florida, the University of Pennsylvania and Horae Gene Therapy Center at the University of Massachusetts Medical School. I would like to go into more detail regarding the AAV program for Best disease option from Penn and Florida, the new addition to our gene therapy portfolio. There is currently no FDA or EMA approved therapy to treat this orphan inherited retinal disease. The Best1 gene and bestrophin, a multifunctional protein that regulates ion channels and [indiscernible] in the RPE cells. As mentioned above, RPE cells are necessary for the survival of the photoreceptors to serve their perceived life and are necessary for our vision. In humans, mutations of the Best1 gene results in a wide spectrum of inherited retinal diseases collectively known as bestrophinopathy that involve lesions in the macula, which over time lead to atrophy and loss of central vision. The lead Best1 [AD] product candidate demonstrated anatomical proof of concept when it was tested in canine dystrophinopathy disease model, reversing [lesions] and micro-detachments. The results of this work were published in February of this year in the Proceedings of the National Academy of Science of the USA, the PNAS Journal. In addition to the exclusive option agreement, as Glenn mentioned earlier, we also entered into a master sponsored research agreement with Penn facilitated by Penn Center for Innovation pursuant to which we together with Penn plan to conduct additional pre-clinical studies, as well as a natural history study for patients with Best disease. In parallel with the sponsored research, we plan to commence IND-enabling activities including manufacturing for a pre-clinical toxicology study. Based on current timelines, we can submit an IND by 2021. Moving onto our other gene therapy programs, currently we are conducting the natural history study and additional clinical studies for rhodopsin-mediated autosomal-dominant RP program, and have commenced IND-enabling activities. Based on current timelines and regulatory review we expect to initiate a Phase 1-II clinical trial in 2020. We are currently also evaluating the minigene therapy approach for Leber Congenital Amaurosus type 10, or LCA10, which is the most common type of LCA and is caused by mutations in the CEP290 gene and automosal recessive Stargardt disease, which is caused by mutations in the ABCA4 gene. LCA10 and Stargardt disease are both orphan inherited degenerative retinal diseases that lead to severe vision loss without any currently available FDA or EMA approved treatments. Although at a very early stage of its development, we believe the minigene therapy for Stargardt disease has potentially a strategic large cycle improvement for our Zimura program in this disease. Turning now to our complement C5 inhibitor program, we expect initial top line data from our dose-ranging, open-label, multicenter, Phase IIa clinical trial of Zimura in combination with anti-VEGF agent, Lucentis, in treatment naïve patients with wet AMD by the end of this year. We enrolled a total of 64 patients in this clinical trial. This trial is designed to assess the safety and to detect a potential efficacy signal of different doses of Zimura in combination with Lucentis 0.5 mg index. Following the completion of this trial, [P&L] data will be analyzed and we will determine whether to proceed to a randomized, sham-controlled clinical trial of Zimura combination therapy with anti-VEGF in wet AMD. This trial was designed to validate our previously completed Phase 1-IIa trial in treatment naïve wet AMD patients. In patients that received six monthly intravitreal injection of Zimura 2 mg in combination with Lucentis 0.5 mg, 60% gained greater than or equal to three lines of vision, which is generally accepted as meaningful visual gain with a mean vision gain of 15.3 letters from baseline, both of which are higher than what is generally seen in clinical trials of anti-VEGF monotherapy. Although these were well-tolerated and no safety concerns were identified. Our trial had a small sample size and consistent with a Phase I/IIa study, with no control group, although potential and efficacy of signal was present, we wanted to further validate this finding before entering into a large-scale randomized control trial. We look forward to the upcoming Zimura data in wet AMD by the end of this year. Earlier this month we completed patient recruitment in our ongoing Zimura Phase II clinical trial in geographic atrophy secondly to dry AMD, 286 patients are enrolled in this clinical trial. This trial is designed to assess the safety and efficacy of Zimura mono therapy in geographic atrophy over 12 months. Patients will continue to be monitored until month 18. We currently continue to enroll patients in our Zimura Phase IIb clinical trial in autosomal recessive starter disease. I would like now to turn over the call to Dave Carroll. Dave?

[David Carroll:]

Thank you Kourous and good morning everyone. I'd like to highlight a few items from our press release of this morning provide an update to our yearend cash estimate and also review our recent inception for transaction. For the quarter our net loss totaled $14.7 million or $0.41 per share compared to a net income of $189.1 million or $5.25 per share for Q3, 2017. As Q3, 2017 reflected the impact of our completion of the Novartis licensing and commercialization agreement. Year-to-date our net loss totaled $41 million, $1.13 per share compared to a net income of $123.7 million or $3.44 per share for 2017 again through to the Q3 2017 completion of the Novartis licensing agreement. Turning to our expected year-end cash balance. Our cash balance at September 30, was approximately $135 million and $11 million decrease from Q2. We're increasing our cash guidance and now expect our year-end cash balance to range between $125 million and $130 million; an increase from the company's prior estimate of $112 million and $117 million. This increase reflects the impact of the cash received from the Inception 4 transaction and that we are spending less than expected to achieve our goals. This estimate is also based on our current 2018 business plan which includes our recently announced best one collaborative gene therapy research program and the continuation of our development programs for Zimura our RHO-adRP gene therapy product candidate and our other collaborative gene therapy research programs. Of course these estimates do not reflect any additional expenditures resulting from the potential in licensing or acquisition of additional product candidates or technologies or any associated development that the company may pursue. Turning to our Inception 4 transaction. We've acquired the small molecule inhibitors of HtrA1 $6.1 million in cash and Versant helped with identifying additional opportunities to expand our portfolio. Ophthotech has issued approximately $5.2 million shares of its common stock to the sellers, which is approximately 12.5% of our outstanding shares post transaction. For clarity, $5.2 million is approximately 12.5% of approximately $41.4 million shares. The sellers will also receive certain clinical and marketing approval milestones. However, there are no royalties, no near-term milestones and Ophthotech will not assume any infrastructure or personnel from inception for. I’ll now turn the call back over to Glenn. Thank you for your time.

[Glenn Sblendorio:]

Thank you Dave. So in summary, we continue to build our portfolio with novel therapeutics and gene therapy with the goal of being leader in treating retinal disease. And target for wet and dry AMD have been met and we plan to report data in 2018 and 2019. We've added to our portfolio the third gene therapy deal in inherited retinal disease this year and we've increased our cash guidance through the program savings in the acquisition of inception 4. So we remain committed and focused on achieving not only our goals for the short term but also for the long term. I would like to thank everybody for listening today. We're going to open up for questions in a moment. I also want to note that we will be posting a couple of slides to our website providing an overview of the portfolio and summaries of the two deals that we completed today. Operator you can open the line up for questions.

[Operator:]

Thank you. [Operator Instructions] And we will take our first question from Anupam Rama from JPMorgan.

[Unidentified Analyst:]

Hey guys. This is [indiscernible] filling in for Anupam this morning. Thank you for taking my questions and congratulations on all the progress. Maybe one from us on the announcement this morning of the acquisition of inception 4 with an IND to file in GA secondary to dry AMD, how are you guys thinking about how the addressable populations may or may not differ between this gene therapy candidate Zimura which is being studied in the ongoing Phase IIb in the same indication? Are there any stratifications factors to consider between the two programs in terms of populations that you're studying? And then also maybe a second one if I could on more broadly how we should be expecting BD to continue here or [what’s] story now turn this sort of execution? Thanks so much guys.

[Kourous Rezaei:]

Thank you for the question. Just to clarify the extra one inhibitor is not a gene therapy product but it's therapeutic and get it as an additional target for treatment of geographic atrophy. In general we do not look at specific populations for complement inhibition versus extra one inhibitor but we look at it as either using HtrA1 as an additional asset at the monotherapy or potentially as a combination therapy for geographic atrophy in dry AMD.

[Glenn Sblendorio:]

So on the second question with business development a very good question. I think we have a lot on a plate to execute on. We have started with a very small team, very good team and as I said in the presentation before we will continue because that is our lifeline. I think we'll be very selective. You'll see today with the slide that we posted to the website, the portfolio is filled with a lot of opportunities that was the objective of the BD effort over the last year. So we'll continue. We'll be very selective and really focused on execution to bring all of these programs forward. Thank you.

[Unidentified Analyst:]

I see that clear. Thank you guys.

[Glenn Sblendorio:]

Bye. Bye.

[Operator:]

[Operator Instructions] And next we will hear from Yigal Nochomovitz with Citigroup.

[Yigal Nochomovitz:]

Hi there. Thank you for taking the questions. On the wet AMD study that's reporting out in a few this quarter I guess, that's an incentive study, can you just talk about is it monthly dosing or you doing the three months of monthly followed by prn dosing? What's the dosing there?

[Kourous Rezaei:]

Yes. There is no, for this one there is no prn dosing because the duration is very short. It's a six months clinical trial. As indicated in the call we had done a trial in the past where we did have the 60% [indiscernible] and the mean change of vision with 15.3 letters. So we look at that dose but we have done some additional dose ranging studies to see whether we can further improve on those results. So this trial serves two purposes; one whether we can validate previous findings and two, do additional dose ranging to see if we can find a better outcome than what we had before.

[Yigal Nochomovitz:]

And since this open label course you are able to see the data in real time or no?

[Kourous Rezaei:]

No.

[Yigal Nochomovitz:]

Okay.

[Kourous Rezaei:]

We have not.

[Yigal Nochomovitz:]

But when you say the 15.3 letters that's sort of your – is that your sort of bar for go-go or no-go on the future development to do a proper control trial? Is that what you're looking for?

[Kourous Rezaei:]

We have not set a specific bar at this point for which to go. We have pre-specified a few criteria but again since this is a – just to remind you this is a Phase IIa trial, this is but not have a control arm. We want to look at see how each of these arms individually do, how it compares to what we have done in the past and then make a decision whether it is what worthwhile moving forward. We have consulted a world leading statistician to help us with that but this is again a soft criteria when we want to look at all the additional end points that we have and then make a decision to move forward.

[Yigal Nochomovitz:]

All right. Okay. And then on the Best disease program which you just – can you just clarify since this is not entirely clear, Penn and Florida are collaborators academically and they have the same product candidates or does each institution have different product candidates and you have licensed the whole set of candidate? Can you just clarify how the two of the two academic groups work together, not sure.

[Kourous Rezaei:]

Sure. The way this collaboration works is that the [gene] vector technology comes from University of Florida. The animal model is at Best and all the patients are also at Best, actually University of Pennsylvania. University of Pennsylvania has the – has a very large retinal degeneration center. They help us with doing that sort of history studies. They also have the animal model which in our understanding that's unique to them. These are the only ones who have this animal model. But the gene therapy technology comes from University of Florida. Basically we use that technology and University of Florida is tested in animals at University Pennsylvania. And also the future animal – the patients’ natural history studies also done at the University of Pennsylvania. There is a collaborative effort with both the institutions.

[Yigal Nochomovitz:]

Okay. Got it. That makes sense. And then on the HtrA1 you mentioned I think something about protecting the over expression cadavers in postmortem studies of dry AMD patients. Is there any effort underway for patient [indiscernible] to look for the high expressions of HtrA1 or is this thought that basically it's highly – it's going to be highly expressed in all the dry AMD patients, so you don't need to do a selection.

[Kourous Rezaei:]

It's a great question. At this stage I think we will be looking at all AMD patients. Obviously when we look at these patients we are going to do also generic analysis in the clinical trials and decide whether in a later phases if one wants to be more selective or wants to be more broad base but at this stage we are going to be looking at more broad based.

[Yigal Nochomovitz:]

Okay. Got it. Thank you.

[Glenn Sblendorio:]

Thanks Yigal.

[Operator:]

And with no further questions I would like to turn the call back over to management for any additional or closing remarks.

[Glenn Sblendorio:]

Thank you. I think we are done and I would like again to thank everybody for listening in today. Thank you.

[Operator:]

That does conclude our call for today. Thank you for your participation. You may now disconnect.