IVERIC bio, Inc.
Q4 2018 Earnings Call Transcript

Published: 26 Feb 2019

[Operator:]

Good day, and welcome to the Ophthotech Corporation Q4 Year-End 2018 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kathy Galante. Please go ahead ma’am.

[Kathy Galante:]

Good morning, and welcome to our fourth quarter and year-end 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, Chief Business Officer. 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; 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 related 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 November 2, 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 appreciate you joining our call this morning. 2018 was a transformative year for Ophthotech as we continue pivot the company to a leader and trading regularly (inaudible). Let me recap some of the highlights; first, our active business development resulted in multiple transactions leading to the addition four gene therapy research and development programs that target orphan inherited retinal diseases and an age-related therapeutic program to our retina portfolio. Versant Ventures became a major shareholder of Ophthotech through the acquisition of Inception 4. We also expanded our Board by adding three leading industry experts in our Phase 2b Complement 5 or C5 inhibitor program for the treatment of geographic atrophy secondary to AMD and Stargardt on track to data readouts this year and next. We look forward to reporting initial topline data from our ongoing, randomized, double masked, sham controlled phase 2b clinical trial researching the safety and efficacy of the Zimura mono-therapy in patients with geographic atrophy secondary to dry AMD in the fourth quarter of this year. Patients recruitment for our phase 2 randomized, double-masked, sham controlled clinical trials assessing the safety and efficacy of Zimura mono-therapy in patients with Autosomal Stargardt disease has now completed and initial topline data are expected to be available in the second half of 2020. We are particularly excited to have diversified our therapeutic pipeline through the acquisition of Inception 4. In October 2018, we acquired Inception 4 from Versant, a company that’s well known in the industry for creating start-up companies focused on scientific merit. With this acquisition, we gained worldwide development and commercialization rights to an HtrA1 inhibitor program for the treatment of age-related retinal diseases. Based on our current timelines, we are planning to submit an IND with the US FDA for our new HtrA1 inhibitor program in geographic atrophy secondary to dry AMD in late 2020. Versant Ventures as a major new investment in Ophthotech is also helping us identify additional opportunities to expand our pipeline. We obtained approximately 6.1 million in cash through the acquisition of Inception 4. Now moving on to our gene therapy programs; we believe that advances in gene therapy technologies have been promising and may provide transformative next generation therapy for patients with retinal diseases. Going to past year, we executed on our strategy to build a diversified portfolio of gene therapy programs for orphan inherited retinal disease, and we are currently developing multiple adeno-associated virus or AAV gene therapy product candidates. First, we are currently conducting a natural history and IND enabling study for the reduction mediated autosomal-dominant retinitis pigmentosa program. RHO-adRP is an orphan monogenic inherited retinal disease that is characterized by progressive and severe vision loss leading to bilateral blindness. Based on the current timelines and subject to regulatory review, we expect to initiate a phase 1/2 clinical program in 2020. There are currently no other treatments available to these patients. To build on our gene therapy strategy during the third quarter of last year we obtained the right to license and develop and commercialize novel AAV gene therapy products for the treatments of patients with retinal disease due to BEST1 gene patients. These are orphan inherited retinal diseases typically impacting both eyes of the patient. In addition to the exclusive option agreement, we also plan to sponsor research to conduct pre-clinical and natural history. We plan to commence an IND enabling activity and based on current timeline we expect to submit an IND to the FDA in 2021. Here also there are no treatment options for patients. We’re also sponsoring research to evaluate an intriguing minigene strategy for both Leber Congenital Amaurosis type 10 or LCA10 which is the most common form of LCA and is caused by mutation in the CEP290 gene. And the second program in autosomal recessive Stargardt disease which is caused by mutations in the ABCA4 gene. We expect to receive results from LCA10 during this year, at which point we may let our option on this program with a license. LCA10 and Stargardt disease are both orphan inherited degenerative retinal diseases that leads to severe vision loss without any current available FDA or EMA approved treatments. Although, we’re at the very early stages of development, we believe that the minigene strategy for Stargardt disease is potentially our strategic lifecycle improvement for our Zimura program in this disease. We’re also sponsoring research at University of Massachusetts Medical School to evaluate various AAV gene therapy methods for both intravitreal and subretinal applications in the eye. We’re delighted to collaborate with leading scientists who are pioneers in gene therapy retinal diseases. We have cultivated strong scientific relationships with the investigators at the University Of Massachusetts Medical School and its Horae Gene Therapy Center, the University of Florida and the University of Pennsylvania. Before I turn the call over to Kourous who’ll go in to more detail about these programs, since the beginning of 2018 we have expanded our Board of Directors by adding three leading industry experts. During 2018, Adrienne L. Graves Ph. D. Former Chief Executive of Santen and Jane Pritchett Henderson, Chief Financial Officer of Turnstone Biologics and former Chief Financial Officer and Senior Vice President of Corporate Development at Voyager joined our Board. Effective January 1, 2019, Dr. Cal Roberts, Senior Vice President and Chief Medical Officer, Eye Care at Bausch Health Companies and Clinical Professor of Ophthalmology at Weill Medical College of Cornell University was also elected to the Ophthotech Board of Directors. We’re excited and pleased to welcome Adrienne, Jane and Cal and look forward to their contributions to our strategy. We’re excited about our pipeline, and we look forward to continuing to work and develop and move this pipeline forward. We’re committed to advancing and expanding the pipeline and other applications and opportunities for retinal diseases and creating value for our shareholders. I’d like to now turn the call over to Kourous.

[Kourous Rezaei:]

Thank you Glenn and good morning everyone. With Glenn already providing an overview of our strategy, I will focus on providing you more granularities regarding our diversified portfolio of gene therapy and therapeutic programs that we have assembled over this past year. We created a diversified portfolio solely focused treating inherited and age-related retinal diseases. The foundation of our portfolio is based on strong scientific proof of concept, precedence of significant unmet medical needs and future commercial viability. Today we have created portfolio with multiple shots on goal for a broad spectrum of diseases in both our gene therapy and therapeutics pipeline reinforcing our commitment to patients and retinal specialists who do not have any treatment options for treating these retinal diseases. As Glenn mentioned, our current AAV gene therapy portfolio consists of development programs for rhodopsin-mediated autosomal-dominant RP, and diseases impacted by BEST1 mutations as well as minigene research programs for LCA10 and autosomal recessive Stargardt disease. Further, we are funding researching comparing various AAV gene delivery methods for intravitreal and sub-retinal applications in the eye. I would like to provide details on our AAV gene therapy programs. We are developing a single vector mutation independent, novel adeno-associated virus gene therapy product candidate for the treatment of rhodopsin-mediated autosomal-dominant retinitis pigmentosa, an orphan inherited retinal disease. Rhodopsin-mediated adRP is a monogenic orphan disease with more than 150 mutation identified in rhodopsin gene. These mutations may lead to the production of proteins that are targeted to the retinal tissue. The concept for the rhodopsin mediated adRP product candidate combine a transgene expressing a highly efficient novel short therapy in RNA designed to target a knock down endogenous rhodopsin in a mutation independent matter. With a human rhodopsin replacement transgene made resistant to RNA interference in a single AAV 2/5 vector. Basically it shuts down the generation of far-flick endogenous protein while simultaneously replacing it with a gene that expresses the protein that is needed for vision. We are collaborating with internationally renowned scientist in gene therapy for orphan retinal diseases. Professor Alfred Lewin and Professor William Hauswirt from the University of Florida and Professor William Beltran and Professor Gustavo Aguirre and Professor Sam Jacobson and Professor Art Cideciyan from the University of Pennsylvania. In August, this impressive proof-of-concept study result of our product candidate in a natural occurring canine disease model were published in a journal of Proceedings of the National Academy of Sciences, demonstrating long term anatomic and functional rescue of the retinal tissue in the area fitted with our AAV product candidate. This publication entitled mutation-independent rhodopsin gene therapy by knockdown and replacement with a single AAV vector was published by scientist of Penn and University of Florida. I would like to point out that proof-of-concept of study and the announcement about this disease has already been published by these scientists earlier. Moving now to our next existing gene therapy inherited retinal disease program, which impacts patients with BEST1 mutations. The BEST1 gene called bestrophin, a multifunctional protein that regulates ion channels and homeostasis in the retinal pigment epithelial cells, which are necessary for the survival of the photoreceptors to serve their perceived life and are necessary for our vision. The patients in BEST1 gene are known to alter intercellular calcium signaling and disrupt ion and fluid transport across retinal pigment epithelial cells leading to disruption and the adhesion between them and photoreceptors. In humans, this can lead to development of vitelliform lesions in the macular, which overtime may progress to atrophy and collateral loss of central vision. Our lead BEST1 AAV product candidate demonstrated impressive anatomical proof-of-concept when it was treated in the natural occurring canine dystrophinopathy disease model with various BEST1 mutations, reversing sub-retinal lesion and micro detachment in all of them. The result of this work were published in February 29, ’18 in the proceedings of The National Academy of Sciences together with Penn with plan to conduct and natural history and IND enabling studies. Based on current timeline and subject to regulatory review, we plan to initiate a clinical trial in patients in 2021. I would like to point out that current retinal specialists do not any FDA or EMA approved treatment options available to them for the treatment of patients suffering from either rhodopsin mediated adRP or diseases caused by BEST1 mutation. We are also evaluating a minigene strategy for orphan retinal diseases that involve mutation in genes that are too large to fit inside a standard AAV vector, such as LCA10 and Stargardt disease. We are collaborating with leading scientists such as Dr. Guangping Gao, professor of molecular genetics and microbiology and director or Horae Gene Therapy Center at the University of Massachusetts Medical School with a pioneer in AAV vector technology and Dr. Hemant Khanna, associate professor of ophthalmology and visual sciences who is developing our minigene strategy. The concept of this minigene strategy seeks to deliver a smaller but a functional form of the larger gene packaged in to an AAV delivery vector. The minigene strategy may offer a novel approach for diseases that would otherwise be difficult or impossible to address through conventional AAV gene replacement therapy where the size of the gene of interest exceeds the transgene packaging capacity of conventional AAV vectors. We are currently focused on LCA10 and autosomal recessive Stargardt disease as both are orphan inherited degenerative retinal diseases that lead to visual loss without any currently available FDA or EMA approved treatments. Our current phase 2b trial of Stargardt disease would provide us valuable information for future utilization of the minigene therapy in Stargardt disease which potentially a strategic a lifecycle improvement. More age-related indications, the addition of HtrA1 inhibitor program has broadened the spectrum of our therapeutic portfolio and I would like to go in to more detail with you regarding this exciting new program. HtrA1 is a serine [cortege] that impacts both cells and extracellular matrix. The overexpression of HtrA1 leads to alteration and disruption in the physiological morphology and function of retinal pigment epithelial cells and the Bruch’s membrane, which is the base membrane necessary for the normal function of these cells. As I mentioned earlier, the degeneration of RPE cells leads to the death of photoreceptors which are responsible for our eyesight. 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 risk for AMD. Further overexpression of HtrA1 has been demonstrated in postmortem eyes of patients with AMD. Based on these scientific findings, HtrA1 overexpression may play a role 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 exclusivity in vitro and target engagement in multiple animal models as well as a number of backup compounds. We believe that this program is supported by strong scientific rationale and has the potential to be at best-in-class and addresses the high unmet medical need in age-related diseases specially dry AMD. Thank you for your time. I will now turn the call over to Dave Carroll.

[Dave Carroll:]

Thank you Kourous, and good morning everyone. I’d like to highlight a few items from our press release this morning and provide some guidance on our expected year-end 2019 cash balance. In December 2018, we terminated our agreement with Novo Holdings, which relieved us of any obligation to pay Novo future product royalties. Until this quarter, we have reflected the $125 million in financing we received from Novo as a royalty purchase liability on our balance sheet. As a result of this termination, during the fourth quarter, the company extinguishes liability and recognized $125 million gain. This gain on extinguishment did not impact our year-end cash balances. For the quarter, our net income totaled 104.1 million or $2.62 per share compared to a net loss of 9.5 million or $0.26 per share for Q4 2017. This increase in net income was driven primarily by the aforementioned $125 million gain on extinguishment. Year-to-date, our net income totaled 63.1 million or $1.70 per share, compared to a net income of 114.2 million or $3.17 per share for 2017, as 2017 reflects the impact of our Q3 completion of the Novartis licensing agreement and our recognition of approximately $210 million in collaboration revenues. Turning to our expected year-end 2019 cash balance, as we previously announced our cash balance at December 31 was approximately 131 million. We now estimate our year-end 2019 cash balance to range between [80] million and 85 million. This estimate is based on current 2019 business plans, which includes the expansion of our gene therapy programs, the expansion of our HtrA1 development program, and the continuation of our clinical development programs for Zimura. Of course these estimates do not reflect any additional expenses resulting from the potential in-licensing or acquisition of additional product candidates or technologies or any associated development that the company may pursue. I’ll now turn the call back over to Glenn. Thank you for your time.

[Glenn Sblendorio:]

Thanks Dave. And before we turn the call back over to the operator for questions, I want to reiterate, we remain focused on advancing our promising portfolio of novel therapeutics and gene therapies to treat inherited retinal diseases in age-related ophthalmic diseases. We also remain committed to building on the strong momentum that we started in 2018. And in 2019, we expect the number of (inaudible) to generate topline data through our Zimura phase 2 clinical programs in GA in the fourth quarter of this year. Second, we expect results from our minigene program for LCA10 during the year, at which time we may elect to exercise our option for this program. Third, we’ll continue to advance the preclinical work in RHO-adRP to be ready to enter the clinic in 2020. So we’ll select a manufacturer for the pre-clinical work in phase 1 clinical supply for our BEST1 disease program. And last, we’ll initiate formulation development HtrA1 inhibitor program. So we have a lot to do. In addition, our business development and outreach will continue to be aggressive but selective as we seek our additional opportunities that are in-sync with our science-driven retina focused strategy. We are committed to effectively managing our cash position and to creating value for our shareholders. In 2019, we’ll continue to execute on strategy and look forward to providing you with updates as all these programs progress. Again, thank you for listening to our call, and operator please open the line of questions.

[Operator:]

[Operator Instructions] we will now take our first question from Yigal Nochomovitz of Citibank. Please go ahead.

[Yigal Nochomovitz:]

I was just curious regarding the timelines for both the retinitis pigmentosa study as well as the BEST gene program. You’re saying you’re going to be in the clinic in 2020 and 2021 respectively, and I think Glenn you also mentioned (inaudible) natural history study. I was just wondering, is it imperative to do a natural history study. I would think that some exist already in the literature and if not what are you specifically trying to learn from the study that will help you better prepare for clinical success given maybe that – if you didn’t do those studies maybe you could start the clinical work sooner.

[Glenn Sblendorio:]

I’ll reiterate the timelines, yes adRP in 2020 and in 2021. And Kourous do you want to talk about the strategy around the natural history studies?

[Kourous Rezaei:]

Thanks Yigal for the question, and I agree with you, there is some natural history already available. The natural history is done in parallel with IND enabling studies. Basically, we are looking to find the ideal inclusion criteria and a potential end point to basically tailor them to a clinical trial. And the additional information that is currently available in the literature would obviously help. One of the advantages is the scientists we are working with are the leaders in the field. So they are looking at their database to also select those patients.

[Yigal Nochomovitz:]

And would we expect to see the results of those natural history studies before you start the phase 1/2 or will they continue during the clinical work?

[Kourous Rezaei:]

Well some of them – probably the natural history study is just a history study that these patients will continue to be followed. Obviously once they are enrolled in the trial, the result of the trial will become crucial to further guide us on how to design the subsequent trials. But if any additional information becomes available during the study or in the literature obviously we take in to effect in our design.

[Yigal Nochomovitz:]

Got it, and on the UMMS program with Horae Gene Therapy Center. I’m just wondering if that agreement allows you to go beyond LCA10 at some point, obviously now you have ProQR and (inaudible) already involved in that area. I’m just wondering how much flexibility you have beyond LCA10 given there are quite a few other forms of LCA.

[Kourous Rezaei:]

Yes. So we have two opportunities with UMMS on LCA10, the second Stargardt disease and then obviously the third effort with them is around working with Dr. Gao’s vector library to find optimal ways to delivery genes either intravitreal or subretinal. I would say the relationship is good with him and we’ll continue to expand that for those with the existing agreements that we have today. The only I’d say about the competitive landscape on the other two are using different modalities to treat those patients. This is a gene therapy approach that could have a different outcome. So our relationship with UMMS I think is very good, and we’d look for opportunities to work with them on other things as the opportunities present.

[Yigal Nochomovitz:]

And one other question I had is on the upcoming Phase 2b for Zimura. Can you discuss in any more detail what the desired treatment effect is there or in other words what does the study power for on treatment effect in order to be successful in reducing the rate of growth of the GA (inaudible) in order to control.

[Kourous Rezaei:]

Sure. This phase 2b is a screening trial, which is based on the amount of impact that Zimura has on the growth. We will decide whether to move forward and whether the results are good enough to potentially be counted as a one registrational trial. At this point, we are still evaluating obviously, the competitors has already set certain impact already, but we are looking both at the efficacy and the safety to make those decisions. We have provided any more detailed guidance publicly, but we are definitely obviously looking to see how the impact will make us decide whether on how to move forward.

[Operator:]

[Operator Instructions] We will now take our next question from Anupam Rama of JPMorgan. Please go ahead.

[Unidentified Analyst:]

This is (inaudible) coming in for Anupam this morning. Thank you for taking the question and congratulation on all the progress. I assume that the pipeline that you are building, the company has done a number a gene therapy deal over the last year. Should we be expecting more gene therapy business development over the next 12 to 18 months, and perhaps you can talk at a higher level about what you’re looking for in gene therapy opportunities and how you are thinking about internal versus external manufacturing for your ongoing and potentially future programs. And then a housekeeping question as well, how should we be thinking about your cash run rate [impact]?

[Glenn Sblendorio:]

So I’ll talk a little bit about the strategy, our strategy on business development going forward will be focused only on gene therapy. The criteria that we mentioned is that we look for things that have a great science obviously with the transactions we’ve done today, each of those institutions are known for great science, and also that they are right now focused, so that we kind of box around that. I’ll lay a third dimension that we obviously look at each of those opportunities in the market capabilities. So, there’s always a financial model there. Over the next 12 to 18 months we’re active, we’re looking, we’ll continue to look. So if we find other interesting gene therapies, we could expand our collaborations with the existing institutions that would be priority one. As to the cash runway and guidance, I’ll let Dave answer that question.

[Dave Carroll:]

So we’ve said that we’ll end 2018 with cash ranging between 80 million to 85 million and we said in the past and we continue to reiterate that we have more than sufficient resources to get it to the next [card] turns. That’s always been our over-arching feat, and we’ll continue to see that happen as 2019 progresses. And your last question related to manufacturing, because of our size at this point in time, we won’t be committing capital to build a facility. So we will use the same approach to that. We have already selected a manufacturer for adRP program. As I mentioned one of the key criteria for 2019 is to select a CMO for the pre-clinical work that we have in BEST1 disease. And that’s when we talked about the manufacturing input we’ll disclose shortly. I don’t think anybody will be surprised, we believe they are one of the best if not the best at this point now and more to come on that. But our strategy will be to use outside resources for manufacturing.

[Operator:]

There are no further at this time. I would now like to hand the call back to Glenn for any additional or closing remarks.

[Glenn Sblendorio:]

Once again thank you for listening to the call today. 2019 will be another very important year for us in terms of execution and moving our program forward. So we look forward to continuing to provide updates throughout the year. Thank you.

[Operator:]

Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.