IVERIC bio, Inc.
Q1 2017 Earnings Call Transcript

Published: 3 May 2017

[Operator:]

Good day and welcome to the Ophthotech Corporation First Quarter 2017 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 first quarter 2017 earnings call. Joining me today I have Dr. David Guyer, Chief Executive Officer and Chairman of Ophthotech, Mr. Glenn Sblendorio, President and Mr. Dave Carroll, Chief Financial Officer. Before we begin, I would like to remind you that today we will be making statements relating to Ophthotech’s future expectations regarding operational, financial and development matters, including statements regarding our projected use of cash and cash balances; the timing, progress and result of the Fovista Phase III clinical program and our Zimura clinical program the implementation of a new strategic plan. These statements constitute forward-looking statements for the purpose of the Safe Harbor provision of 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 wind down of various clinical trials, the implementation of our reduction in personnel, the negotiation and confirmation of in-license and/or acquisition transactions and availability of data from clinical trials. I refer you to our SEC filings and in particular to the Risk Factors section in our annual report on Form 10-K filed on February 28, 2017 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 David.

[David Guyer:]

Thanks, Kathy. And thank you, everyone, for joining us on the call this morning. Last week we announced the leadership transition that will take effect on July 1, 2017. As part of this change, I will transition from Chief Executive Officer of Ophthotech, to the newly created role of Executive Chairman, concurrent with this transition on behalf of the Board and myself we are thrilled that Glenn has accepted the position of Chief Executive Officer of the company. Glenn will retain his role as President and has been nominated as a class 1 director for election at the company’s upcoming annual meeting of stockholders on May 19, 2017. Glenn is an accomplished leader in the health care industry with extensive financial, operational and business development experience. Glenn’s outstanding track record in the biopharma industry makes him an ideal choice as CEO to fulfil our company's current and future needs. The company also announced the promotion of David F. Carroll to Chief Financial Officer and Treasurer effective immediately. Mr. Carroll was previously Senior Vice President of Finance. Dave has more than 25 years of experience in the life science industry including eight years at the Medicines Company and several senior financial leadership roles. I am looking forward to working with Dave in his new role as CFO. I will now turn the call over to Glenn.

[Glenn Sblendorio:]

Thank you everybody for joining this morning and David, thank you. In February 2017 we announced that the company initiated a plan to review strategic alternatives. Without limiting any options, the principal focus of the strategic review plan is to actively explore opportunities to obtain rights to additional products, product candidates and technologies to treat ophthalmic diseases, particularly those of the back of the eye. We are particularly interested in obtaining rights to product candidates for ocular indications with a high unmet medical need. We believe that our experience and expertise in ophthalmology positions us well to explore and critically evaluate a variety of opportunities. We also believe that our focus on diseases of the eye and our experienced management team will make us an attractive collaborator or acquirer for companies seeking to out-license or sell products, product candidates or technologies. We've also previously announced that we engaged LEERINK Partners as a financial advisor to assist both management and the Board in evaluating the company’s strategic alternatives. As part of our updated business plan, we continue to review whether there is any scientific rationale for potentially developing our current product candidates, Fovista and Zimura in one or more new ophthalmic indications where there is a high unmet medical need. Our goal, as part of this overall plan is to align our corporate resources relative to pursuing development of a potentially broader product pipeline. We plan to reassess our existing focus in Zimura development programs throughout 2017 if the implementation of our updated business plan progresses and evolves. In the meantime, we are continuing to develop Zimura in both geographic atrophy, a form of dry AMD, as well as Zimura in the treatment of wet AMD. Our reassessment of the Zimura development program in dry AMD may be particularly affected by results of a competitors Phase III trial of a complement inhibitor being studied for the treatment of geographic atrophy. Results from this competitor’s trial are expected in the second half of 2017. We expect a reassessment of Fovista development programs for the treatment of wet AMD will be primarily determined by the initial top-line data from our remaining Fovista Phase III trial for the treatment of wet AMD, also known as OPH1004, which investigates Fovista in combination with Eylea or Avastin. Top-line data in this trial is expected in the second half of 2017. As a result of our reassessment, we may modify, expand or terminate some or all of these development programs or clinical trials at any time. Our future development pipeline could include additional product candidates or technologies that we may acquire in-license and/or the future development of Zimura or Fovista. As part of our strategic review we may also consider other alternatives, including the acquisition of products, product candidates or technology or other assets outside of ophthalmology. This could include mergers or other transactions involving some or all of our assets. We cannot be sure if or when the strategic review process will result in any transaction. I'm also excited to continue to work very closely with David Guyer. I look forward to his continued guidance and contributions to Ophthotech. As David mentioned earlier, we are pleased that Dave Carroll was promoted to Chief Financial Officer. As you know, prior to Ophthotech Dave and I worked at the Medicines Company for several years. Dave’s outstanding financial expertise in the Life Science Industry will be instrumental as we execute a strategy to maximize shareholder value. I'd like to now turn the call back over to David who will review the first quarter of 2017 results.

[David Guyer:]

Thank you, Glenn. I'm excited to have the opportunity to contribute to the company in this new role. I look forward to working closely with you David and the entire Ophthotech team. I’d like to now give a brief overview of our Q1 operating results versus 2016 and also review our expected year end cash balance. For the quarter, our net loss totalled $43.1 million or $1.20 per diluted share, compared to a net loss of $36.3 million or $1.03 per diluted share for Q1, 2016. AS lower R&D and G&A expenses did not offset decline in collaboration revenue collaboration revenue was $1.7 million for the quarter compared to $15.7 million from Q1, 2016. Collaboration revenue decreased due to a decrease in shipments of Fovista API to Novartis. R&D expenses were $32 million versus $37.8 million for Q1, 2016. Q1 2017 R&D expense include approximately $4.8 million severance costs related to the company's previously announced reduction in personnel. R&D expenses decreased year-over-year, primarily due to the decrease in the company’s Fovista Phase III clinical programs, including decreased manufacturing expenses. G&A expenses were $13.2 million versus $14.7 million for Q1, 2016. G&A expenses include approximately $3.9 million severance and lease termination costs. G&A expenses decreased year-over-year, primarily due to a decreasing costs to support the company’s operations and infrastructure. Turning to our cash balance. Our cash balance at March 31 was approximately $228 million. We expect to spend another $45 million to $55 million and implement a reduction in personnel, the winding-down of the Phase III Fovista in combination with Lucentis clinical trials, the termination of the Fovista Expansion Studies, cancellation fees related to manufacturing commitments, and obtaining initial top-line data in the second half of 2017 for the Phase II Fovista in combination with Eylea or Avastin in clinical trial. We expect our year cash balance to range between $140 million and $160 million, excluding any potential business development activities or any changes to the Company's current clinical development programs. Finally, fully diluted weighted average shares outstanding for the quarter were approximately 35.8 million. Thank you for your time. I would now like to turn the call back over to David.

[David Carroll:]

Thank you, Dave. And thank you everyone for your time this morning. I would now like to turn the call over to the operators, so we can open up the line for any questions.

[Operator:]

Thank you. [Operator Instructions] We'll take our first question from Yigal Nochomovitz with Citigroup.

[Yigal Nochomovitz:]

Hi, guys. Thanks for taking the question. David on Zimura, just going back to the data from the dose escalation study where you had a dose dependent impact on visual acuity. Do you have any data on what happened to those patients after Zimura was withdrawn? Obviously the idea being that you would see a material drop in visual acuity with withdrawal of Zimura? Thanks.

[David Guyer:]

Yes. Thanks, Yigal, I’ll have Kourous answer that.

[Kourous Rezaei:]

We do not have any information after the discontinuation of the trial. It’s only during the clinical trial as you know they got more intense dosing at the beginning and then they get less, they get only two dosages over I think it’s every 12 week afterward and at that point there would be no [indiscernible] on and off effect. But at the conclusion of the trial of the patients, we do not have any follow up after that.

[Yigal Nochomovitz:]

Okay. Thanks. And then with regard to the Roche study for lampalizumab obviously in the MAHALO study they showed a better effect in the complement factor I positive patients, but not in the CFI negative patients. So if it turns out that that the Roche study is positive but it's driven by CFI positive what is the evidence that you have for Zimura that could suggest activity in CFI negative patients which would offer a development opportunity, do you have any data there? Thanks.

[Kourous Rezaei:]

At this moment we do not have any specific data based on genetic analysis, but obviously if there is any specific data regarding any specific gene expression in their data, we may definitely look into that.

[Yigal Nochomovitz:]

Okay. And just one question on the financials. What percent of the 2017 budget have you allocated, this is I guess for David, have you allocated to biz dev opportunities or strategic initiatives? Thank you,

[Glenn Sblendorio:]

Yigal, it's Glenn, I’ll take that. It's essentially people cost at this point. If we get into a situation where we're looking at specific data issues we may hire consultants. I would say the number overall is relatively small. If you look at those potential incremental cost that we have put aside some money for both, obviously internal resources devoted to it as well as some third party costs. But the number is small. I will tell you that a large portion of the folks that do remain would be involved in business development because it really covers the whole range, things like CMC, clinical, clinical operations regulatory, business development, project management. So a lot of that those folks do remain small group and they would be looking at opportunities.

[Yigal Nochomovitz:]

Okay. Sorry, I guess I meant, I meant with respect to you know what kind of dollars you would invest in purchasing assets, i.e., in a way of an upfront?

[Glenn Sblendorio:]

I thought you were talking about that. It depends, I mean I don’t know if we can provide any guidance on that right now. Obviously we have the cash balance [indiscernible] cash to any business development opportunity. So I think the only time we could answer that is once we identify a specific opportunity.

[Yigal Nochomovitz:]

Okay. Great. Thank you.

[Operator:]

We'll take our next question from Anupam Rama with JPMorgan.

[Anupam Rama:]

Hey, guys. Thanks so much for taking the question. I mean, I was just hoping to push a little bit on you know, if you could walk us through how you're thinking about timing of the strategic review and if there are some internal goals on the timeframe in which you hope to complete this? Thanks.

[David Carroll:]

Again as we mentioned, we don't have a specific date, but it obviously is a priority to the company and to the Board to get clarity around future direction. I think the only thing I can mention on timing is that there is a sense of urgency and also to do the right thing for the company and shareholder. So we don't have a specific date, but I will tell you it is a top priority to come to an answer as quick as possible, you know, the Board is actively involved in discussions with us all the time on that.

[Anupam Rama:]

Great. Thanks so much for taking the question.

[Operator:]

We'll take our next question from Yatin Suneja with SunTrust.

[David Fang:]

Hi, guys. This is David on for Yatin. Thanks for taking my question. Could you just maybe talk about your expectations for the upcoming top-line data from the 3rd Fovista Phase III trial? I guess the investment expectations for these results are pretty low given the disappointing data from the first two trials. What would you do if the 3rd Fovista trial reads positive?

[Kourous Rezaei:]

The question is what the company do if the Phase III trial OPH1004 is positive?

[David Fang:]

Right. And I guess, what are your expectations for the upcoming data?

[Kourous Rezaei:]

Well, if the clinical – the OPH1004 is positive then we may consider doing another trial to confirm the outcome.

[David Fang:]

Would you say the - I guess, current cash is - do you have enough cash to conduct a second pivotal trial then in combination with Eylea and Avastin?

[David Guyer:]

David, I think the question is, one, we would obviously have a discussion with the regulators both here in the United States and Europe first to get guidance as to what the path forward. It may include a second trial, and if you remember, we do have a partner ex-US for this. I think once we have the guidance on any additional investment that's needed we can answer that question more – with more certainty. But you did see our cash balance today, I don't want to say, we can’t answer at this point whether it’s sufficient or not, but I think we need the guidance from regulatory agencies as to what the path going forward then we can answer question on capital.

[David Fang:]

Okay. Thank you.

[Operator:]

And we have no further questions in queue at this time. I will now like to turn the conference back over to our speakers for any additional or closing remarks.

[David Guyer:]

Great. Thank you all very much for you interest and time and we will end the call now. Thank you.

[Operator:]

And this does conclude today’s conference call. Thank you all for your participation. And you may now disconnect.