IVERIC bio, Inc.
Q3 2017 Earnings Call Transcript

Published: 8 Nov 2017

[Operator:]

Good day, and welcome to the Ophthotech Corporation Third Quarter 2017 Results Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over the Kathy Galante, Vice President of Investor Relations. Please go ahead.

[Kathy Galante:]

Good morning, and welcome to our third quarter 2017 earnings call. Representing Ophthotech today is Mr. Glenn Sblendorio, Chief Executive Officer and President; Dr. David Geyer, Executive Chairman; Dr. Kourous Rezaei, Senior Vice President, Medical Strategy; Mr. Dave Carroll, Chief Financial Officer; Mr. Keith Westby, Chief Operating Officer; and Vishal Kapoor, Head of Business Development. I would like to point out that you can access the Company’s updated corporate presentation by going to the Events section of our Investor Relations page on our website. I would like to also remind you that today we will be making statements relating to Ophthotech’s future expectations regarding operational, financial and development matters, including statements regarding the implementation of our strategic plan, our projected use of cash and cash balances; the timing, progress and result of clinical trials and other development activities; and the potential for our business development strategy, including any potential in-license or acquisition opportunity. These statements constitute forward-looking statements for purposes 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 conduct of clinical trials, availability of data from clinical trials, expectation for regulatory matters, need for additional financing and negotiation and confirmation 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 this morning, November 8, 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 time 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:]

Thank you, Kathy, and good morning, everyone. We really appreciate you joining our call this morning. Our strategy is to become a leading company in developing treatments for age-related and orphan indications in the eye. We are developing Zimura, our complement C5 inhibitor for the treatment of both age-related and orphan indications impacting the retina. Further, we continue our search for new BD opportunities to supplement the strategy with focus and vigor. I’d like to give you an update on our Zimura program, which is moving ahead at full speed, and we are on track to have four clinical programs up and running in different ophthalmic indications before the end of this year. These programs include diseases with multibillion-dollar markets, such as geographic atrophy, secondary to dry age-related macular degeneration and wet AMD, as well as our other indications, including idiopathic polypoidal choroidal vasculopathy in our lead orphan indication in autosomal recessive Stargardt disease. During the past quarter, two competitors announced conflicting data from their clinical trials assessing the impact of their complement inhibitor agent on the growth of geographic atrophy in patients with dry age-related macular degeneration. Accordingly, in their respective press – according to their respective press releases, the agent that blocked all three pathways met its endpoint; while the other agent, which only blocked the alternative pathway upstream, did not. The new inhibitor complement factor C5, which is generated by all three pathways and is an enforcer of the complement system leading to cell death. We are developing Zimura because we believe that blocking all three pathways may be necessary for successfully slowing down the growth of geographic atrophy and preventing the progression of the degeneration in dry AMD. Therefore, we are excited about our competitors’ results, which appear to validate the importance of blocking all three pathways in this devastating and debilitating disease. Recent scientific data further reinforces our conviction in the potential of complement C5 inhibition in patients with geographic atrophy secondary to dry AMD. From our perspective, an additional advantage of Zimura is its safety track record for more completed clinical trials in both dry and wet AMD. In a moment, I’ll ask Kourous to provide a more detailed discussion regarding the complement cascade as well as the role of C5 in relation to the inflammasome and membrane attack complex formation and the potential role of C5 as a therapeutic agent. Our strategy to leverage our in-house expertise in retina, together with the expertise of our robust clinical operations team, enable us to focus on developing Zimura in both age-related and orphan retina diseases, generating multiple potential opportunities to create value for our shareholders. We are aggressively moving forward the company with these potential clinical programs, and David will provide an overview in a moment. While progressing the development of Zimura, we are continuing our business development efforts to identify and potentially obtain rights to additional products, product candidates and technologies that would complement our strategic goal to be a leading company in developing treatments for age-related and orphan diseases of the eye, helping patients with these devastating conditions and creating again value for our shareholders. I’d like to now turn the call over to Kourous, who will describe in more detail the science behind our efforts to move Zimura forward in the treatment of eye diseases.

[Kourous Rezaei:]

Thank you, Glenn, and good morning, everyone. Geographic atrophy, the end stage of dry age-related macular degeneration, is a disease signified by degeneration of retinal tissue leading to loss of vision. Scientific evidence has been nominal in the recent years, implicating the role of complement activation in the degeneration of retinal tissue. The complement pathway plays a crucial role in regulating the innate immune system. It is a complex cascade with around 40 variables involving three different pathways, which all converge to activate the complement factor C5 and resulting its cleavage generating C5a and C5b. It has been shown that C5a is involved in planning the cells for inflammasome activation, while C5b is involved in the formation of membrane attack complex, or known as MAC. The end product of both inflammasome upregulation and MAC accumulation is cell degeneration and cell death. Under normal circumstances, complement activation is utilized by the body as a protective mechanism against invading bacteria and organisms that cause infection and tissue damage. However, this circulation of the complement system can also lead to its upregulation and result in damage to the host tissue. Reports in peer-reviewed scientific journals have demonstrated that postmortem eyes from patients with geographic atrophy have signs of complement activation with inflammasome upregulation and MAC accumulation. This has been specifically shown in retinal pigment epithelium cells or RPE cells in the back of the eye. This degeneration in turn will result in the death of photoreceptors, the cells responsible for our vision. The presence of multiple variables in the complement cascade also provides many opportunities to inhibit its activation and potentially prevent the complement-induced cellular degeneration in the eye. We believe that in a complex pathway, the focus downstream and closest one is to where activation is taking place, in this scenario, the C5-induced cell death, the better it is. The human body is very versatile in finding compensating mechanisms of action. And if one is too far upstream or too selective, then one may not end up being as effective. Obviously, in biologic systems, a fine balance needs to be reached between safety and efficacy, and one may not want to completely turn off the immune system inside the eye because the eye is an immune-privileged organ. And from clinical experience, we know that it does not respond well to infections such as [indiscernible] Further, it has been reported that the expression of a certain complement protein could lead to leakage and angiogenesis. The recent efficacy and safety results reported by our competitors in their press releases further confirmed our thought process and convinced us that we’re inhibiting the right target in the complement cascade for the treatment of geographic atrophy secondary to dry AMD. I will now turn the call over to David Guyer to provide you an overview of our clinical programs. David?

[David Geyer:]

Thanks, Kourous. Recent clinical data, together with the continuous growth of scientific evidence implicating complement in C5 in various retinal diseases has further invigorated our enthusiasm for the therapeutic potential of Zimura. We have modified our ongoing Zimura clinical trial for the treatment of geographic atrophy, or GA, secondary to dry AMD. Our ongoing randomized, double-masked, sham controlled Phase IIb clinical trial is designed to assess the safety and efficacy of the Zimura monotherapy in patients with GA. We have modified the design of the trial to accelerate the anticipated time line for obtaining top line data. We reduced the number of patients we plan to enroll to approximately 200, and we have shortened the time point for attaining the primary efficacy endpoint, which is the mean rate of change in GA over 12 months. The number of sites has also been expanded within the U.S. and globally to expedite enrollment. Patients will be treated and monitored for 18 months. The modified study design incorporates patients that were already enrolled in the study prior to these modifications. A range of Zimura dosing regimens will also be assessed. The company submitted the modified Phase IIb clinical trial protocol to the FDA early in the fourth quarter of 2017. Initial top line data is expected to be available during the second half of 2019. Let’s turn our attention now to our Zimura program for wet AMD. In our already completed Zimura wet AMD Phase I/IIa study, patients received six monthly intravitreal injections of Zimura in combination with Lucentis 0.5 mg. In the high-dose group, 60% of treatment-naive patients gained greater than or equal to three lines of vision, which is generally accepted as meaningful visual gain and which is higher than what is generally seen with anti-VEGF monotherapy. All doses were well-tolerated with no adverse events considered to be related to the study drug. Our trial had a small sample size consistent with the Phase I/IIa study and no controls, so while potentially a signal, these findings clearly need to be further validated and, therefore, we are currently conducting an ongoing dose-ranging, open-label Phase IIa clinical trial with Zimura in combination with Lucentis in treatment-naive patients with wet AMD. These patients have not been previously treated with any anti-VEGF agents. We expect to enroll approximately 60 patients and plan to evaluate various endpoints at month six. Based on the anticipated enrollment rate, initial top line data from this trial would be available by the end of 2018. Clinical sites have already been identified and activated with patients already being treated. We remain on track to initiate our clinical trial of Zimura for the treatment of autosomal recessive Stargardt disease before the end of this year. Autosomal recessive Stargardt disease is an inherited orphan retinal disease leading to vision loss during childhood or adolescence. There are currently no FDA or EMA approved treatment options available, and autosomal recessive Stargardt disease remains a significant unmet medical need. We expect to enroll approximately 120 patients globally in the Phase IIb trial, making this one of the largest interventional clinical trials in Stargardt disease to date. For the primary efficacy endpoint, we are planning to evaluate an anatomic endpoint as measured by spectral domain optical coherence tomography, SD-OCT, as the primary endpoint, which will be assessed at 18 months. Initial top line data is expected to be available in 2020. The planned size of approximately 120 patients for this Phase IIb screening trial was determined based on a number of patients that we believe could potentially be enrolled within a reasonable period of time. Based on the actual enrollment rate during the trial, this number may be increased or decreased. As autosomal Stargardt disease is an orphan indication, to our knowledge, there is no natural history data currently available regarding the variability for our planned primary efficacy endpoint in the autosomal Stargardt disease patient population we plan to enroll in this trial. In addition, we have not studied Zimura in Stargardt disease previously, and so we do not have any clinical data regarding its potential effect in this indication. Based on this information, this trial could be underpowered to demonstrate a potential clinical benefit for Zimura in this indication. We are also planning to initiate an open-label Phase IIa clinical trial evaluating Zimura in combination with anti-VEGF therapy for idiopathic polypoidal choroidal vasculopathy, IPCV, in age-related eye disease involving the choroidal vasculature characterized by the presence of polypoidal lesions, which leads to vision loss. This trial is on track to initiate within the next few weeks. Initial top line data is expected in the second half of 2019. We want to leave enough time for Q&A, so I’ll now turn the call over to Dave Carroll, who will briefly review the company’s second quarter 2017 results.

[Dave Carroll:]

Thank you, David. I’d like to highlight a few items from our press release this morning and also update our expected year-end cash balance. For the quarter, our net income totaled $189.1 million or $5.25 per share compared to a net loss of $60.9 million or $1.71 per share for Q3 2016. This increase is primarily due to a $205 million increase in collaboration revenues as we completed all deliverables required under our Novartis Agreement. In October, this agreement with Novartis ended. We do not expect any additional revenues for 2017. Year-to-date, our net income totaled $123.7 million or $3.44 per share compared to a net loss of $127.1 million or $3.59 per share for 2016, again due to an increase in collaboration revenues. Turning to our cash balance. Our cash balance at September 30 was approximately $180 million as our increasing collaboration revenues had no impact on our cash balances. The company expects its 2017 year-end cash balance to range between $155 million to $165 million, excluding any potential business development activities or any other changes to the company’s current clinical development programs. This range reflects the impact of our age-related development programs for Zimura and Fovista, including the wind-down of the Fovista Phase III trials. We expect the incremental cost in advancing our ongoing and new clinical programs for Zimura, the next phase of clinical development will range between $25 million and $35 million, much of which will be incurred after 2017. We believe that we have sufficient resources to accomplish these goals. Finally, we expect to substantially complete our organizational restructuring in the fourth quarter. We expect our cash corporate overhead expenses, including personnel costs, to continue to decline and to be less than $2 million per month. I’ll now turn the call back over to Glenn. Thank you for your time.

[Glenn Sblendorio:]

Thanks, Dave. I’d like to thank all of you for listening to our call today. We have a clear path forward with a specific focus on indications in the back of the eye and orphan diseases. Our strategy does start with Zimura, and we’re excited to have four clinical development programs underway before the end of this year. As we roll out the trial designs for wet and dry AMD, Stargardt disease and IPCV, our initial reception from clinical investigators has been very positive and encouraging. We intend to continue these discussions next week at the American Academy of Ophthalmology, and we’ll keep you apprised of the progress as we move forward. Thank you again, and we’ll now turn it back to the operator for Q&A.

[Operator:]

Thank you. [Operator Instructions] We will take our first question from Yigal Nochomovitz with Citibank.

[Yang Huang:]

Hi, this is actually Yang on for Yigal. Can you hear me?

[Glenn Sblendorio:]

We can hear you.

[Yang Huang:]

Yes, thanks for taking my questions. I have two. So the first question, can you remind us what was the mean visual acuity increase in your completed Phase I/IIa for the combo? And how does that data compare to Lucentis’ monotherapy in their – in Lucentis’ earlier trials? Thank you.

[Kourous Rezaei:]

Could you please repeat the question one more time?

[Yang Huang:]

I mean, can you remind us what was the mean visual acuity in your completed Phase I/IIa for the combo study? And how would that data compare to Lucentis’ monotherapy in Lucentis’ earlier trials?

[Kourous Rezaei:]

Yes. I don’t have that information on the top of my head at this point. But I can get it to you during this call and get back with you.

[Yang Huang:]

Okay, sure. My second question is, so you already completed a Phase I/IIa trial, and can you tell us what is the main difference between the new trial and your completed trial, I mean, the new Phase IIa trial?

[Kourous Rezaei:]

That’s a good question. Number one, we wanted to revalidate the results from that original trial one more time in another trial. And we are doing additional dose-ranging studies in this new trial, looking at additional dosages to look at the impact.

[Yang Huang:]

So can you tell us what the dose range is going to be in your new trial?

[Kourous Rezaei:]

No, not at this point.

[Yang Huang:]

Okay. Yes, thanks for taking questions.

[Operator:]

[Operator Instructions] Okay, we’ll turn it back to today’s speakers.

[Glenn Sblendorio:]

Okay, thank you again. We look forward to continued dialogue with you in the fourth quarter as we initiate these trials, and appreciate the interest. Bye-bye.

[Operator:]

This does conclude today’s call. Thank you for your participation. You may now disconnect.