EyePoint Pharmaceuticals Inc (EYPT) 2022 Q1 法說會逐字稿

Good morning. My name is Josh, and I'll be your conference operator today. At this time, I would like to welcome everyone to the EyePoint Pharmaceuticals First Quarter 2022 Financial Results and Recent Corporate Developments Conference Call. (Operator Instructions) Please be advised that this call is being recorded at the company's request.

I would now like to turn the call over to George Elston, Chief Financial Officer of EyePoint Pharmaceuticals.

Thank you, Josh, and thank you all for joining us on today's conference call to discuss EyePoint Pharmaceuticals' First Quarter 2022 Financial Results and Recent Corporate Developments. With me today are Nancy Lurker, President and Chief Executive Officer; Dr. Jay Duker, Chief Operating Officer; and Scott Jones, Chief Commercial Officer. Nancy will begin with a review of recent corporate updates. Dr. Duker will then discuss clinical plans for EYP-1901, and Scott will comment on our Q1 2022 commercial performance. I will close with commentary on first quarter financial results, and then we'll open up the call for your questions.

Earlier this morning, we issued a press release detailing our financial results as well as commercial and operational developments. A copy of the release can be found in the Investor Relations tab on the company website, www.eyepointpharma.com.

Before we begin our formal comments, I'll remind you that various remarks we will make today constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments and regulatory matters and time lines, the potential success of our products and product candidates, financial projections and our plans and prospects.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC and other filings that we may make with the SEC in the future. Any forward-looking statements represent our views as of today only. While we may elect to update those forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

I'll now turn the call over to Nancy Lurker, President and Chief Executive Officer of EyePoint Pharmaceuticals.

Thank you, George, and apologies for my horse voice, I'm still getting over a cold. So Good morning, and I do want to thank you for joining us to discuss the very solid progress EyePoint made in the first quarter of 2022. Our team has maintained the positive momentum we had in 2021 and now into 2022, and the company continues to be well positioned to create long-term value for our shareholders, particularly should subsequent clinical trials for EYP-1901 report out positively.

We are keenly focused to execute on our goal of becoming the leader in ocular drug delivery. In the first quarter, EyePoint presented additional validating clinical results of our ongoing Phase I trial for our lead pipeline program, EYP-1901, while simultaneously advancing 2 strategic corporate initiatives, refinancing our debt and our just announced enhanced agreement with Betta Pharmaceuticals. We also made important leadership hire that position the company for long-term successful growth that encompasses our overarching mission of improving the lives of patients with serious eye disorders and bringing our innovative products to patients in the United States and around the world.

Prior to turning the call over to my colleague, I'd like to highlight a few of our achievements in 2022 so far. I'm incredibly pleased with the team's consistent execution of our Phase I DAVIO clinical trial for our lead pipeline asset, EYP-1901 in wet AMD. As many of you know, wet AMD is a serious and potentially devastating eye disorder accounting for approximately 90% of all AMD related blindness. But despite these safe and effective FDA-approved medications on the market, treatment adherence remains an ongoing challenge for patients and physicians. Currently, most patients with wet AMD are treated every month or every other month with eye injections.

EYP-1901, which is a combination of the small molecule TKI vorolanib and our proprietary bioerodible drug delivery technology, Durasert has the potential to transform the currently burdensome treatment paradigm for many wet AMD patients. EYP-1901 may be able to provide the substantial benefit of a longer duration between physician office visits and eye injections of up to 6 months while maintaining stable visual acuity and macular anatomy. We believe based on our interim Phase I DAVIO clinical trial results, that a majority of patients can potentially be maintained with EYP-1901 for up to 6 months with no supplemental therapy after an initial induction period with traditional anti-VEGF drugs.

Under this treat to maintain treatment paradigm, EYP-1901 provides a number of potential benefits, a new mechanism of action using vorolanib, an anti-VEGF tyrosine kinase inhibitor, zero-order kinetics delivery that provides consistent stable release of vorolanib and the potential ability to sustain a majority of patients up to 6 months while potentially significantly reducing the treatment burden for patients with wet AMD.

As Jay will discuss in more detail later in the call, we continue to be pleased with the ongoing Phase I DAVIO trial results, which showed positive safety data with no significant inflammation as well as promising efficacy data at the sixth- and now 8-months follow-up so far. We look forward to announcing our 12-month Phase I DAVIO data at ASRS in July of this year. Looking ahead, we expect to initiate our Phase II clinical trial for EYP-1901 in wet AMD in the third quarter of 2022, and we anticipate interim 6-month results in the second half of 2023.

I'd like to thank the entire EyePoint team for the tireless work focused on bringing this innovative technology to as many patients as quickly as possible, and we look forward to sharing additional updates this year on EYP-1901's exciting progress. In addition to advancing the Phase II clinical trial of EYP-1901 for wet AMD, we are preparing to expand this innovative treatment to additional indications with the Phase II study of EYP-1901 for nonproliferative diabetic retinopathy or NPDR beginning in the second half of this year.

Along with our focus on development of EYP-1901 in the U.S., we continue to consider our options for partnering outside of North America. This quarter, we entered into an agreement to develop and commercialize EYP-1901 in China and other selected Asian territories with Betta Pharmaceuticals. This extension of our current partnership was already contemplated as part of our 2020 agreement with Betta, where we secured vorolanib rights, a critical component of EYP-1901. In addition, we expanded our rights to local delivery of vorolanib for all of ophthalmology, including DME. We look forward to continuing our work with Betta, and we also look through additional partnering opportunities outside of North America at the appropriate time.

Regarding our commercial products, we had a strong first quarter with $9 million in net product revenues, an increase of 32% from the first quarter of last year, along with strong customer demand for both YUTIQ and DEXYCU. This strong start to 2022 supports our strategy and the commercial business franchise to achieve breakeven status this year.

Additionally, we wanted to share an update on our Phase III trial of YUTIQ-50, a potential 6-month sustained delivery for posterior segment of the eye. The FDA has recently updated the regulatory requirement for ophthalmic drug and device combination products, such as YUTIQ. These regulatory changes now require EyePoint to complete an additional clinical trial to YUTIQ-50, beyond what was originally communicated for the planned post approval NDA supplement, resulting in a significant increase in the program's anticipated cost.

As a result, we've made the decision to pause enrollment for this study until we can reassess and determine if there's a path forward. I would like to emphasize that this decision is driven by financial considerations only. We still believe in the safety of YUTIQ-50 and its potential clinical utility given the proven track record of YUTIQ-180. Despite this, as an organization, we recognize that we must take a disciplined approach to our pipeline investments and continue to focus our resources on EYP-1901's clinical development.

I'd also like to add that we remain committed to serving the posterior segment uveitis patient community with YUTIQ-180 and learn more about the serious eye disorder to improve patient outcomes through our ongoing YUTIQ CALM registry study, which is the first and only registry trial for posterior uveitis and our YUTIQ Phase IV synchronicity study, which is a prospective open-label uncontrolled 2-year follow-up study designed to evaluate the safety and efficacy of the YUTIQ-180 intravitreal implant for posterior segment uveitis. We plan to update the scientific and patient community on these important studies in the months to come.

As you'll hear from George later on, we remain well capitalized to execute on our pipeline, and we remain focused on EyePoint's financial health and cash runway. This included a debt refinancing in Q1 with Silicon Valley Bank, which provided the company with a significant interest rate improvement, resulting in approximately $2.8 million of annual interest savings.

Finally, we made important leadership appointments in the first quarter, building out our growing team with 2 new industry veterans. Earlier this year, we were very pleased to announce the appointment of Michael C. Pine as Chief Corporate Development and Strategy Officer. He brings more than 20 years of business development and strategy experience to EyePoint Pharmaceuticals, and we are thrilled to have him on board during this exciting time in the company's evolution. Recently, EyePoint also appointed Isabelle Lefebvre as Chief Regulatory Officer. Ms. Lefebvre brings over 30 years of global regulatory affairs experience across all phases of drug development, especially in ophthalmic conditions, and we look forward to receiving her guidance on FDA-related matters and global regulatory strategy.

I'd like to thank the talented EyePoint team for our company's clinical, operational and financial success to date. As we advance the future of sustained ocular drug delivery, we look forward to executing on multiple near-term clinical catalysts so that we can deliver improved ocular treatment and ultimately create a better future for patients living with serious eye disorders.

I'll now turn the call over to Dr. Jay Duker, our Chief Operating Officer, to provide an update on our lead program, EYP-1901 as well as other pipeline initiatives. Jay?

Thank you, Nancy, and good morning, everyone. Before I begin, I want to reiterate what an exciting time this is as our team is poised to execute on multiple clinical catalysts this year as we advance our pipeline. As Nancy stated earlier, we are quite pleased with the results of our Phase 1 DAVIO clinical trial for our lead pipeline program, EYP-1901, an investigational sustained-release delivery treatment for wet age-related macular degeneration being studied as a maintenance therapy following induction therapy with an anti-VEGF, a therapeutic approach, which we refer to as treat to maintain. The largest unmet need in the wet AMD landscape is longevity of action of anti-VEGFs.

Our goal is to sustain the majority of wet AMD patients treatment interval up to 6 months or longer after a single injection of EYP-1901, allowing patients and practitioners the flexibility to safely reduce the number of visits to their retina specialists through controlled and sustained intravitreal delivery of an anti-VEGF drug. The recent positive 8-month safety data and efficacy results give us increased confidence that EYP-1901 may have a differentiated profile for safety, efficacy and tolerability in wet AMD.

Before we review the data, I'd like to touch on EYP-1901's use of the Durasert delivery technology and its differentiation from alternatives in the retinal drug delivery landscape. Bioerodible Durasert allows for true sustained release of drug with zero-order kinetics after an initial beneficial burst of medication. In its nonerodable formulation, Durasert has best-in-class track record of proven safety, tolerability and consistent medication delivery. Durasert has been safely administered to thousands of patients across 4 U.S. FDA-approved products and the safety and efficacy results we have seen so far with the bioerodible formulation used in the DAVIO trial, bolster our confidence in this differentiated drug delivery system.

EYP-1901 combines a bioerodible formulation of the Durasert sustained release technology I just described with vorolanib, a small molecule tyrosine kinase inhibitor. Vorolanib binds to the VEGF receptors blocking all isoforms of VEGF as well as PDGF. This is different from the antibody fragmented trap molecules that are the current anti-VEGFs on the market today. These molecules bind VEGF. This differentiated anti-VEGF mechanism of action, coupled with our bioerodible Durasert zero-order kinetics technology could potentially change the treatment paradigm to a much less burdensome approach with EYP-1901, which we have coined treat to maintain.

Turning now to our DAVIO study. DAVIO is a Phase I open-label dose escalation trial that enrolled 17 patients across 4 dose cohorts. All enrolled patients were previously treated with standard of care anti-VEGF therapy, no reinjection with the study drug was performed during the study and typical criteria for supplementation with the standard of care anti-VEGF was employed. Following a positive 6-month data readout in October of last year, we reported positive interim 8-month safety and efficacy data of the DAVIO trial in February at the Angiogenesis 2022 virtual meeting. We're quite pleased with the interim results we have observed so far.

Importantly, we've seen impressive efficacy and durability with over 50% of patients supplemental anti-VEGF free up to 6 months and 41% up to 9 months as well as significant reduction in treatment burden for patients, 79% at 6 months and 75% at 8 months. Additionally, we observed stable visual acuity and central subfield thickness as measured by optical coherence tomography, with the updated 8-month data showing change in best corrected visual acuity of minus 3 ETDRS letters and central subfield thickness change of plus 13 microns.

In addition, the 8-month data highlighted positive safety with no ocular serious adverse events and no drug-related systemic SAEs. Furthermore, no dose-limiting toxicities, no retinal detachments, no cases of endophthalmitis, no occurrences of implant migration into the anterior chamber or any post-year's segment ocular inflammation was reported.

As Nancy mentioned, we planned to initiate a randomized controlled Phase II study of EYP-1901 for previously treated wet AMD in Q3 2022. The wet AMD Phase II trial is expected to enroll 144 patients randomly assigned to 1 of 3 doses -- 1 of 2 doses of EYP-1901, approximately 2 milligrams or 3 milligrams or aflibercept control. The efficacy endpoints are change in best corrected visual acuity, change in central subfield thickness as measured by OCT, time to supplementation and safety.

Looking ahead, we anticipate sharing interim 6-month data for this Phase II trial in the second half of 2023. We are also working to explore the paradigm-changing treatment potential of EYP-1901 in several other severe eye disorders, including diabetic retinopathy, diabetic macular edema and retinal vein occlusion. In the second half of this year, we plan to initiate a Phase II trial of EYP-1901 in nonproliferative diabetic retinopathy.

In addition, we now expect our third Phase II trial employing EYP-1901 in serious ocular disease will be for the indication of DME. Diabetic macular edema is the most common site threatening complication of diabetic retinopathy. We expect to initiate this Phase II trial in Q1 of 2023. We will continue to provide clinical updates on these additional indications throughout the year as our rapidly growing pipeline advances.

I will now turn the call over to Scott Jones, Chief Commercial Officer, for the commercial update. Scott?

Thank you, Jay. We're excited to report a strong quarter for our commercial business with $9 million of net product revenue, an increase of 32% from the first quarter of last year. Our Q1 net product revenue for YUTIQ and DEXYCU was $4.6 million and $4.4 million, respectively. Customer demand was approximately 14,800 units of DEXYCU and 650 units of YUTIQ compared to approximately 13,800 units and 650 units, respectively, in Q4 2021. Customer demand for DEXYCU saw approximately a 7% growth from Q4 2021.

Customer demand for DEXYCU stem from our strong commercial presence and our collaboration with our commercial alliance partner, ImprimisRx, who has assumed full responsibility for U.S. sales and marketing activity for DEXYCU as of January 1, 2022. EyePoint retains the DEXYCU NDA revenue recognition, manufacturing and distribution responsibilities for all markets. ImprimisRx has been a strong partner, and we look forward to continued growth for that franchise.

Customer demand for YUTIQ remains strong due to our ongoing expansion of YUTIQ sales efforts into the retinal community for the treatment of posterior segment uveitis and from an approved siliconized needle that provides preferred procedural experience for physicians and patients. Although demand for YUTIQ was consistent with Q4 2021, it's important to note that historically, first quarter demand numbers usually trend down due to insurance deductible resets for these patients.

We are incredibly pleased by the progress we've made with our commercial businesses and with the performance of our commercial teams. Our mission is to continue to provide the unique sustained delivery system across all platforms that provide -- that requires fewer visits to doctor's office, a key attribute for each product's value proposition for both patients and doctors. We look forward to updating you on revenues and demand in the quarters to come.

I would now like to turn the call over to George to review the financials. George?

Thank you, Scott. As the financial results for the 3 months ended March 31, 2022 were included in the press release issued this morning, my comments today will focus on a high-level review for the quarter. To begin, in the first quarter, we continued our balance sheet focus and entered into a new loan agreement with Silicon Valley Bank to replace our existing CRG credit facility with improved economic terms. The new loan agreement with Silicon Valley Bank provides for senior secured credit facilities in the aggregate amount of $45 million and reduces the loan interest rate from 12.5% to a blended rate of approximately 5%, resulting in an estimated $2.8 million in annualized interest savings.

For the first quarter ended March 31, 2022, total net revenue was $9.3 million compared to $7.3 million in the quarter ended March 31, 2021. This includes net product revenue for the first quarter of $9 million compared to net product revenue for the first quarter ended March 31, 2021 of $6.8 million, an increase of 32%. Net revenue from royalties and collaborations for the first quarter ended March 31, 2022, totaled $0.3 million compared to $0.5 million in the corresponding period in '21.

Operating expenses for the first quarter ended March 31, 2022, totaled $27.6 million versus $18.3 million in the prior year period, primarily driven by an increase in R&D spending, including clinical trial costs for EYP-1901 and investment in personnel across the organization, including noncash stock-based comp. Nonoperating expense totaled $2.7 million and net loss was $21 million or $0.56 per share compared to a net loss of $12.3 million or $0.50 per share for the prior year period.

Cash and investments at March 31, 2022, totaled $190.8 million compared to $211.6 million at December 31, 2021. We expect the cash and investments on hand at March 31, 2022, and expected net cash inflows from our product sales will enable us to fund our current and planned operations into the second half of 2024. In conclusion, we are pleased with EyePoint's progress in the first quarter of '22 and are well capitalized to advance our product pipeline to key value inflection points.

Thank you all very much for listening this morning, and I'll now turn the call over to the operator for questions.

(Operator Instructions) Our first question comes from Georgi Yordanov with Cowen.

Congratulations on all the progress. So maybe just a few on our end. Now that you have the full DAVIO data, appreciating the fact that there's still limited number of patients, but has this data help you better refine the commercial opportunity for 1901? Who you think would be the most optimal patient for a maintenance product like that? And what percentage of the patient population that these patients represent? And then secondly, given the efficacy we've seen from 1901 in DAVIO, what do you see as the main risks to a successful registrational trial? And I guess related to that, what would be the most optimal trial design that could maximize your chances of success while still ensuring you get the durability you've demonstrated so far on the label?

Wow, that's quite a list. Let me see if I can answer an overview, and then I'm going to triage it out to the team here. So -- and your -- if we miss some of your questions, just reiterate them. I would say definitely, as the data continues to come in, of course, it refines our approach because it informs exact better how long this is working. And we remain really pleased with what we're seeing. I mean we're out 9-months on -- which we've reported on rescue, 8 months on overall safety and efficacy. And we continue just to see really good sustainability of treatment.

Now we're going to continue to keep this designed as a 6-month treatment just because we want to be able to capture a majority of patients. And we still believe, obviously, dependent on Phase II results that a majority of patients can be treated with EYP-1901. I want to just elaborate a bit on this treat to maintain approach that we're taking. It's important to understand that we're not here to replace current anti-VEGF. They are very effective and safe. The problem, as we all know, is they're not as durable and long acting as patients really need, particularly given the fact patients have to keep coming in all the time to doctor's offices to get their eyes injected, which is a real burden.

So the goal is to be able to first go ahead and induce your patients with an anti-VEGF if the eye is cleared up as possible. And then you can put in EYP-1901, maintain that patient, so treat to maintain for, we hope, a majority of patients up to 6 months. And then for some patients, though, who may be particularly resistant to anti-VEGF therapy or they just can't get rid of all the fluid, you can supplement as needed with existing therapies. So that is -- and again, because we have 2 different mechanisms of action on board, there is often a benefit could be. I want to put caveats. We don't know everything yet, to having 2 different mechanisms of action at work on the eye.

So we think there's a lot of benefits for patients. We continue to have a group headed up by Scott. I'm going to let him comment just a bit. We just launched a new group for early commercial development and Scott and his team's task is to begin to more fully understand the commercial opportunity and what we need to do to more appropriately develop that commercial opportunity because it is a new treatment paradigm. So you need to change some of the current mindset. I'm now actually -- and then we'll get back to the regulatory trials in just a moment. I'm going to ask Dr. Jay Duker to comment and then Scott on the commercial opportunity.

Yes. Thanks, Nancy, and I think you covered things well. I'd probably just add a few more thoughts based on the DAVIO results. Georgi, you asked what percentage of what AMD patients would benefit from this treatment. And the way I would answer that is based strictly on the 17 patients from DAVIO, one would extrapolate that the market would be at least 85% of wet AMD. Now what I mean by that is there is a clear-cut benefit to about 85% of the patients who enrolled in the trial, either they didn't require any supplemental anti-VEGF or if they did require supplemental anti-VEGF, it was at a very reduced rate compared to prior to enrollment.

Now I think we can speculate in more of a broad spectrum of wet AMD patients, not the spectrum we enrolled in DAVIO that the benefit might be greater than that. But again, that's speculation. That's why we're doing a Phase II trial to see in a broader population of wet AMD patients than what we enrolled in DAVIO, how -- what percentage is going to benefit. And we're optimistic that, that benefit will be a majority of patients.

Major risks. Major risks of any trial are safety and efficacy at a very high level. The good news is in -- with n = 17, we really had no safety issues. Of course, that's a small number. We're confident though that safety will probably not bubble up to be a problem, and the confidence stems from the experience with Durasert in tens of thousands of patients, number one. And the safety of vorolanib, both preclinical and so far in patients. I have to say that that in our preclinical studies, we haven't been able to find a maximally tolerated dose in animals for EYP-1901. And I think that would be a safe thing to say n = 17 from the Phase I that we didn't find an MTD in humans either.

So, so far, it looks safe. Again, anything can happen as you expand these trials. From an efficacy perspective from the risks, #1 thing we're trying to hit here is noninferior visual acuity compared to Eylea. And it's -- that's the primary endpoint. And looking at the DAVIO trial and again trying to extrapolate over 6 months, we're optimistic that, that's a value that we'll be able to statistically meet. But obviously, that's the big risk as well that in this population or with whom you enroll that you won't be able to achieve that. But certainly, extrapolation would suggest that we have a very good chance.

Last question was around trial design. And once again, the trial design is an iterative process. When we get more data and the data suggests that a trial should be designed in a specific way, that's the way we go. Now our wet AMD Phase II DAVIO II trial is really on target to start in the third quarter of this year. The protocol is set and that protocol and inclusion/exclusion criteria was largely influenced by the patients that we saw who did well in DAVIO I and those who didn't. And I think those inclusion/exclusion criteria will reflect that. So I hope we covered everything. And I think if there's any commercial comments, perhaps Scott can weigh in.

Scott, go ahead.

Sure. Thank you for the question. And as Jay said, I think there -- we're still examining the exact percent of patients, but certainly a large percent of the currently treated patients we believe will be correct for our potential therapy. But just to take a step back to think about why there is such a need for this in the marketplace. As you know, that's current AMD, DME, DR, it's a very large market. But if you think about what's going to occur in the next several years, we have an aging population. We have an expansion of the number of patients with diabetes. We currently have a very undertreated diabetic retinopathy market, and the number of retina specialist isn't expanding appreciably to be able to meet those needs.

So the demand for a more durable therapy, we think it's -- we're just meeting a need that is growing every day. So we certainly think there is just an enormous opportunity for us to build and bring a durable therapy to the marketplace. But again, as Jay said, we are currently evaluating which patients we believe will be the most appropriate as we move forward. And certainly, we'll have more information to come in the coming years.

Hopefully, he has answered all the questions, Georgi.

Really comprehensive. Really appreciate it. And congratulations again on all of this.

Our next question comes from Yatin Suneja with Guggenheim.

Congrats on the results. Just a couple for me. First is on the 1901 Phase II study. Just I think one of the confusion out there is that I think we and investor community is used to thinking about Eylea or other injection as a comparison. So just help us understand what is the right comp. To us, it seems like port delivery study that was run by -- run with Lucentis might be the right comp to think about how you are conducting the Phase II study. Can you maybe comment on that? Is that the right way to look at it? And then obviously, the study is going to start in Q3. Can you talk about how long it might take for you to report the interim data? Any ballpark you could give on the enrollment and data read out time frame, that would be very helpful.

Sure. No problem on that. Jay, why don't you take those questions?

Sure. So Yatin, thanks for the questions, and as usual, very insightful. The first is a comparison of our trial. And I would say at a high level, the primary endpoint of noninferior visual acuity is what has been used in all the recent wet AMD trials. Once you have a standard of care, and the standard of care was Lucentis initially, that was what the comparison needed to be, and that's how the trials were designed. Noninferior margins were determined by the prior studies, by the size of your study and the statistics involved. So at a very high level, one could look at any of the recent studies that were noninferior visual acuity.

However, as you point out, we're looking at a different patient population. The only previous trial that looked at a non-naive patient population for maintenance therapy was the port delivery system. So in some ways, the port delivery system trials would be in some ways comparable to the patient population that we're enrolling. However, their control group was monthly Lucentis and our control group is monthly Eylea times 3 and then EYLEA every other month after that. So we have a bit of a different control group as well with a different treatment interval.

And I'd also like to point out that given that Eylea will be dosed after the first 3 months, as every other month, there is the potential for anti-VEGF supplemental in our control group, which I believe is a bit unique for any of these studies. So while there are comparisons to many of the previous wet AMD trials, I'd say, given the patient population, the longevity of action of our drug, the rescue criteria, there are always going to be some differentiation.

So -- but at a very high level, what we're trying to do is inherently different than what some of our previous anti-VEGF molecules have been trying to do, which is, again, as Nancy pointed out at the beginning, we're not necessarily replacing Eylea or faricimab. We are working to maintain the gains that those drugs give patients initially over the long term because we're sustained release, which helps to account for patients who can't make it back for visits or extended intervals that have been extended beyond perhaps what might be safe.

Because we know in the real world, patients with these branded drugs still over the year or 2 into their disease lose much of the visual gain that they had. So there's a definite unmet need out there for continuous treatment, and that's what we aim to provide.

Yes. Let me just also add on to your last question, Yatin, which was -- we expect that we will report out the Phase II wet AMD results in the second half of 2023. So we're on track with this, of course, timing of all the patient to be enrolled is still a variable, but we're pulling out all the stops to enroll as quickly as possible. And as we stated earlier, we're on track for third quarter of this year to enroll our first patient.

Got it. Just one more question, if I may. With regard to the update on the YUTIQ-50 that you're pausing the study, what exactly -- can you just provide a little bit more detail on what exactly FDA asked us to do that may be driving the cost of this program?

Yes, good question. As again, some people may know, but others may not. The FDA recently issued new guidance related to drug device combinations. This new guidance was as a result of a lawsuit that was filed by another company against the FDA on their particular product, and it's called the Genus decision that was handed down by an appellate court. As a result, the FDA issued new guidance. And as a result of that, for some products, they want more studies to be done. And that's the case with YUTIQ-50. So instead of one study, they're requiring now 2 studies. We don't see any impact right now on EYP-1901 because we already are anticipating that we will be doing multiple Phase III pivotal studies.

So we don't see any impact on the EYP-1901. Unfortunately, we had planned for one study on YUTIQ-50 and the guidance is now that we have to do 2 studies. So as you can imagine, YUTIQ is a nice, steady, consistent product growing very nicely in revenues, but it's never going to be a huge drug if at all often said. It is going to deliver some nice profit to the bottom line over an extended period of time because we don't have to put a lot of money into it. However, these are not large drugs. And so as a result, the cost of doing another Phase III study for YUTIQ-50 may become problematic for us to see the ROI on YUTIQ-50.

Got it. So basically more of an ROI or NPV decision. It seems like 2 studies, but given that for 1901, you will be required to do multiple study till it get approved, should not have any read-through, right?

Yes, exactly. And again, let me just reiterate. This is strictly a financial decision on YUTIQ-50. It has nothing to do with YUTIQ, nothing to do with what we believe the benefit of a 6-month steroid delivery is for uveitis. However, again, that's our -- uveitis is not a large category. It's an orphan disease. And as we've always said, probably YUTIQ-180 will probably hit maximum revenues of $80 million to $100 million over time. YUTIQ-50 is a subcategory of that. So when you do the ROI, it's just very hard to do that with 2 pivotal Phase III studies. But again, we see no impact on 1901.

Our next question comes from Jennifer Kim with Cantor Fitzgerald.

Congrats on all the good work this quarter. And Nancy, I wish you a fast recovery from your cold. I have a few questions here. Maybe to start off, I think you mentioned that you're going to present 12-month data at ASRS. Given the 6 months is the sweet spot, like you said, what kind of additional takeaways are you hoping to see in that 12-month data?

Yes. That's a great question. Jay, why don't you take that?

Yes. So I'll start by saying first of all, again, the Phase I trial is primarily safety. So we want to make sure that there's no longer-term safety issues, not that we expect any. Certainly, if you have a problem that's injection related, you'd expect it early in the study. If you have a problem that's dose related, once again, because of the burst of vorolanib that we get in the first few weeks, we would have expected that early in the study. We didn't see either of those. So while we wouldn't anticipate any new safety issues in the last 3 months of the study, we want to make sure that none exists. That's number one.

Number two is we didn't reinject 1901 during this study. And so based on the preclinical and animal and in vitro data, we would expect the implants to release in humans for approximately 9 months. So we would expect in some patients to get that longevity of action that we saw with 41% supplemental anti-VEGF free up to 9 months. But as the implants run out, we would expect a reactivation of the disease and need for supplementation, although not necessarily immediately. Remember when you give an Eylea or Lucentis shot, that drug might be out of the eye in weeks, but some patients can go 2 or even 3 months between injections. And so we would expect to see somewhat of the same as the drugs run out.

So while from a safety perspective, we would very happy to see minimal, if any, safety issues really in the first few months. We want to confirm that through the year. And with respect to efficacy, again, we -- as we've said and as I think you know, we're really anticipating going for a label of every 6 months in the pivotal trials. So one could argue that the efficacy data beyond 6 months may not be useful, except I will again remind you that retina specialists are happy to allow patients to go longer than the label if they deem it safe. So while we may have a label of 6 months in some patients, which was 41% in DAVIO, we were able to go 8 and up to 9 months without supplement. And so that data is important to clinicians. So even though they might be able to reinject it 6 months in certain patients, they may choose to extend that a little bit longer.

Okay. Great. And maybe another question. On your license agreement with Betta, is there any color you can give on the exact terms of that deal? And on a related note, with your amended agreement with Equinox, I guess, is the biggest takeaway there that you're now able to plan that Phase II trial in DME? And are you still planning to look into the RVO opportunity? Or has DME sort of taken the priority over that?

Yes. Let me answer that. So as for Betta, we're very pleased to have the extension of our partnership with them. As you may recall, we struck that agreement in 2020 where we in-licensed vorolanib. What we've always anticipated, and that was part of the original agreement is that they would have the ability to negotiate for rights to China. That was all anticipated as well as part of the payments and milestones that we owe them. In exchange, of course, that was some reduced payments in exchange for them gaining rights to 1901. So we won't go into the details of that. But suffice it to say, it gives them now the formal rights to 1901 in China. And of course, there's your typical royalties and milestones that they will pay us for that as well.

In addition, back to DME, yes, it now gives us rights to all of ophthalmology indications delivered locally with vorolanib around the world outside of China. And we are now going to prioritize, as Jay may have mentioned, I believe, in his comments that DME will now be done first before -- excuse me, before retinal vein occlusion. So we'll do wet AMD in the nonproliferative diabetic retinopathy, and the thinking now is we'll do DME as a third study that we'll initiate. We certainly would still think about RVO. We have to be careful, obviously, of our capital management. The timing of RVO is yet to be determined, but we do expect that we should be able to initiate a DME trial sometime early next year.

Okay. That's helpful. Yes. That's perfect. One last quick question. Just on YUTIQ-50. Is there anything -- I know it's just a sort of a small single trial, but is there anything that we should think about in terms of modeling costs now that the trial has been put on hold?

George, why don't you answer that?

Yes. I think the -- certainly, the near-term benefit is we're probably going to reduce that spend over the next 12 to 18 months. We'll probably pick up $4 million to $5 million in anticipated spending that we won't spend. So that does certainly help our cash runway in the near term. And -- but even though our cash guidance is unchanged from last quarter, which is into second half of '24, that also assumes that we're starting the Phase II in DME in the first quarter of next year. So it's a cash pickup near term, which is good news in this environment.

And Nancy, I had one more thing about it, which is there's some, what I might deem minor, indirect benefits, which is the clinical team. Although these 2 studies weren't large studies, they were still studies we needed to track and therefore, they can focus more on the EYP-1901 studies and as well as the manufacturing group.

Yes, yes. Very good point.

Your next question comes from Yale Jen with Laidlaw and company.

And my congrats on your progress. Maybe just as a follow-up from the -- of the previous one. Just in terms of the reason that you guys placed the DME ahead of the retinal vein occlusion, was that the economical or market assessment or other reasoning? Just curious. And I have a follow-up.

Yes. Yes. DME is a much, much larger market with a higher unmet need. Not that -- RVO still has unmet need, but DME is just a substantially larger market than RVO. So when you look at where to put your capital, obviously, you have to look at where you can have the most impact for patients, the broadest number of patients as well as on a return basis. So it was a pretty easy decision to make to prioritize DME over RVO.

Okay. Great. That's very helpful. And 2 quick ones. The first one is that in terms -- if you guys are going to start with those Phase II study later this year and next year, was the manufacturer aspect of that already been done or is still in progress to prepare for the stock get into the trial?

No. Our product is all ready to go for the trials.

Okay. Great. Maybe the last question here is a housekeeping one. For this quarter, you have extinguishment of debt. Is that a onetime event? Or that will be continue for the remaining of the year?

George, you take that.

I'll take that. So what that is, it's a noncash, it's an unamortized discount that was associated with the CRG loan. And with the refinancing, it's just a noncash accounting entry. So it was a onetime that won't repeat.

Okay. Great. I really appreciate it, and congrats for the progress.

(Operator Instructions) Our next question comes from Yi Chen with H.C. Wainwright.

First question, just to clarify. With respect to the new FDA regulations for a combination drug device, it apply -- does it apply to -- it applies to the nonerodable Durasert technology as well as the erodible Durasert technology?

Yes. Let me just reiterate a couple of things. Yes. And by the way, let me just reiterate, it applies to a number of ophthalmology and even non-ophthalmology products. This is not specific to just ophthalmology or even our product. It's a drug device combination, so regulation. So any time that you have a drug combined with a device and the definition of a device is quite broad, I might add. The FDA is now has to require more data. So -- but I want to again reiterate the way that the regulation based on the ruling came out is that it doesn't add anything more to 1901 because 1901 is delivered in a injector. And obviously, it's also in an implant.

It qualifies under these regulations, but we always anticipated doing all the work that is being promulgated. The difference was, in this particular case with YUTIQ-50, they need more than just one study because the YUTIQ-50 was -- had not previously been on the market, and we did not have a clinical study around it, so they need 2 clinical studies, which, as I said, we always anticipated with the multiple indications on 1901 regardless.

Got it. And just to confirm, there is no upfront payment for the Betta Pharmaceutical licensing agreement, right?

That is correct.

Okay. Last question. For the upcoming NPDR Phase II trial in the second half of the year, what would be the drug used in the control group?

Yes. Jay, why don't you answer that?

At this point, the control group will consist of a sham EYP-1901 injection. So there will be no active control.

Okay. Do you think it will be necessary at a certain point in the future to evaluate the drug against an active control?

We really can't speculate on that. At the current time, we believe from a regulatory perspective, as of now, that's not necessary. But that could change in the future. But our current belief in discussing this with regulatory advisers is that a sham nonactive control is still permissible and that's because while there are 2 FDA-approved products in this space for DR, the usage of them is so minimal.

And I'm showing no further questions in the queue at this time. Ladies and gentlemen, thank you for participating in today's conference. This does conclude your program, and you may now disconnect. Everyone, have a great day.

Thank you, everyone.