IVERIC bio Inc (ISEE) 2017 Q4 法說會逐字稿

Good day, everyone, and welcome to the Ophthotech Corporation Fourth Quarter and Year-End 2017 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kathy Galante, Vice President of Investor Relations. Please go ahead, ma'am.

Good morning, and welcome to our fourth quarter year-end 2017 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; Dave Carroll, Chief Financial Officer; Keith Westby, Chief Operating Officer; and Vishal Kapoor, Vice President of Business Development.

I would also 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 for our product candidates; and the potential for our business development strategy, including any potential in-license or acquisition opportunities.

These statements constitute forward-looking statements for purpose of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. These statements cover many events and matters that are subject to various risks that could cause actual results to differ materially from those expressed in any forward-looking statements, including risks relating to the initiation and the conduct and design of research programs and clinical trials; availability of data from these programs; expectations for its 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 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 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.

Thank you, Kathy, and good morning, everyone, and we appreciate you joining our call this morning. I'm pleased to announce today that Ophthotech is entering the arena of next-generation ophthalmic gene therapy. Our company's strategy has been to develop new treatment options for orphan and age-related diseases in back of the eye.

Genetic mutations are the cause of most orphan-inherited retinal degenerative diseases. And therefore, it's only natural for us to look into novel and differentiated gene therapy opportunities to fulfill our strategy. Further, gene therapy may decrease the treatment burden in age-related retinal indications.

As part of this strategy and for our first gene therapy collaboration, the company has entered into a series of sponsored research agreements with the University of Massachusetts, UMass, Medical School. Under the agreements, we will work with the Horae Gene Therapy Center at UMass Medical School to utilize their expertise in both vector technology and their minigene therapy approach to target retinal diseases.

Dr. Guangping Gao, Director of the Horae Gene Therapy Center and Professor of Molecular Genetics and Microbiology at the UMass Medical School, and his team will be the cornerstone of these efforts. Dr. Gao is a world-renowned expert and pioneer in gene therapy, who is the driving force behind the discovery of novel adeno-associated virus or AAV family for gene therapy. Kourous will discuss with you in more detail the retinal applications of both the new gene therapy delivery technology and the minigene therapy approach in a few moments.

UMass Medical School has granted us an option to obtain an exclusive license to any patents or patent applications that result from this sponsored research. We believe that the complementary synergy between Dr. Gao's highly recognized team of experts in gene therapy at the UMass Medical School and our team's expertise in drug development for retinal diseases has the potential to fulfill our commitment to developing innovative solutions for the treatment of diseases in back of the eye.

Recent advances in gene therapy are forming a foundation to provide transformational cures rather than therapies for patients with orphan retinal diseases. Our collaboration with UMass Medical School is the initial step in executing our strategy to build the portfolio of next-generation gene therapy options in retinal diseases. We're excited to enter this emerging field as we continue to broaden and advance our ophthalmic pipeline and generate multiple potential opportunities to create value for our shareholders.

Our Zimura program continues to move ahead at full speed. We are on track with 4 clinical programs ongoing in different ophthalmic indications. These programs include potential multibillion-dollar market opportunities, such as geographic atrophy secondary to dry AMD and wet AMD as well as idiopathic polypoidal choroidal vasculopathy and our lead orphan indication, autosomal recessive Stargardt disease. We're aggressively moving forward on Zimura programs with these clinical trials. David will provide you more detailed information later in this call.

So we're excited to begin 2018 with a strong balance sheet, multiple ongoing clinical trials in our Zimura program and by entering into the gene therapy arena with the collaboration with the UMass Medical School. As we look forward, we continue to see collaborations, in-licensing and partnering opportunities that offer differentiated treatment approaches for eye disease.

Before I turn the call over to Kourous, I'd like to add that we are pleased to welcome Jane Pritchett Henderson, Chief Financial Officer and Senior Vice President of Corporate Development at Voyager Therapeutics to our Board of Directors. We are thrilled to have someone of Jane's caliber join our board. Jane's extensive background in biotechnology, and specifically in corporate development, will be a valuable addition to our board. In addition to our board seat, Jane will chair our Audit Committee.

Now I'd like to turn the call over to Kourous.

Thank you, Glenn, and good morning, everyone. As Glenn mentioned, we are excited about collaborating with scientists at Horae Gene Therapy Center at UMass Medical School to expand the strategic focus of our development efforts for treatment options for retinal diseases. We believe that combining their scientific and clinical gene therapy expertise with our deep expertise in the drug development for retinal diseases will provide a strong foundation to deliver on our strategy and create value for our shareholders.

Gene therapy's key strength is its potential to provide durable, prolonged therapeutic effect to our patients with a single administration. The field of gene therapy is advancing at a rapid pace and it's crucial for us to be at its cutting edge. We believe that our work with UMass Medical School will begin to pave the way for the development of innovative gene therapy solutions and novel therapeutic options for patients with degenerative retinal diseases.

As we shifted our strategy towards orphan ophthalmic indications, it became clear to us that since the majority of these diseases are caused by one or more genetic mutations without any approved treatment options, the potential to achieve an extended treatment effect through a single gene therapy administration is particularly appealing to both the patients and the physicians. Further, gene therapy has the potential to ease the treatment burden for patients with age-related retinal diseases, who currently require chronic therapy over years, if not decades.

We are particularly interested in adeno-associated virus or AAV gene therapy delivery vehicles as AAV vectors can be designed to be cell-specific for retinal tissue and the safety profile in humans is relatively well documented as compared to other delivery vehicles and gene therapy technologies currently in development. Our work with UMass Medical School, who are world expert researchers in AAV vectors, will focus on developing next-generation AAV vectors for delivering gene therapy to the back of the eye. Further, we will evaluate UMass's minigene therapy approach to target orphan ophthalmic indications.

AAV vectors are generally limited as a delivery vehicle by the size of their genetic cargo. The use of minigene as a therapeutic strategy seeks to deliver a shortened but still functional form of a larger gene package into 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 AAV vectors.

The scope of our agreements with UMass includes: Leber Congenital Amaurosis type 10 or LCA10, which is the most common type of LCA and is caused by mutations in the CEP290 gene; and autosomal recessive Stargardt disease, which is caused by mutations in the ABCA4 gene. LCA10 and Stargardt disease are both orphan-inherited degenerative retinal diseases that lead to vision loss without any currently available FDA or EMA-approved treatment.

I will now turn the call over to David Guyer to provide you an overview of our Zimura complement factor C5 inhibitor program. David?

Geographic atrophy, the end stage of dry age-related macular degeneration, is a disease characterized by degeneration of retinal tissue leading to loss of vision. Recent clinical data, together with the continuous growth of preclinical scientific evidence potentially implicating complement and C5 in various retinal diseases, has further invigorated our enthusiasm for the therapeutic potential of Zimura.

We've already completed a multicenter, uncontrolled, open-label Phase I/IIa clinical trial evaluating the safety and tolerability of Zimura administered as monotherapy in patients with geographic atrophy secondary to dry AMD. Zimura was generally well tolerated in this trial. We did not observe any evidence of drug-related adverse events. We also did not observe any instance of conversion to wet AMD in eyes treated with Zimura in this trial. Adverse events were primarily ocular adverse events in the study eye which were related to the injection procedure.

We have an ongoing randomized, double-masked, sham-controlled Phase IIb clinical trial designed to assess the safety and efficacy of Zimura monotherapy in patients with GA. During 2017, based in part on our review of our third-party clinical trial data, we modified this trial to accelerate the timeline to obtain top-line data. Following the review of additional third-party clinical trial data and further statistical analysis, we have determined to add patients to the trial and now plan to enroll a total of approximately 275 patients in the trial.

The primary efficacy endpoint is the mean rate of change in geographic atrophy over 12 months. Patients will be treated and monitored for 18 months. A range of Zimura dosing regimens will also be assessed. We continue to expect initial top-line data to be available during the second half of 2019.

Let's now turn our attention to our Zimura program for wet AMD. In our previously completed Zimura wet AMD Phase I/IIa study, among the treatment-naïve patients that received 6 monthly intravitreal injections of Zimura in combination with LUCENTIS 0.5 mg.

In the high-dose group, 60% of these patients gained greater than or equal to 3 lines of vision, which is generally accepted as meaningful visual gain with a mean vision gain of 15.3 letters from baseline, both of which are higher than what is generally seen in clinical trials for anti-VEGF monotherapy.

All doses were well tolerated and no safety concerns were identified. Our trial had a small sample size consistent with a Phase I/IIa study with no control group. And although a potential efficacy signal was present, these findings clearly need to be further validated before entering into a large-scale trial.

We are, therefore, currently conducting an ongoing dose-ranging, open-label Phase IIa clinical trial in Zimura in combination with LUCENTIS in treatment-naïve patients with wet AMD. We expect to enroll approximately 60 patients in this trial and plan to evaluate various endpoints at month 6. Based on the anticipated enrollment rate, initial top-line data from this trial is expected to be available by the end of 2018.

As Glenn mentioned, the primary focus for the company is to develop novel treatments for underserved patients diagnosed with an orphan ophthalmic disease. We view that there are advantages to pursuing drug development for orphan indications, including the potential for a regulatory exclusivity, clinical trials of smaller sample size and accelerated development timelines.

We are pleased to announce that the first patient was enrolled in our clinical trial in Zimura for the treatment of autosomal recessive Stargardt disease earlier this year. Autosomal recessive Stargardt disease is an inherited orphan retinal disease leading to vision loss during childhood or adolescence. With no FDA or EMA-approved treatment options currently available, there is a significant unmet medical need for the treatment of autosomal recessive Stargardt disease. We expect to enroll approximately 120 patients globally in a 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, which will be assessed at 18 months. Initial top-line data is expected to be available in 2020. The size for this Phase IIb screening trial was determined based on the number of patients that we believe could potentially be enrolled within a reasonable period of time. Based on the actual enrollment, we may increase or decrease this number. We have not previously studied Zimura in Stargardt disease.

We have also initiated an open-label Phase IIa clinical trial evaluating Zimura in combination with anti-VEGF therapy for idiopathic polypoidal choroidal vasculopathy, an age-related eye disease involving the choroidal vasculature, characterized by the presence of polypoidal lesions, which leads to vision loss. Initial top-line data is expected in the second half of 2019.

Please note that our ongoing and planned clinical trials for Zimura are designed to obtain data to guide potential future development efforts. Our Phase IIa trials are designed to evaluate safety and to detect a potential efficacy signal. Our Phase IIb screening trials are designed to search the potential therapeutic benefit of Zimura as well as to evaluate safety. In light of our limited clinical data to date for Zimura in geographic atrophy and our lack of clinical data for Zimura in Stargardt disease, our Phase IIb trials may be underpowered to demonstrate a potential therapeutic benefit for Zimura in these indications.

I will now turn the call over to Dave, who will briefly review the company's fourth quarter and year-end 2017 results.

Thank you, David, and good morning, everyone. I'd like to highlight a few items from our press release of this morning and also provide guidance on our expected 2018 cash burn and the external cost of our Zimura clinical trials.

For the quarter, our net loss totaled $9.5 million or $0.26 per share compared to a net loss of $66.3 million or $1.86 per share for Q4 2016. This decrease is due primarily to the wind-down of our Fovista program and the impact of our organizational restructuring, which is now largely complete. Our net income for the year totaled $114.2 million or $3.17 per share compared to a net loss of $193.4 million or $5.45 per share for 2016. This increase is due primarily to the Q3 2017 conclusion of the Novartis Agreement and our subsequent recognition of approximately $210 million in deferred revenues.

Turning to our expected 2018 cash burn and the cost of our Zimura clinical trials. Our cash balance at year-end was approximately $167 million. For 2018, we expect the cash required to fund our operations and capital expenditures will range between $50 million and $55 million. This range includes costs associated with our Zimura clinical trials. As David mentioned, we've increased the number of patients to be enrolled in the Zimura geographic atrophy trial. We now expect the total external cost of completing our ongoing and planned clinical trials for Zimura to be between $30 million and $38 million, which will be incurred over the next several years.

Finally, these estimates do not reflect any additional expenditures resulting from the potential in-licensing or acquisition of additional the product candidates, additional technologies or the associated development that the company may pursue.

I'll now turn the call back over to Glenn.

Thank you, Dave. We look forward to the year ahead as we will continue to advance our multitrack strategy to develop therapy for large market age-related retinal diseases, where there is unmet medical need, and for orphan retinal diseases with a focus on underserved patients and to utilize a disciplined business development approach to attain additional products, product candidates and technologies in these disease areas.

We'll focus our selection criteria on several factors: compelling science on identified unmet medical need based on current standard of care; a meaningful commercial opportunity based on existing treatment options and treatment options known to be in development in areas where we believe we can apply your competitive advantages. Among the novel technologies we have evaluated to date, we believe that gene therapy solutions may be particularly well-suited for our strategy as potential treatments for both orphan and age-related eye diseases. We remain committed to being opportunistic, and we will consider other compelling opportunities as they emerge.

I'd like to thank all of you for listening to our call today and ask the operator to please open up the line for questions.

(Operator Instructions) It appears our first question comes from Anupam Rama with JPMorgan.

This is Tessa filling in for Anupam this morning. Wondering if you all can provide a bit more color around the key modifications to the ongoing study in GA outside of increasing enrollment in the study. I know you all presented some of these details last week at the Macula Society Meeting. So any other color around any changes here?

Thank you for the question. Well, the original trial was designed to have 300 subjects with an interim analysis at month 18 with the primary endpoint at month 24. And at the interim analysis, an independent board could have increased the number of the subjects up to 900. When the additional data became available from competitors' trials, we modified the trial to having the primary endpoint to be the enlargement and growth of geographic atrophy. The original trial was change in vision. Also we modified the sample size. Currently, the trial sample size is approximately 275 subjects. And their primary endpoint is at month 12. The trial goes up to month 18, but the primary endpoint is at month 12.

I just want to add one point of clarification, but the timelines that we've previously provided in terms of completion remain the same. So that tells you recruitment is on track and the additional patients that we're enrolling will fit into that timeline.

(Operator Instructions) Our next question comes from Yigal Nochomovitz with Citi.

On the gene therapy initiative, which you announced this morning, could you just give us a little bit more perspective on the goal for the cadence of additional collaborations that you're seeking? And then with respect to the UMass collaboration, do you have any sense on how close they are to filing patents for their technology?

So on the UMass -- I'll work in reverse. On the UMass IP, there is some existing IP. But the key of the collaboration is really to work on new, innovative IP. So I think as that collaboration goes forward and we continue to work with them, we're looking for new innovations both on the minigene side as well as on the other program as well, so that to be determined. And as I mentioned in my commentary, we have an option for an exclusive license on those. So that's the exciting part of this. The other aspect of that is also to work on new novel vectors. Dr. Gao's lab has built an extensive inventory of vectors. And we have an opportunity to work with him to target certain vectors for intravitreal delivery of genes. Yigal, can you come back to the first question again? I want to be sure we got it right.

I was just curious as to what expectations we should have for additional collaborations with academic partners.

Right. So this is also our first one -- yes, thank you, I got it. This is our first one. And I think it adds a couple of things for us. The vectors is an interesting project for us as we bring in potentially other targets. Obviously, the program in Stargardt is potentially a lifecycle program if our therapeutic program is successful. And obviously, LCA10 fits our strategy of unmet medical need. So we continue to look. We continue to talk to both universities as well as business collaborators. And we'd like to build off this platform that we've developed with UMass for potentially other indications that fit the profile that I spoke about.

Got it. And then with respect to the concept of using a minigene for gene therapy for ocular indications, beyond LCA, what other indications would be potentially addressable with the minigene that you couldn't do with a full-length gene?

That's a great question. One of the other indications is again Stargardt, as Glenn pointed out. That one may have the potential to address with minigene therapy. And then we may be looking also into other indications. But the Stargardt and LCA10 are the ones that we are currently concentrating on.

And are there any other points of differentiation with respect to the UMass technology or expectations for that technology beyond minigene potentially with respect to the vectors that would differentiate you from, say, a Spark or maybe an Editas?

Well, I think the biggest -- in addition to what you just indicated, we also think the caliber of the people we are collaborating with would be a differentiating factor. And we have to again -- they have a large library of vectors. And we're going to be looking into that for ophthalmology, specifically for retina, and then based on that, develop the program and the pipeline.

Yigal, I'll mention one other thing then I'll let Vishal say a couple of things. As you know, there're a couple leading centers worldwide that really have expertise, and expertise based on the faculty in place, expertise based on where they came from and the number of years they've been working on the field of gene therapy. UMass is one of those centers. And so that was one of the reasons we gravitated to them. And we thought there were some unique applications. That's not to say that the other centers don't have unique applications. We'd like to continue to work with other academic institutions. But we felt that this was a unique opportunity to really bring in some novel technologies.

I'll just add just specifically around LCA10. As we think about the competitors in LCA10, they're looking at specific mutations of the CEP290 gene. If you think about a minigene approach, you're mutation-independent. And so you're looking at across the board for all LCA10s. So that's the other differentiating factor I'd add.

Okay, interesting. And then just one on -- for David on the GA trial. Obviously, you made some changes to the study to accelerate the data. But assuming you do see a good signal there, is there any potential that this could be enough to file? Or would you -- would this really -- you need to do a lot much larger study in GA?

Again, that's a good point. Obviously, this is a screening trial. And then whether this counts as a Phase III, it depends on the effect of the drug. Usually for filing, you need 2 Phase III trials. But that becomes again regulatory negotiations at that point.

Right, okay. And then just one quick one on the financials, you mentioned the $50 million to $55 million expected burn. Is that a fair assumption for the pace of use of the remaining cash? Or should we expect it to tick up in 2019?

Could you just repeat the last part -- so if you take -- Yigal's trying to figure, is that the pace going...

Yes, that would be -- well, yes. Yes, I would say yes. The pace is...

So Yigal, I just want to put one caveat here though. The GA trial is our most expensive. The GA trial is our most expensive, and we'll finish recruitment next year. So I just want to put a little caution on pace because a lot of that investment is happening this year, $50 million to $55 million. So I'll just caution there. Obviously, if those trials are successful, we'd look at designing the next trial. So Dave's comment around pace could be right. But I think when we say $30 million to $38 million on Zimura alone, of which the GA is part of, that is over several years. So I just want to caution that's a little bit of a hedge on pace.

And it appears we have no other questions at this time. I would now like to turn the conference back over to Glenn Sblendorio for any additional or closing remarks.

Again, I am truly excited about 2018. We're off to a good start, as I mentioned in my summary, with the trials and the team is doing a great job. We're hoping to have good dialogue during the balance of '18, and thank you for participating today.

That does conclude today's conference. Thank you for your participation.