IVERIC bio Inc (ISEE) 2015 Q1 法說會逐字稿

Good day and welcome to the Ophthotech Corporation first quarter 2015 earnings results conference call. Today's conference is being recorded.

At this time I would like to turn the conference over to Kathy Galante, Head of Investor Relations. Please go ahead, Ma'am.

Good afternoon and welcome to our first quarter 2015 earnings call. Joining me today, I have Dr. David Guyer, Chief Executive Officer and Chairman of Ophthotech; Dr. Samir Patel, President and Vice Chairman; Mr. Michael Atieh, Executive Vice President and Chief Financial and Business Officer; and Mr. Todd Smith, Senior Vice President and Chief Commercial Officer.

Before we begin, I would like to remind you that today we will be making statements related to Ophthotech's future expectations regarding its financial results, potential receipt of milestone payments, clinical and regulatory developments and commercialization plans. These statements constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Security 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. I refer you to our SEC filing and in particular, to the risk factor section in our quarterly report on form 10-Q filed earlier today for a detailed description of the risk factors affecting our business.

In addition, any forward-looking statements represent our view only as of today and should not be relied upon as representing our view as of any subsequent date. 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 change. I would now like to turn the call over to David.

Thanks, Kathy and thank you to everyone for joining us on the call this afternoon. The first quarter of this year has resulted in solid progress for Ophthotech.

Today, I am very pleased to share our excitement in reaching the completion of patient recruitment of the first Phase III trial of Fovista in combination with Lucentis. We expect patient recruitment in the second Phase III trial investigating Fovista in combination with Lucentis to be completed approximately by the end of the third quarter of 2015. The third Phase III trial, which is investigating Fovista in combination with Eylea or Avastin, is recruiting patients as expected and we anticipate the duration of recruitment for this third trial to be roughly similar to that of the first two trials.

Our timing projections for the trials that continue to enroll patients, assume that there is no impact on recruitment related to the summer season or the initiation or activation of competing trials. We would like to thank all of the participating investigators for their commitment to and enthusiasm for our Phase III program. We expect the initial top line data from both Phase III trials of Fovista in combination with Lucentis to be available in 2016, approximately one year after the enrollment of the last patient in the second Phase III trial plus the time needed for database closure and analysis of the initial top line data.

In addition to being identical with respect to the trial design in the first year, both of these Phase III trials are investigating the superiority of Fovista in combination with Lucentis compared to Lucentis monotherapy alone. Therefore, the database from both trials of Fovista in combination with Lucentis will be logged and analyzed together which will allow for the analysis of multiple relevant endpoints in accordance with the statistical analysis plan.

As we remain anti-VEGF agnostic, let us now turn to our third Phase III trial. As you may recall, in this trial either Eylea or Avastin is used as the anti-VEGF agent in combination with Fovista versus administration of either Eylea or Avastin alone in the control arm.

As you also know, our Fovista Phase II-B trial utilized Lucentis as the only anti-VEGF agent because Eylea was not yet approved for marketing and Avastin's noninferiority status compared to Lucentis was not yet established when the Phase II-B trial commenced. Therefore in order to gain more experience with Fovista when combined with a with Avastin or Eylea prior to starting a pivotal trial, our Phase III trial of Fovista in combination with Avastin or Eylea started later than the Phase III trials utilizing Lucentis as the a anti-VEGF agent.

This time period of approximately nine months allowed us to complete the assessment of initial preclinical and clinical studies and in short, compatibility of Eylea or Avastin when administered in combination with Fovista. Some of the data from these studies were presented at the Angiogenesis Meeting in Miami in February and at the ARVO Meeting last week in Denver and will be discussed shortly.

Again as I mentioned at the onset, this pivotal Phase III trial investigating Fovista administered in combination with either Eylea or Avastin as the anti-VEGF agent continues to enroll at the expected rate. Our key objectives and plan is to make Fovista commercially available to physicians for their patients with wet AMD as quickly as possible assuming a positive data outcome from the Phase III program.

As we continue to explore various regulatory filing options, we believe that the most likely scenario is to initially submit a new drug application to the US Food and Drug Administration for Fovista in combination with Lucentis based on data from the first two Phase III trials of Fovista in combination with Lucentis. And subsequently submit an amendment to the NDA with data from the Phase III trial of Fovista in combination with Eylea or Avastin. Alternatively, we may elect to file a supplemental NDA for Fovista in combination with Eylea or Avastin following FDA review of the NDA for Fovista in combination with Lucentis.

We are excited with the progress of the Fovista Phase III pivotal program and reaching our first major recruitment milestone today. We have focused our resources on obtaining our initial top line data in 2016.

Given the fast track status granted by the FDA for Fovista for the treatment of wet AMD, we believe that Fovista, administered in combination with anti-VEGF therapy, is well-positioned to potentially be first to market in this class of novel therapy for wet AMD. I will now turn the call over to Samir.

Thank you, David. In addition to the Phase III studies which David reviewed, our Fovista expansion studies are designed to investigate the potential role of PDGF inhibition to address significant unmet needs in patients receiving anti-VEGF monotherapy. These include visual loss associated with subretinal fibrosis, [treatment burden] and suboptimal response with anti-VEGF monotherapy. The enrollment in our anti-fibrosis trial should be completed in the next week or two.

I would like to thank all investigators for their support and great enthusiasm. This trial is assessing the optimal regimen of Fovista administration in combination with anti-VEGF therapy for an antifibrotic effect in treatment non-eval and also previously treated wet AMD patients. The trial is 24 months in duration but we hope to have some interim subgroup analysis data towards the end of the year, end of this year.

The second Fovista expansion study investigating the role of Fovista in combination with other currently employed a anti-VEGF agents to decrease the treatment burden wet AMD patients was initiated at the end of 2014 and continues to have good enrollment.

The planning for the trial investigating the potential benefit of adding Fovista to patients experiencing poor or suboptimal visual outcomes with monotherapy anti-VEGF regimens is on track to commence in the second half of this year. We believe the mechanism of action of Fovista in combination with anti-VEGF coupled with the positive findings from our previously reported controlled Phase II-B study provides strong rational for this trial. Furthermore, we are encouraged by the findings of an IST presented at the ARVO poster session last week from the Retinal Consultants of Arizona in this subgroup of patients receiving Fovista combination therapy who were judged to be anti-VEGF failures by the investigators.

An average of 25 anti-VEGF injections were previously administered in this cohort of 27 patients. The data at the three-month time point in these suboptimal anti-VEGF responders were presented in February at the Bascom Palmer Eye Institute Angiogenesis Exhibition and Degeneration Meeting in Miami.

In brief, the results showed after three-month monthly doses of Fovista administered in combination with anti-VEGF in these 27 patients, experienced an average gain of 7.07 letters on the standardized visual acuity chart. Additionally, 10 out of 27 patients receiving pre-treatment with Fovista gained an average of 11.10 letters versus 4.70 letters than those without pre-treatment at the three-month time point, which is consistent with our scientific hypothesis that pretreatment with Fovista may result in enhancement of the antiantiogenic effect.

At the ARVO Meeting last week, further update in this cohort of 27 patients was presented following six monthly doses of Fovista combination therapy. At this time point, the average gain in visual acuity increased further to 8.8 letters.

10 out of 27 patients receiving pre-treatment with Fovista gained an average of 16.5 letters versus 4.41 letters in those without pretreatment. We believe these findings are consistent with our trial rationale for the plan treatment resistant study employing Fovista combination therapy.

Last week, Dr. David Cheresh's group at the University of California San Diego School of Medicine also presented their findings at the ARVO meeting. They investigated the effect of combined targeting of PDGF and VEGF with Fovista and Eylea respectively in preclinical ocular and cancer models. Relative to monotherapy, combining Fovista and Eylea not only provided a more robust antiangiogenic effect but also reduced fibrosis.

I will now turn the call over to Mike.

Thank you, Samir. Here's an update on our results of operations.

Collaboration revenue, which we recognize under the Novartis agreement, was $41.7 million for the quarter ended March 31, 2015. This revenue was primarily related to the second $50 million Fovista enrollment milestone which was earned during the quarter. This enrollment milestone, which we received from Novartis in April, is accounted for using the relative selling price method which calls for the immediate recognition of revenue for a large portion of the milestone with the remaining portion being recognized as collaboration revenue in future periods.

We have one remaining enrollment based milestone of $30 million from Novartis which will be earned by us at the completion of enrollment in the final Phase III trial. Finally, with respect to collaboration revenue, we are responsible for supplying Fovista drug substance to Novartis under our agreement with them. When this occurs later this year, we will record collaboration revenue related to this activity.

Turning to expenses, research and development expenses were $24.6 million for the quarter ended March 31, 2015 compared to $14.4 million for the same period last year. Over half of the increase in R&D expense in the quarter relates to our Fovista Phase III clinical program where enrollment continues to increase and the Fovista expansion studies that Samir discussed.

Cross related to Fovista include, clinical trial costs and cost to manufacture Fovista for the clinical studies. Increased compensation expenses, including share based comps associated with additional research and development staffing along with an increase in manufacturing spending related to the Zamora clinical program, accounted for the remaining changes in expenses.

As we continue into 2015, our R&D expenses will increase significantly and may fluctuate from quarter-to-quarter. As you heard earlier, the Fovista in combination with Lucentis trials are reaching full enrollment and the Fovista in combination with Eylea or Avastin trial continues to enroll patients, which means our cost related to these trials will increase as more and more patients are treated. The Fovista expansion studies are rapidly enrolling as we explore potential new benefits from Fovista therapy.

In addition, we continue to make significant investments in the CMC area as our contract manufacturers begin to scale the Fovista drug substance and drug product manufacturing processes. And we continue our focus on the rigorous requirements for FDA approval of the manufacturing and QAQC process related to Fovista. This manufacturing scaling process will take place during the remaining part of 2015 and into 2016 and may create some uneven levels of expenses quarter-to-quarter since the manufacturing costs related to unapproved drugs are expensed when incurred.

In addition, as previously mentioned, we will be manufacturing Fovista drug substance for Novartis under our agreement with them and all related costs to produce this material will be charged to R&D with the respective payments from Novartis recorded as collaboration revenue.

Finally, manufacturing related expenses will also increase as we prepare for the start of the Zimura dry AMD study that was discussed by Samir. In total, we expect to incur increasing levels of R&D costs over the remaining part of 2015 and into 2016.

General and administrative expenses were $9.6 million for the quarter ended March 31, 2015 compared to $6.3 million for the same period in 2014. Sequentially, expense levels in this quarter were generally in line with expense levels in Q4 2014.

Now the increased G&A expense versus the first quarter of 2014 relates primarily to increases in costs to support the expansion of the Company's operations including the Company's public company infrastructure. And the hiring of additional management and corporate staffing, including the early stages of a commercial organization, increased professional services and consulting fees, and increased share based compensation. For the remaining part of 2015, you should expect a steady but slower rate of growth in G&A expenses compared to the growth in R&D expenses.

The Company reported net income for the quarter ended March 31, 2015 of $7.6 million or $0.22 per diluted share compared to a net loss of $20.7 million or $0.64 per share for the same period in 2014. Fully diluted weighted average common shares outstanding at March 31, 2015 were $35.2 million. The reporting of net income in the quarter was driven by the recognition of revenue related to Novartis enrollment milestone that was earned. We did not record a tax provision on income since we expect that there that will be an annual loss in 2015 and therefore, no interim tax provision is required.

Turning to the balance sheet, cash, cash equivalents and marketable securities totaled $433 million at March 31, 2015. The balance at March 31, did not include the $50 million Fovista enrollment milestone that was received from Novartis in April.

And now, I'll turn the call back over to David.

Thank you, Mike. Thank you for your time this afternoon and for your continued support. I will now turn the call over to the operator so we can open up the lines for any questions.

Thank you.

(Operator Instructions)

Our first question will come from Joseph Schwartz with Leerink Partners.

Great, thanks very much and congratulations on all the progress. I was wondering, first of all, how are you selecting patients for inclusion into these Phase 3 trials on top of Lucentis? Is it just classic features of wet AMD or is it the presence of SHRM or both? Which is believed to correlate stronger with anti-PDGF activity?

Hi, Joe. It's Samir Patel. I just want to make sure your question is processed property. You're talking about the Phase 3 trial of Fovista plus Lucentis with respect to the inclusion criteria, correct?

I guess it would apply to all the Phase 3 on top of the various VEGFs. I just wasn't clear, is it classic presentation or is it SHRM or both? What kinds of patient inclusion criteria have you employed?

So, it's SHRM by OCT, and just as a background, when we commence the Phase 1 trial, and that was roughly in the 2008 period, we used a live fluorescein angiogram because the OCT that was used to assess the cross sectional anatomical component of the retina was a time domain and very very noisy OCT. And the same inclusion criteria continued in the Phase 2 trial where, I forget the breakdown, but some of the sites had the current spectral domain OCT with high resolution and the balanced in. For the purposes of this call we can say roughly a half had a time domain.

Obviously when we started the Phase 3, the use of a fluorescein angiogram, as you know, is quite unusual and rare nowadays. Virtually everybody uses OCT and the OCT is very high resolution, and its sensitivity and specificity has determined the location of the fluorelier vascularization with respect to the RPE, which is what you are really trying to do when you look at classic is better and more accurate. So it is for that reason we switched over to using SHRM. In essence, the definition for the use of the term classic refers to fluorescein angiogram. It's equivalent component on OCT is called SHRM.

Okay, that's very helpful. Thanks for that explanation. Maybe one on Zimura before I pass it on, what should we expect as far as trial design goes for this Phase 2, 3 study in terms of numbers of patients, types of patients to be enrolled and primary endpoint?

When the Zamora Phase 2, 3 geographic angiogram deep program, we said would start sometime in the second half of this year and we are still finalizing the trial design, sample size, et cetera, and we will, in the near future, give you all that when we're ready. But we're still in final discussions for all of those points.

Okay, thanks very much.

Our next question comes from Anupam Rama with JPMorgan.

Hello. Thanks so much for taking the question. Now that you've provided a better sense of enrollment timeline for Fovista, can you talk about the depth of analyses that you'll be conducting for the combined Fovista Lucentis data set? And at what point you'd be ready for moving forward with the regulatory filing? And just, a quick follow-up question, if you could give us an update on the ocular formulation of tivozanib, and when a go forward decision for that program will be made?

It is Samir. With respect to the analysis, I think at this point it is suffice to say that in addition to the primary endpoint, we would be looking at typically typical clinically meaningful endpoints that one would look at. And I think it is fair to state that those endpoints that typically are valid for the patients, whether it is on the visual gain side or the visual loss side, those primary endpoints would be the ones that we would be looking at in a combined analysis. Most of those tend to be binary, meaning you are looking at a portion of patients so there's loss of data. So combining them is really important to have the adequate power.

With respect to the subsequent filing, it just kind of depends on the duration of log and analysis it takes. So I don't think I can comment any more than what David has already stated. In connection to the tivozanib and the formulation, those continue to -- studies continue and we are encouraged by them, and when we have a little more data and granularity we will certainly go ahead and give you some feedback.

Alright, thanks so much for taking the question.

Our question comes from Terence Flynn with Goldman Sachs.

Hi, this is Amy in for Terence. Thanks for taking the question. Can you provide us an update on your latest thoughts regarding a coformulation strategy of Fovista with another anti-VEGF?

Hi, it's Samir.

When you say with another anti-VEGF, as you know, obviously the only one we have disclosed so far is that we're looking at formulation of tivozanib. But we've made a statement in the past that we would be looking at Fovista if we go down the road of coformulation. We are, as you can see with the pretreatment study for example, in that setting coformulation wouldn't be something that one would think would be the right thing to do if the antifibrotic effect or visual outcome is markedly better than giving both of them together.

I think just as important if not more important as we've stated before, it is about maintaining the visual outcome. If we had the gain initially then the additional anti-VEGF agent in a setting where either you don't have any fluid or even subretinal fluid which has been now shown in Harvard to be associated with atrophy. That study, you wouldn't want to give additional anti-VEGF. So those type of decisions really weigh in on whether to go formulated or not.

As far as coformulating, I think we have the option, as David said as before, with Novartis on a coformulation if we have to with Lucentis. The other anti-VEGF agents, not only just limited to tivozanib, we have disclosed that in the past that we have done coformulation studies and are confident that Fovista can be coformulated with other anti-VEGF agents. But I think it's premature to talk about the validity and the requirement of coformulation when only things that really count is the visual outcome, whether that is in the gain or in the loss side over a longer period. That is what is going to dictate our coformulation strategies.

Our next question will come from Stephen Willey with Stifel.

Thanks for taking the question.

I'm curious if the decision strategically to either supplement the initial NDA filing or to file a supplemental NDA separately, does that just really predicated upon timing, or are there other factors that are going to dictate how that ends up playing out?

Our goal is to make Fovista available to physicians and their patients as quickly as possible. And so, we will do whatever strategy accomplishes that and obviously, there are whole bunch of potential discussions with regulatory on what gets us there fastest. Whatever path we believe will get Fovista initially on market the quickest we'll take. It's a complicated multifactorial decision, but we will as we make progress inform you on which way it looks most likely.

Okay. With respect to the six-month data that was updated at ARVO, should we expect to see another 12-month update of that data towards the back half of this year at another medical conference?

Hi, Stephen. It is Samir. I can't really comment on when or if additional data are going to come forth. That is not our trial. It's really an ISD. So we don't really control that. But certainly on the Fovista expansion studies, we'll do our best to have some data towards the end of the year as we had said previously.

Okay, and as you think about the Zimura trial and dry AMD, I know that said you were still finalizing trial design. But is there a threshold level of GA that you want to have in these patients in terms of just a baseline entry card here? Thanks.

When you think about a dry AMD trial, I think there is the fixation to only think about it from geographic atrophy, because it is so well defined. And as an anatomic endpoint, it's certainly there is an indication that that's acceptable. But we are considering various aspects. It's not only -- obviously, I think to answer your question directly, typically, the answer is it clinically meaningful? And clinically meaningful is looked at, not only just at the rate, but looking at other parameters on the 50 side and other aspects of visual function that I'm sure the regulatory agencies would consider. I don't think it's a number or rate per se, it is the relative aspect that would be looked at.

That being said, I think it's also important to realize that from a commercial standpoint when you look at treating monthly on the disease that maybe in some patients five, seven, eight years to treat monthly, and you don't have a biomarker to follow, such as fluid in wet AMD, is a bit difficult and challenging. We are taking that into consideration and some of the other visual function type of studies that we've been in touch with with individuals who presented recent findings at various meetings and at ARVO, as well, to see how we can find a study that's not only looks at geographic aspects, but other aspects that might be clinically meaningful and could determine and help decide the amount of treatment and level of treatment.

Okay, thanks and congratulations on completing the first study.

(Operator Instructions)

We will take our next question from Gbola Amusa.

Hi, thanks for taking my call and congratulations on the results.

Three questions on Fovista. First of all, on February 23 or so, you mentioned a translational scientific board that included Dr. Cheresh and Dr. Jane who seemed to have cancer competencies. And then, looking at the ARVO posters, one study recommends continued investigation of Fovista in cancers complicated by angiogenesis and fibrosis. So can you comment on whether the formation of your TSB is related to the conclusion of this poster?

Secondly, for the Fovista in anti-fibrosis in terms of timing of that data, you've already got a completion of enrollment planned in the next week or two. Can you say to what extent the data will be used to inform the filing of Fovista with regulators or the development of the product in cancer?

And then the third question, in terms of the timing of your headlines for Fovista with Lucentis, you mentioned something that implies third-quarter 2016 plus whatever time it takes for the database to close and be analyzed. How long do you anticipate it takes to close the database and analyze it just so we have better visibility on time?

Thank you.

This is Samir.

On the first one where you talk about the translational [scientific] by the board, in just about everything we've learned to a great extent, if you look back to the entry of the first pharmacotherapy in therapeutic agent subsequent to Lucentis as well, a lot of these phytokind-related translational aspects really came from tumor models including anti-PDGF. If you think about the dual antagonism of PDGF and VEGF, a lot of those came from tumors zenograph models pancreatic eyelet models. And so, it's only rational to really think about all the other findings in that microenvironment by a couple of individuals who are really at the forefront of pathologic angiogenesis.

So I think it's best to think about it from a pathologic angiogenesis preclinical model. Not that they are not available or present in the eye, the model that we have in the eye is a thermal model. And so it's not as much of a disease model as you'd see in cancer. That being said, the downside of the cancer model is you have up regulation of -- so many genetically up regulations of so many different proteins that it may be not be analogous to what you see in the eye.

But having said that, it is understanding what happens at preclinical level and that's why the translational board is of tumors not necessarily because of entry into any tumor settings. And I hope that kind of answers your question also on anti-fibrosis and its relevance for cancer. We are really focused right now on the complication of fibrosis as it relates to the back of the eye.

With respect to the timing of the following the database, I will leave that to David. David?

Great. Traditionally, I think is easier to speak in general industry standards, obviously there is variation depending upon how clean cut data is and how your independent statisticians and data put together and everything. But in general, industry standards range from four to six weeks ballpark to close your database and get your topline results and we'll promptly report that after it is received.

Great. And just a clarification on the anti-fibrosis data, could you mention whether that affects your filing plans? Whether receiving that data could affect the timing of your filing plans?

I say again, we will do whatever it takes to get Fovista on market as soon as possible and as quickly as possible. Obviously, a lot of that decision will be with early discussions with FDA, as well as what the best path is and what each path would potentially give label wise. I think it's too early really to speculate on that except that our overall goal is to get Fovista on the market as soon as possible.

Thank you, I'll head back into the queue.

(Operator Instructions)

Next we will take a follow-up question from Gbola Amusa.

Hi, thanks again. That was pretty fast.

For Zimura and polypoidal choroidal vasculopathy, on my numbers you've got about 7% to 10% prevalence in wet AMD patients, which implies that this could be potentially fewer than 200,000 people in the US. Assuming you agree with that prevalence rate in wet AMD, does that mean you hope to achieve an orphan drug designation with that indication? A second question, on April 23, Reuters reported that your partner Novartis is looking for a $2 billion to $5 billion bolt on acquisitions. To what extent do you have contingencies built around that statement?

I think on the polypoidal question, the diagnosis of polypoidal really requires the performance of ICD and in the United States, it's not a routine procedure that is done with neovascular AMD. I'm not quite sure, I'm not sure about the prevalence rate, but I would say that our strategy right now is not naturally to pursue an orphan designation at this time. With respect to the second question, I'll let David handle that.

At this point we cannot comment on our partner or any other company's potential strategy.

Thank you.

That does conclude the question-and-answer portion of today's call. At this time, I would like to turn things back over to Mr. David Guyer.

I'd just like to thank everyone again for their time and interest and we look forward to further updates in the near future. Thank you.

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