IVERIC bio Inc (ISEE) 2015 Q2 法說會逐字稿

Good day, everyone, and welcome to the Ophthotech Corporation's second-quarter 2015 earnings results conference call. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Miss Kathy Galante.

Please go ahead, ma'am.

Good morning and welcome to our second-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; and Mr. Michael Atieh, Executive Vice President and Chief Financial and Business Officer.

Before we begin, I would like to remind you that today we will be making statements relating to Ophthotech's future expectations. Regarding its financial results, potential receipt of milestone payments, clinical and regulatory development, and commercialization plans. These statements constitute forward-looking statements for purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements cover many events and materials that are subject to various risks that could cause actual results to differ materially from those expressed in any forward-looking statement.

I refer you to our SEC filing, and in particular, to the Risk Factors section in our Ton Form 10-QA filed on July 28, 2015, 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. While we may elect to update these forward-looking statements at some point in the future, we disclaim any obligation to do so, even if our views do change.

I would now like to turn the call over to David.

Thanks, Kathy.

And thank you to everyone for joining us on the call this morning.

During the first half of 2015, we achieved several significant milestones in regards to our Fovista Phase 3 pivotal program and our Fovista Expansion Studies program. Since our last conference call, we have also strengthened our senior management team with the addition of three well-accomplished and talented new members to Ophthotech.

In May 2015, we provided updates on the Company's two Phase 3 trials of Fovista in combination with Lucentis in patients with wet age-related macular degeneration. Completion of enrollment of the first Phase 3 trial was announced. In addition, guidance was provided for the approximate completion of enrollment of the second Phase III trial by the end of the third quarter. Subject to delays related to the summer season and/or the initiation of competing trials.

We currently anticipate that enrollment of the second Phase 3 trial should be completed in the fourth quarter of 2015. The Company's timing projections for completion of enrollment assume no additional impact related to the summer season and/or competing trials. We continue to expect to report initial top-line data from both Phase 3 trials of Fovista in combination with Lucentis by the end of 2016.

This timeline could be subject to an adjustment to a slightly later time point if the recruitment rate is on the lower end of our projected enrollment scenario. The initial top-line data are expected one year after the enrollment of the last patient in the second Phase 3 Fovista in combination with Lucentis trial, plus the customary time required for database closure and analysis.

In addition to being identical with respect to the trial design in the first year, both of these Phase 3 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 locked and analyzed together, which will allow for the analysis of multiple relevant endpoints in accordance with the statistical analysis plan.

The third Phase 3 trial, which is investigating Fovista in combination with either Eylea or Avastin, continues to enroll patients; and the recruitment is on track. This third Phase III trial was issued approximately nine months after the Fovista in combination with Lucentis trials. Our key objective 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 3 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 3 trials of Fovista in combination with Lucentis, and subsequently submit an amendment to the NDA with data from the Phase 3 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 extremely pleased to welcome the newest members to our senior management team. Dr. David Shima joins us as Chief Scientific Officer. Henric Bjarke joins as Chief Commercial Officer, and Dr. Satish Tripathi joins as Senior Vice President of Global Regulatory Affairs.

Samir and I are particularly pleased to be reunited with two of our most talented and accomplished senior management colleagues from Eyetech. Dave and Henric were an integral part of the team at Eyetech that brought the first anti-VEGF product to market for the treatment of wet AMD. We're very excited to have this opportunity to work with them again.

Henric joins us from Alexion, where he successfully managed commercial operations in the US and Canada, launching their lead product Soliris. As mentioned, Henric has extensive commercial experience in the retina and ophthalmology market. He led the sales and marketing effort at Eyetech during the launch of Macugen. He managed multiple US and global brands and participated in several major launches. Including Xalatan, which was the world's number one brand of glaucoma medication and the first ophthalmic medicine to achieve blockbuster status.

I will now turn the call over to Samir, who will provide some background on Dave and Satish.

Thank you, David.

As David mentioned, we are excited to welcome these new members to our senior management team. All three bring relevant experience and proven track records to Ophthotech.

I'm excited to be working with Dave Shima again. He's an exceptional colleague that I worked with for many years. Dave has a deep passion and extensive experience in drug discovery, and his past work is directly relevant to our commitment to developing science-driven breakthrough therapies.

Dave is a pioneer and world leader expert in PDGF angiogenesis and vascular cell biology. He played a critical role in validating the potential of anti-PDGF in retinal disease and identified it as a target for development. Dave oversaw the early development of Fovista in his laboratory at Eyetech.

As a world-renowned researcher in both academic and industry settings, Dave has focused his career on angiogenesis. Inspired by his work under the mentorship of Dr. Judah Folkman at Boston Children's Hospital. Dave joins us from Roche, where he recently served as Global Head and Vice President of Ophthalmology, Discovery, and Biomarkers.

Satish had an extensive career in combined R&D and global regulatory strategy experience. He has been directly involved in multiple regulatory approvals and has been directly involved in all aspects of drug development and their registration in the US, EU, Japan, and Australia, and over 100 other countries. He held various regulatory positions at major biopharma companies, and served as pharmacology and toxicology reviewer at the US Food and Drug Administration. We're excited to have Dave Henrich and Satish join our senior management team, who bring a wealth of knowledge and expertise to Ophthotech.

The Fovista Expansion Study is investigating the role of Fovista in combination with multiple anti-VEGF agents to reduce retinal fibrosis and treatment burden, and wet AMD patients are progressing well. The Company expects initial interim data from our Fovista retinal fibrosis study by the end of 2015.

The planning process for the study in monotherapy anti-VEGF resistant patients with wet AMD is on track, with the study expected to commence this year. In addition, we expect to initiate Phase 2, 3 dry AMD program with Zimura in the fourth quarter.

One last note. We are planning to host an Investor Day or an R&D day toward the end of the year. We will review all of our programs in greater detail and host a panel discussion with leading retinal specialists. We will provide more details over the next few weeks.

I will now turn the call over to Mike.

Thank you, Samir.

Good morning, everyone. I will begin with a short discussion on the recent filing of an amended 10-K for 2014 and an amended 10-Q for the first quarter of 2015.

As we discussed in the 8-K we filed concerning these amended financial statements, an accounting error occurred in the second quarter of 2014. Related to the release of a valuation allowance recorded against our deferred tax assets, as future losses were incorrectly anticipated when valuing these tax assets. This accounting error did not impact cash, operating expenses, or our operating results. The impact was below pretax income and the tax expense line. As we also discussed, we expect that the impact will completely reverse itself by the end of 2015.

Now turning to the quarterly results. Collaboration revenue related to the Novartis agreement was $1.6 million for the quarter ended June 30, 2015. This revenue was recognized in connection with the deferred revenue recorded on the balance sheet. Let me remind you that we are also responsible for supplying Fovista drug substance to Novartis under the agreement. And when this occurs later this year, we will record related collaboration revenue.

Research and Development expenses were $32.1 million for the quarter ended June 30, 2015, compared to $34.7 million for the same period in 2014. R&D expenses in 2014 included a $19.8 million expense for a milestone payment to Nektar related to the Novartis agreement. Excluding this amount, R&D expenses increased $17.1 million in Q2 2015 versus Q2 2014, with the increase primarily related to the Fovista Phase 3 clinical studies, the Fovista Expansion Studies, and the manufacturing of Fovista drug substance.

Increased compensation expenses, including share-based comp associated with additional research and development staffing. Along with an increase in manufacturing spending related to the Zimura clinical program accounted for the remaining change in expenses.

General and Administrative expenses were $12 million for the quarter ended June 30, 2015. Compared to $7.6 million for the same period in 2014, an increase of $4.4 million. The increased G&A expense versus Q2 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, professional services and consulting fees, and increased share-based compensation.

The Company reported a net loss for the quarter of $37.1 million or $1.08 per share. Compared to a net loss of $73 million, or $2.19 per share, for the same period in 2014.

The net loss in the second quarter of 2014 included a large tax provision related to the payments we received under the Novartis and Novo agreements. The net loss for the second quarter of 2015 was positively impacted by the recording of an income tax benefit of $5.1 million in the quarter.

Fully-diluted weighted average common shares outstanding at June 30, 2015, were 34.4 million. And turning to the balance sheet, cash, cash equivalents, and marketable securities totaled $449 million at June 30, 2015.

Now I'll turn the call back over to David

Thank you, Mike.

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

(Operator Instructions)

Yatin Suneja, Cowen and Company.

Thank you for taking my question. The first one is on enrollment. Could you help us understand, you mentioned in the release that the slowdown is because the summer season versus competing trials. How much of this become of the summer season versus competing trial, and how confident you are that the normal will now complete in Q4? And then, can't use the sites that you were using for the first trial for this trial?

Yatin, this is Samir. Thank you for your question. So I think it's important to realize it's very difficult to quantify one versus the other, and I wouldn't necessarily state that there is a so-called slow down because of any specific reason to a specified quantitative degree. It is simply because of what you alluded to with your comment subsequently about the cohort of countries. They are, at least in the ex-US, where a large part of our recruitment comes from, the sites are distributed differently. There are different countries participating in the 1002 trial compared to the 1003 trials, both of them being Fovista plus Lucentis. Therefore, you would expect some changes in recruitment rate that's more country-based more than anything else.

As far as the actual recruitment rate versus some of the competing trials or summer slowdown. We're still in the middle of our summer cycle. So it's difficult to go ahead and specifically state that there is a slow down at a quantifiable degree, because we're still in -- and also there's a month-to-month variation that could be -- that is substantial. So really taken together, it's reasonable to state that we believe that the recruitment should be completed by the end of the year. But I think it's very difficult to state one versus the other and the impact it's had quantitatively.

And then, can't you use the sites from first trial for this trial? Or are they overlapping sites?

You could, but you would have to do a whole new filing because there's specific country filings that were done for the original study. I will state though that we just had a meeting in Europe, the [IS UP] and the ASRS2 meetings. I can tell you that the sites that are involved, the enthusiasm level and the commitment to the study has been unparalleled. So I really don't believe it's a material fundamental issue related to the trial. It was more just related to the cohort of the patients and the volume that they see in specified countries in this trial.

Great. Thank you very much.

Joe Schwartz, Leerink Partners.

Thanks very much. I was wondering how much of slower enrollment is due to fewer patients starting on Lucentis in favor of Eylea? And do you think that this could help enrollment in your third phase III trial? And then, could you give us any insight into how far along you are in enrollment in the second phase III on top of Lucentis, and how many patients are left? And what the rate has been to date?

It's Samir, Joe. Thanks again for your question.

So as I stated in my previous answer, it's not -- we have not disclosed any quantifiers. But I think it's really important again to stress that this might be the intrinsic rate for this particular trial based on the countries that are there. They're very different countries in the 1002. We've always felt -- we gave you guidance in May based on the recruitment rate that we were seeing. And at this point, it's very difficult because the summer season people do plan ahead of time. And it's difficult to gauge exactly what the level of slow down, if there is an intrinsic slow down. As I stated, we're looking at month-to-month variation that's significant. And I just think it's reasonable to state that by end of the year. But we don't believe this is anything material in terms of major quantifiable differences that we are seeing.

Right. Okay. Maybe one more then on dry AMD. Can you tell us, are you waiting for anything in particular to read out competitively or other rate limiting factors to starting the phase 2/3 for Zimura?

Well we've had -- the protocol development is virtually finished. We've had some input in terms of the regulatory strategy, and we're pretty excited at the pace. And as David stated earlier, we expect to commence enrolling that trial by the end of the year.

Okay. Thanks for taking my questions.

Terence Flynn, Goldman Sachs.

This is Cameron filling in for Terence. Thanks for taking our questions this morning.

First of all, I was wondering, can you provide any update on your co-formulation strategy? And then second, can you remind us whether the Zimura phase 2/3 trial will include an interim analysis? Thanks

Cameron, this is Samir. Can you repeat the second question one more time?

Will the Zimura phase 2/3 dry AMD trial have an interim analysis?

Let me take the second question first. Yes that is our plan, but we really have not gone through the entire disclosure of the actual protocol. But, in general, yes, that is correct.

And with respect to the co-formulation strategy, it really hasn't changed from the past year. We continue to speak to physicians who have already at our science day in March gave very comprehensive and I would state unanimous views on co-formulation. That is, that over the longer-term of therapy, there are two really driving factors. One is that they don't really view it as a treatment burden at all. We, as a Company, believe that when commercialized, we'll be in a setting where physicians are going to be able to inject both drugs without having -- assuming it's approved, without having any delay. So the treatment burden for both the patients and the physician is going to be unchanged compared to what is today. And the second issue is the co-formulation allows a wide array of flexibility in addressing the multiple tissue responses that relate to a reduction of vision loss over longer term. There are more and more studies out there demonstrating potential and iatrogenic issues related to anti-VEGF therapy contributing to atrophy of their retina. It remains to be seen if it is related and then to what extent. But in that particular study, as we've alluded to before, one of the last things you'd like to do is if there is no fluid or need for anti-permeabilities, that you may be in a situation where you don't really want to use anti-VEGF. And of course, the pricing phenomenon where you have two expensive drugs, the ability to go ahead and switch over to a [bath] in which is a lower-priced option is something the market has educated us that is very critical with the presentation of two separate agents as opposed to co-formulation. That being said, we've also talked about co-formulation where we have an option to do that. Either with our own anti-VEGF agent, tivozanib, which we're developing. And also through the deal that we have with Novartis where the co-formulation with Lucentis is an option.

Anupam Rama, JPMorgan.

Thanks so much for taking the question. Samir, just wanted to follow up on a comment that you just made. Just wondering if we could get a formulation update with tivozanib, and when the timelines for a decision-making process there might be?

And then, a second quick one just for Zamora. Last quarter, you'd disclosed that you had enrolled the first patient in the PCV trial. So just wondering if you had any comments on enrollment metrics there, and when -- what your current thinking is when might see some data?

So on the Zimura, we've had continuing enrollment. That's not a disease that is highly prevalent with the specific metrics we're looking, but we're almost close to finishing the small cohort that we wanted to do. We will have some more updates, both on that and within relation to our Zimura program in a more comprehensive fashion at the science day.

As far as tivozanib is concerned, as you know, we started development on tivozanib. What we plan to do is have a formulation and the initial formulation and develop it with trials both in wet AMD and diabetic macular edema depending on the pharmacokinetics. And continue developing the slow release, which in both of those are going quite well. And I think again, at science day, we'll give more granularity in connection to what our next plan is. But I think it's important to emphasize, we're excited about the anti-VEGF potential of tivozanib, both in diabetic macular edema and neovascular AMD.

Great. Thanks so much for taking our questions.

(Operator Instructions)

Philomena Kamya, Stifel.

Congratulations on the progress made thus far. I just have a couple of follow-up questions. We saw a very nice print from Eylea yesterday that looked to be mostly DME driven. We just wonder if you guys have any sense if in wet AMD Avastin shares continue to remain stable in the US and in Europe?

This is Samir, Philomena. Thank you for your question. But we really don't have any guidance in connection to the anti-VEG use in the US or ex-US.

Okay. Great. Just one quick other question.

We were wondering if you could just provide us with any idea of how much interim data we may see from the Fovista retinal fibrosis study? Just in terms of patient numbers, treatment duration, and any additional data we might to hope to see in the top line fibrosis read? And do we do expect this in the AAO presentation?

Just to be clear, and again, thanks for the question. It's a long-term study, the anti-fibrosis, and we believe at the last earnings call we discussed how we had completed recruitment in that trial. So obviously it's going to be impossible to give any longer term data, or for that matter, I would say fibrosis reading per se, because you don't have the adequate cohort of patients in terms of numbers to be clinically meaningful in any way. That being said, it's a very broad study in the following ways. First, the very broad criteria, meaning that because it's an anti-fibrosis trial both from visual acuities, both from anatomic markers, it's an unprecedented study compared to the registration trials. For example, you're a lot greater that 50% fibrosis, you are allowed a large amount of hemorrhage which most trials don't permit. So it really gives a very good idea in terms of the real world outcomes, which typically most phase III trials have a more selective criteria. Secondly, it composes of patients that are not only treatment naive, but previously treated, which is very unusual. And third, it allows for looking at patients both by the regiment of simultaneous administration and pretreatment.

So really when you take all that into account, there's a large body of information we could garner about the therapeutic potential for Fovista. So it's in that viewpoint that we will have some interim read. But specific to fibrosis, obviously, that is a tissue response that takes a bit longer, a year or two years. And hence, the study is much longer, so the interim data will more focus on some of these other commercially relevant parameters that the study may afford us. I hope that is clear.

Yes, thank you very much for taking the questions. Again, congratulations on the progress thus far.

Thank you very much.

(Operator Instructions)

We have no further questions at this time.

Well I'd like to thank everyone for joining us today, and for your continued interest. Thanks again.

That does conclude today's conference. We thank, everyone, again for their participation.