IVERIC bio Inc (ISEE) 2015 Q3 法說會逐字稿

I would now like to turn the conference over to Kathy Galante. Please begin.

Good morning and welcome to our third-quarter 2015 earnings call. Joining me today, I have Dr. David Guyer, Chief Executive Officer and the 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 the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.

These statements may cover events and matters 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 filings, and in particular to the Risk Factors section in our quarterly report on Form 10-Q filed on August 10, 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 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 David.

Thanks, Kathy, and thank you to everyone for joining us on the call this morning. It has been a busy and productive time for Ophthotech. We are excited to have achieved significant milestones that have us on track to reach our goal to provide initial topline data from both Phase III trials of Fovista in combination with Lucentis in the fourth quarter of 2016.

We are pleased with the continued progress of the Phase III Fovista clinical development program. As we announced last week, Ophthotech has completed patient recruitment in the second of two large-scale Phase III pivotal clinical trials of Fovista anti-PDGF therapy in combination with Lucentis for the treatment of wet age-related macular degeneration. Ophthotech expects to announce initial topline data from both Phase III trials of Fovista in combination with Lucentis in the fourth quarter of 2016.

These first two Phase III trials are investigating the superiority of Fovista in combination with Lucentis compared to Lucentis monotherapy and are identical with respect to the trial design in the first year. Therefore, the database from both trials of Fovista in combination with Lucentis will be locked and analyzed together, which will allow for the pooled analysis for certain relevant endpoints in accordance with the statistical analysis plan.

A third Phase III trial, which is investigating Fovista in combination with either Eylea or Avastin, continues to enroll patients and is on track. This third Phase III trial was initiated approximately nine months after the Fovista in combination with Lucentis trials. We are pleased with the rate of recruitment to date and the level of interest expressed by the investigators.

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 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 FDA 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.

As you will recall, the FDA granted fast-track status for Fovista for the treatment of wet AMD in September 2013. We believe Fovista is the most advanced anti-PDGF agent in development for the treatment of wet AMD and, if approved, is expected to be first-to-market in this class of novel therapies for wet AMD. Assuming priority review, Fovista could be launched fourth quarter 2017.

I will now turn the call over to Samir.

Thank you, David. As David mentioned, we are pleased with the execution of our Fovista Phase III program and the Fovista expansion studies to date. Recruitment has been completed in two of the Fovista expansion studies.

One trial is investigating the optimal regimen for Fovista administration in combination with multiple anti-VEGF agents to potentially reduce subretinal fibrosis. The other trial is evaluating treatment burden in wet AMD patients. Both trials are ongoing and progressing well. In addition, our plans to initiate a Phase II/III dry AMD program with Zimura by the end of the year continues to be on track.

Last week, the results of our Phase I Fovista combination study in wet AMD patients was published in the Journal of the American Academy of Ophthalmology. As you may recall, this was an uncontrolled study in 23 wet AMD patients to assess safety of Fovista combination therapy with Lucentis, based on the premise of modifying the underlying disease by inducing pericyte loss.

Initial safety, visual, and anatomic outcome of this study served as the basis for our successfully completed randomized controlled 449-patient Phase II study investigating the superiority of Fovista combination therapy with Lucentis versus monotherapy Lucentis.

I would also like to inform everyone that we are scheduled to host an R&D investor day on December 3 in New York, from 8:30 a.m. to 11:15 a.m. We will review and update our Fovista programs in greater detail and host a panel discussion with a leading group of retinal specialists.

I will now turn the call over to Mike.

Thank you, Samir. Good morning, everyone.

For the third quarter of 2015, collaboration revenue was $3.4 million. $1.9 million of this amount was related to supplying Fovista drug substance to Novartis under the ex-US licensing and commercialization agreement, with the remaining amount related to the quarterly recognition of deferred revenue.

The third quarter of 2014 saw collaboration revenue of $39.6 million, the majority of which related to the Company earning the first $50 million enrollment-based milestone under the agreement. As a reminder, we have one enrollment-based milestone remaining for $30 million, and this will be earned when the final Fovista Phase III study completes enrollment in 2016.

Research and development expenses were $40.5 million for the quarter ended September 30, 2015, compared to $17.1 million for the same period in 2014, an increase of $23.4 million. Approximately $13 million of the increase related to the Fovista Phase III clinical studies, the Fovista expansion studies, and the manufacturing of Fovista drug substance and drug product. The remaining increase was due to higher compensation expenses, including share-based compensation associated with additional research and development staffing, along with an increase in manufacturing spending related to Zimura.

We expect to see continued significant year-over-year increases in R&D expenses in Q4 2015 and in 2016 as the third Fovista Phase III pivotal trial completes enrollment, the initiation and enrollment of the Zimura Phase II/III trial occurs, and as we execute on our manufacturing plans for Fovista and Zimura.

General and administrative expenses were $10.4 million for the quarter ended September 30, 2015, compared to $8.8 million for the same period in 2014, an increase of $1.6 million. The increased G&A expense versus Q3 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 $39.6 million or $1.14 per diluted share compared to net income of $8.6 million or $0.25 per diluted share for the same period in 2014. The net income recorded in the third quarter of 2014 was driven by the recognition of revenue related to the first $50 million enrollment-based milestone previously discussed.

Fully diluted weighted average common shares outstanding at September 30, 2015, were 34.8 million.

Turning to the balance sheet, cash, cash equivalents, and available-for-sale securities totaled $426 million at September 30, 2015.

And now I will turn the call back over to David.

Thank you, Mike. In closing, Ophthotech is positioned to build on the strong momentum that we have achieved during 2015. We look forward to capitalizing on the exciting opportunities that lie ahead in 2016, such as providing initial topline data from both Phase III trials of Fovista in combination with Lucentis in Q4, completion of patient recruitment of the Phase III Fovista in combination with Eylea or Avastin trial, continued progress in our Fovista expansion studies, and advancing our Tivo program. In addition, we look forward to initiating a Phase III trial of Zimura to treat geographic atrophy, a dry form of AMD, before the end of this year.

As Samir mentioned, we hope that you will be a part of our R&D investor day on December 3. Please reach out to Kathy if you haven't already registered.

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. Thank you.

(Operator Instructions) Yigal Nochomovitz, Citi.

I actually wanted to go back to some of the Phase II data, just to sort of get a better understanding of how you think about the change in CMV size data, because you'd split it by small CMV size versus large CMV size. You saw about a 50% decrease for the small size and something maybe like a 5% to 10% decrease for the large size.

So I'm just kind of wondering, do you think that Fovista's effect is correlated with the size of the lesion, or is it more just chewing away at the lesion and sort of independent of the actual size? At least based on the data, it would seem the latter explanation would make more sense, but I was curious what you think.

Hi, Yigal, it's Samir. Thank you for your question.

So, correlating size and the change in size with visual outcome is difficult from a simplicity standpoint. And in this is because there are multiple variables that affect visual outcomes; that is, your baseline vision, age of the patient, the amount of fluid, where the location of the lesion is, etc., etc. So there are so many confounders, and to go ahead and create a surrogate-type relationship with a lesion size and outcome is very difficult.

Secondly, just the measurement of the size of the lesion by source and angiogram, which is customarily the way it's done, is extremely variable, depending upon interpretation. And you can just see that in just about every study that's been done. There is a wide swing in terms of, for the same regimen, same drug, that you get variety of different readings.

All that being said, the general directionality is consistent in the Phase II trial across the analysis of lesion size, both by fluorescein angiogram and by OCT, which measures really the presence and absence of this neovascularization by subretinal hyper-reflective material.

And in both those settings, if you look at patients who had very good visual outcome versus those that didn't, the correlation is consistent, whereby in the combination arm, the suggestion always is there that you're modifying the underlying disease by changing the size or causing the resolution of the underlying pathologic lesion. And it correlates reasonably well with visual outcome.

Okay, great. I know you guys haven't talked a ton about Zimura recently, but it would be helpful if you could kind of just paint a picture of the landscape as far as how Zimura -- its mechanism may be different or similar to some of the other complement inhibitors out there, or co-inhibitors that work in the complement pathways such as Roche's lampalizumab and maybe even Soliris. Thanks.

Yes, hi, it's Samir again. So, you know, with respect to the mechanism of action, I think it's best to delineate whether it's acting upstream in the inhibitor, in inhibiting complement signaling pathway or downstream. Both Soliris and Zimura target C5 component of the complement casc. It tends to be more on the distal portion of the pathway. And by doing that, the hope is that the destructive effects of complement activation, which are typically mediated by inflammation and by cell lysis, are being affected by downstream signaling. And that's true with upstream as well.

However, the big difference being that the immunocompetent components of the complement path -- which are very important in innate immunity -- are preserved, at least theoretically, by downstream signaling inhibition. And we believe that that approach may pay dividends.

Okay, thanks very much.

Joseph Schwartz, Leerink Partners.

Thanks and congrats on all the progress.

I wanted to ask about your expansion studies a little bit. First of all, in terms of the fibrosis study, when can we expect to see that data, and what kinds of metrics and analyses should we expect you to report there?

And then on the treatment burden study, what kind of algorithms are you having physicians follow for determining the need for intra-vitreal injections of VEGF and PDGF inhibition?

And then lastly, on the third expansion trial for patients with poor or suboptimal outcomes on VEGF inhibitors, what is the status of that study? Thanks.

Great. Hi, Joe, how are you? So, with respect to the anti-fibrosis study, that's a long-term study; it's a 24-month study. So, I think the data on that will take some time. We announced a few months ago that we had completed recruitment, so it's going to be a while until we see the outcome in the entire cohort finishing 24 months.

But we'll be looking at fibrosis typically with fundus photography, the way it's been done, in our retrospective analysis of the Phase II. There isn't an accepted method across the board that's validated. Nevertheless, nobody disputes, when you look at significant fibrosis -- that's grades 3 and 4 -- as it was done in our Phase II study by certified and massed readers.

In connection to the algorithm for the treatment burden study, there's an induction period with combination therapy followed by quarterly administration of the combination agents. And if you have visual demise in the interim during that quarterly period of five letters or more, patients can be retreated with the combination therapy.

And I'd draw your attention to the fact that all three anti-VEGF agents are being looked at with respect to similar regimen. And typically, that has not been done in other studies. So while all the anti-VEGF agents are roughly similar with respect to their safety/efficacy profile, the regimen has not been established. So this will give us some idea on the optimal regimen via combination therapy with different anti-VEGF agents. And the treatment resistance study, we should be initiating that very shortly, and our hope is by end of this year.

Okay, great, thanks. And did you mention whether there are specific algorithms in the treatment burden study? Just because I know that today physicians often look for fluid or patient-reported visual disturbances as well as anatomical issues. I'm just wondering how much that will be prescribed versus left open to the physician's discretion.

Right. So it's quarterly, so it's a fixed regimen after the induction period. And so you're able to understand a little bit more about the treatment burden reduction. By having it fixed, you're at least leveling the playing field and not leaving it to the variability or subjectivity of retreatment criteria based on physicians' evaluation. So that's what we are really studying, a quarterly regimen algorithm.

Very interesting. Okay, thank you.

Stephen Willey, Stifel.

Thanks for taking the questions. Just had a quick question with respect to the filing strategy options that were discussed I think towards the beginning of the call. Just wondering, I guess, if you choose to submit an amendment to the filing, if you believe that would constitute a major change and thus kind of reset the clock on the plus-Lucentis label.

And with respect to Europe, I know Novartis is probably steering the ship with respect to filing there. But just given that the European regulators typically won't simultaneously review two separate filings, would you expect that Novartis would wait until all the information is available and submit one filing in Europe? Thanks.

Yes. So, first of all, we really can't comment, I think, after the NDA is submitted. And we have discussions with the FDA; we'll know better how the FDA views it. But what's very important to us is we will take the path that gets Fovista on the market as soon as possible, whatever that path is, to be able to allow physicians to treat their patients with this devastating disease.

So that's an important part of whether we amend or supplement, is -- would be that discussion with the regulatory authorities after submitting the NDA on to how they look at it. We obviously want a path that keeps our PDUFA date as early as possible and that doesn't reset the clock. So we would likely take the philosophy that whatever keeps that early approval possible, we would go that way. How they will look at it, it's always -- you have to wait until you have the negotiation.

So, the important point, though, I think, overall is we will take whatever path it is to get Fovista on the market as soon as possible. I really can't comment on the EU regulatory strategy yet. Ophthotech is still working with Novartis on that strategy, and in the future we will talk more about that.

Okay, thanks for taking my question.

(Operator Instructions) Anupam Rama, JPMorgan.

This is Eric in for Anupam this morning. Just wondering if you could give us a bit more color on where you are with your coformulation work with Tivozanib and perhaps maybe expand on how you are weighing the relative advantages of moving forward with Tivo versus a prefilled syringe approach with Novartis. Thanks.

It's Samir. Thanks for your question.

So, we continue to develop the Tivozanib, and we are certainly moving forward, pleased with the progress to date, but really don't have anything to disclose in, actually, the coformulation or drug delivery. I will say, though, that we've done some preclinical work with Tivozanib and are encouraged by it and hope to present some of that work through the investigator who's done some of that work, from Harvard, at the investor day.

Great, thanks.

We have no further questions. And I would now like to turn the conference back over to David Guyer for any additional or closing remarks.

Great. I just want to thank everyone for your time this morning and for your continued support. Thanks again.

And this concludes today's conference. Thanks for your participation. You may now disconnect.