IVERIC bio Inc (ISEE) 2018 Q4 法說會逐字稿

Good day, and welcome to the Ophthotech Corporation Q4 Year-End 2018 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Kathy Galante, Head of Investor Relations. Please go ahead, ma'am.

Good morning, and welcome to our fourth quarter and year-end 2018 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; Dr. Dave Carroll, Chief Financial Officer; Keith Westby, Chief Operating Officer; Vishal Kapoor, Chief Business Officer.

I would 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 of our product candidate and the potential for our business development strategy, including our collaborative gene therapy research programs and any potential in-license or acquisition opportunities.

These statements constitute forward-looking statements for the purposes 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 risk that could cause actual results to differ materially from those expressed in any forward-looking statement, including risk related to the initiation and the conduct and design of research and development programs and clinical trials; availability of data from these programs; expectations for 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 2, 2018, 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.

Thanks, Kathy, and good morning, everyone. We appreciate you joining our call this morning. 2018 was a transformative year for Ophthotech as we continue to pivot the Company to a leader in treating retinal diseases. Let me recap some of the highlights. First, our active business development efforts resulted in multiple transactions leading to the addition of 4 gene therapy research and development programs that target orphan inherited retinal diseases and an age-related therapeutic program to our retinal portfolio.

Versant Ventures became a major shareholder of Ophthotech through the acquisition of Inception 4, we also expanded our Board by adding 3 leading industry experts and our Phase 2b complement C5 inhibitor program for the treatment of geographic atrophy secondary to AMD and Stargardt is on track for data readouts this year and next.

We look forward to reporting initial top line data from our ongoing randomized, double-masked, sham controlled, Phase 2b clinical trial assessing the safety and efficacy of Zimura monotherapy in patients with geographic atrophy secondary to dry AMD in the fourth quarter of this year.

Patient recruitment for our Phase II randomized double-masked sham-controlled clinical trial assessing the safety and efficacy of Zimura monotherapy in patients with autosomal Stargardt disease has now completed and initial top line data are expected to be available in the second half of 2020.

We are particularly excited to have diversified our therapeutic pipeline through the acquisition of Inception 4. In October 2018, we acquired Inception 4 from Versant, a company that's well known in the industry for creating start-up companies focused on scientific merit. With this acquisition, we gained worldwide development and commercialization rights to an HtrA1 inhibitor program for the treatment of age-related retinal diseases.

Based on our current time lines, we are planning to submit an IND with the U.S. FDA for our new HtrA1 inhibitor program in geographic atrophy secondary to dry AMD in late 2020. Versant Ventures as a major new investor in Ophthotech is also helping us identify additional opportunities to expand our pipeline. We obtained approximately $6.1 million in cash through the acquisition of Inception 4.

Now moving on to our gene therapy programs. We believe that advances in gene therapy technologies have been promising and may provide transformative next-generation therapy for patients with retinal diseases. During the past year, we executed on our strategy to build a diversified portfolio gene therapy programs for orphan inherited retinal disease and we are currently developing multiple adenosine-associated virus or AAV gene therapy product candidates.

First, we are currently conducting a natural history and IND enabling study for Rhodopsin-mediated Autosomal Dominant Retinitis Pigmentosa program. RHO-adRP is an orphan monogenic inherited retinal disease that is characterized by progressive and severe vision loss leading to bilateral blindness. Based on the current time lines and subject to regulatory review, we expect to initiate a Phase I/II clinical program in 2020. There are currently no other treatments available to these patients.

Building on our gene therapy strategy, during the third quarter of last year we obtained the rights to license and develop and commercialize novel AAV gene therapy products for treatment of patients with retinal disease due to BEST1 gene mutations. These are orphan-inherited retinal diseases typically impacting both eyes of the patient.

In addition to the exclusive option agreement, we also plan to sponsor research to conduct preclinical and natural history studies. We took plan to commence an IND enabling activity and based on current time lines, expect to submit an IND to the FDA in 2021. Here also, there are no treatment options for patients. We're also sponsoring research to evaluate an intriguing minigene strategy for both Leber Congenital Amaurosis type 10 or LCA10, which is the most common form of LCA and is caused by mutations in the CEP290 gene.

And the second program, in autosomal recessive Stargardt disease which is caused by mutations in the AAV -- ABCA4 gene. We expect to receive results from LCA10 during this year, at which point we may elect to -- or option on this program to license. LCA10 and Stargardt diseases are both orphan, inherited degenerative retinal diseases that lead to severe vision loss without any currently available FDA or EMA approved treatments.

Although at the very early stages of development, we believe that the minigene strategy for Stargardt disease is potentially a strategic lifecycle improvement for our Zimura program in this disease.

We are also sponsoring research at University of Massachusetts Medical School to evaluate various AAV gene therapy methods for both intravitreal and subretinal applications in the eye. We're delighted to collaborate with leading scientists who pioneers -- who are pioneers in gene therapies for retinal diseases. We have cultivated strong scientific relationships with the investigators at the University of Massachusetts Medical School and its Horae Gene Therapy Center, the University of Florida, and the University of Pennsylvania.

Before I turn the call over to Kourous to go into more detail about these programs, since the beginning of 2018, we have expanded our Board of Directors by adding 3 leading industry experts during 2018; Adrienne L. Graves, Ph. D., former Chief Executive of Santen and Jane Pritchett Henderson, Chief Financial Officer of Turnstone Biologics and former Chief Financial Officer and Senior Vice President of Corporate Development at Voyager, joined our Board.

Effective January 1, 2019, Dr. Calvin Roberts, Senior Vice President and Chief Medical Officer, Eye Care at Bausch Healthcare Companies and Clinical Professor of Ophthalmology at the Weill Medical College of Cornell University was also elected to the Ophthotech Board of Directors. We are excited and pleased to welcome Adrienne, Jane, and Calvin and look forward to their contributions to our strategy.

We're excited about our pipeline and we look forward to continuing to do -- to work and develop and move this pipeline forward. We're committed to advancing and expanding the pipeline to add other applications and opportunities for retinal diseases and creating value for our shareholders.

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

Thank you, Glenn, and good morning, everyone. Since Glenn already provided an overview of our strategy I will focus on providing you more granularity regarding our diversified portfolio of gene therapy and therapeutic programs that we have assembled over this past year. We created a diversified portfolio solely focused on feeding inherited an age-related retinal diseases. The foundation of our portfolio is based on strong scientific proof-of-concept, presence of significant unmet medical need, and future commercial viability.

Today, we have created a portfolio with multiple shots on goal for a broad spectrum of diseases in both our gene therapy and therapeutics pipeline reinforcing our commitment to patients and retinal specialists who do not have any treatment options for treating these retinal diseases.

As Glenn mentioned, our current AAV gene therapy portfolio consists of development programs for rhodopsin-mediated autosomal-dominant RP and diseases impacted by BEST1 mutations, as well as minigene research programs for LCA10 and autosomal recessive Stargardt disease. Further, we are funding research comparing various AAV gene delivery methods for intravitreal and subretinal applications in the eye.

I would like to provide details on our AAV gene therapy programs. We are developing a single vector mutation independent novel adeno-associated virus gene therapy product candidate for the treatment of Rhodopsin-mediated Autosomal Dominant Retinitis Pigmentosa, and orphan inherited retinal disease, Rhodopsin-mediated adRP is a monogenic orphan disease with more than 150 mutations identified in rhodopsin gene.

These mutations may lead to the production of proteins that are toxic to the retinal tissue. The construct for the Rhodopsin-mediated adRP product candidate combines a transgene expressing a highly efficient novel short hairpin RNA designed to target and knock down endogenous rhodopsin in mutation-independent manner

With a human rhodopsin replacement transgene made resistant to RNA interference in a Single AAV 2/5 vector. Basically it shuts down the generation of toxic endogenous proteins, while simultaneously replacing it with a gene that express the protein that is needed for vision. We are collaborating with internationally renowned scientists in gene therapy for orphan retinal diseases.

Professor Alfred Lewin and Professor William Hauswirth from University of Florida and Professor William Beltran and Professor Gustavo Aguirre and Professor Sam Jacobson and Professor Artur Cideciyan from the University of Pennsylvania.

In August, this impressive proof-of-concept study results of our product candidate in a naturally occurring canine disease model were published in the Journal of Proceedings of the National Academy of Sciences, demonstrating long-term anatomic and functional rescue of the retinal tissue in the areas treated with our AAV product candidate. This publication entitled Mutation-independent Rhodopsin Gene Therapy by Knockdown and Replacement with a Single AAV vector was published by scientists at Penn and University of Florida. I would like to point out that proof-of-concept study in the mouse model of this disease had already been published by these scientists earlier.

Moving now to our next existing gene therapy, inherited retinal disease program, which impacts patients with BEST1 mutations. The BEST1 gene encodes bestrophin, a multifunctional protein that regulates ion channels and homeostasis in the retinal pigment epithelial cells, which are necessary for the survival of the photoreceptors, the cell that perceive light and are necessary for our vision.

Mutations in BEST1 gene are known to alter intracellular calcium signaling and disruption and fluid transport across retinal pigment epithelial cell, leading to disruption in the adhesion between them and photoreceptors. In humans, this can lead to develop of vitelliform lesion in the macula which over time may progress to atrophy and bilateral loss of central vision.

Our lead BEST1 AAV product candidate demonstrated impressive anatomical proof-of-concept when it was treated in the naturally occurring canine bestrophinopathy disease models with various BEST1 mutations, reversing subretinal lesions and micro detachment in all of them. The results of this work were published in February 29, '18, in the Proceedings of the National Academy of Sciences. Together with Penn, we plan to conduct a natural history and IND enabling studies. Based on current time lines and subject to regulatory review, we plan to initiate a clinical trial in patients in 2021.

We'd like to point out that currently Retina Specialists do not have any FDA or EMA approved treatment options available to them for the treatment of patients suffering from either Rhodopsin-mediated adRP or diseases caused by BEST1 mutations. We are also evaluating a minigene strategy for orphan retinal diseases that involve mutations in genes that are too large to fit inside a standard AAV vector such as LCA10 and Stargardt disease.

We are collaborating with leading scientists such as Dr. Guangping Gao, Professor of Molecular Genetics & Microbiology and Director of Horae Gene Therapy Center at the University of Massachusetts Medical School, who is a pioneer in AAV vector technology. And Dr. Hemant Khanna associate Professor of Ophthalmology and Visual Sciences who is developing our minigene strategy. The concept of this minigene strategy seeks to deliver a smaller but still functional form of the 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.

We are currently focused on LCA10 and autosomal recessive Stargardt disease as both are orphan inherited degenerative retinal diseases that lead to vision loss without any currently available FDA or EMA approved treatments.

Our current Phase IIb trial in Stargardt disease will provide us valuable information for future utilization of the minigene therapy in Stargardt disease which is potentially a strategic lifecycle improvement.

More age-related indications, the addition of HtrA1 inhibitor program has broadened the spectrum of our therapeutic portfolio. And I would like to go into more detail with you regarding this exciting new program. HtrA1 is a serine protease that impacts both cells and the extracellular matrix. The overexpression of HtrA1 leads to alterations and disruptions in the physiological morphology and function of retinal pigment epithelial cells, and the Bruch's membrane, which is the base membrane necessary for the normal function of these cells.

As I mentioned earlier, the degeneration of RP cells leads to the death of photoreceptors, which are responsible for our eyesight. Genetic linkage studies have demonstrated a strong correlation between HtrA1 and risk for AMD. A study published in Molecular Vision in 2017 demonstrated a specific correlation between the expression of HtrA1 and a certain set of genes conferring risk for AMD.

Further, the overexpression of HtrA1 has also been demonstrated in patients with AMD. In these scientific findings, HtrA1 overexpression may play a role in age-related macular degeneration and therefore, molecules involved in the regulation and inhibition of HtrA1 are targets for therapeutic intervention in this disease.

Our new HtrA1 inhibitor program currently consists of multiple lead compounds, which have shown high affinity and specificity in vitro and target engagement in multiple animal models as well as a number of backup compounds. We believe that this program is supported by strong scientific rationale and has the potential to be a best-in-class and address the high unmet medical need in age-related diseases, especially dry AMD.

Thank you for your time. I will now turn the call over to Dave Carroll.

Thank you, Kourous, and good morning, everyone. I'd like to highlight a few items from our press release of this morning and provide some guidance on our expected year-end 2019 cash balance. In December 2018, we terminated our agreement with Novo Holdings which relieved us of any obligation to pay Novo future product royalties. Until this quarter, we have reflected the $125 million in financing we received from Novo as a royalty purchase liability on our balance sheet. As a result of this termination, during the fourth quarter, the Company extinguished this liability and recognized a $125 million gain. This gain on extinguishment did not impact our year-end cash balances.

For the quarter, our net income totaled $104.1 million or $2.62 per share compared to a net loss of $9.5 million or $0.26 per share for Q4 2017. This increase in net income was driven primarily by the aforementioned $125 million gain on extinguishment. Year-to-date, our net income totaled $63.1 million or $1.70 per share compared to a net income of $114.2 million or $3.17 per share for 2017, as 2017 reflects the impact of our Q3 completion of the Novartis licensing agreement and our recognition of approximately $210 million in collaboration revenues.

Turning to our expected year-end 2019 cash balance. As we previously announced, our cash balance at December 31 was approximately $131 million. We now estimate our year-end 2019 cash balance to range between $80 million and $85 million. This estimate is based on our current 2019 business plans, which includes the expansion of our gene therapy programs, the expansion of our HtrA1 development program, and the continuation of our clinical development programs with Zimura.

Of course, these estimates does not reflect any additional expenditures resulting from the potential in licensing or acquisition of additional product candidates or technologies or any associated development that the Company may pursue.

I'll now turn the call back over to Glenn. Thank you for your time.

Thanks, Dave, and before turning the call back over to the operator for questions, I want to reiterate, we remain focused on advancing our promising portfolio of novel therapeutics and gene therapies to treat inherited retinal diseases and age-related ophthalmic diseases. We also remain committed to building on the strong momentum that we started in 2018. And in 2019, we expect a number of milestones; first, to generate topline data from our Zimura Phase II clinical program in GA in the fourth quarter of this year. Second, we expect results from our minigene program for LCA10 during the year, at which time we may elect to exercise our option for this program.

Third, we'll continue to advance the preclinical work in RHO-adRP to be ready to enter the clinic in 2020. Fourth, we'll select a manufacturer for the preclinical work and Phase 1 clinical supply for our BEST1 disease program; and last, we'll initiate formulation development for our HtrA1 inhibitor program. So we have a lot to do.

In addition, our business development outreach will continue to be aggressive, but selective as we seek out additional opportunities that are in sync with our science-driven retina-focused strategy. We're committed to effectively managing our cash position and to creating value for our shareholders. In 2019, we'll continue to execute on strategy and look forward to providing you with updates as all these programs progress.

Again, thank you for listening to our call, and operator, please open the line for questions.

(Operator Instructions) We will now take our first question from Yigal Nochomovitz of Citibank.

I was just curious regarding the time lines for both the retinitis pigmentosa study as well as the BEST gene program. You're saying you're going to be in the clinic in 2020 and 2021 respectively and I think Glenn you also mentioned, you're going to do some natural history studies. Thus, I was just wondering, is it imperative to do the natural history studies? I would think maybe that something exists already in the literature and if not, what are you specifically trying to learn from those studies that will help you better prepare for clinical success, given maybe that if you didn't do those studies maybe you could start the clinical works sooner?

Thanks, Yigal, good question, and I'll reiterate the time lines. Yes, adRP in 2020 BEST in 2021. And Kourous, do you want to talk about the strategy around natural history studies?

Sure. Thanks, Yigal, for the question. And I agree with you, there is some natural history already available. This natural history is done in parallel with IND enabling studies and basically we are looking at to find the ideal inclusion criteria and potential endpoints to basically tailor them to a clinical trial. And the additional information that is currently available in the literature would obviously help. One of the advantages is, is the scientists we're working with are the leaders in the field. So they are looking at their database to also select those patients.

Okay. And would we expect to see the results of those natural history studies before you start the Phase 1/II or will they continue during the clinical work?

Well, some of the -- probably the natural history studies is just a history study and these patients will continue to be followed. Obviously once they're enrolled in the trial, the results of the trial would become come crucial to further guide us on how to design the subsequent trials. But if any additional information becomes available during this study or in the literature, obviously we take into effect in our design.

Got it. And on the UMass program with Horae Gene Therapy Center, I'm just wondering if that agreement allows you to go beyond LCA10 at some point. Obviously, as you know, you have ProQR and Editas that are already involved in that area. I'm just wondering how much flexibility you have beyond LCA10 given there are quite a few other forms of LCA.

Yes. So we have 2 opportunities with UMass; one on LCA10, the second on Stargardt disease, and then obviously the third effort with them is around working with Dr. Gao's vector library to find optimal ways to deliver genes either intravitreal or subretinal. I would say the relationship is good with him, and we'll continue to look to expand that. But those are the existing agreements that we have today. The only thing I'll say about the competitive landscape, the other 2 are using different modalities to treat those patients. This is a gene therapy approach that could have a different outcome. So our relationship with UMass, I think is very good and we'd love for opportunities to work with them on other things as the opportunities present.

Okay. And then, the one other question I had is on the upcoming Phase IIb for Zimura. Can you discuss in any more detail what the desired treatment effect is there or, in other words, what is the study powered for on-treatment effect in order to be successful in reducing the rate of growth of the GA lesion in order to control?

Okay, Kourous?

Sure. So this is -- this Phase IIb is a screening trial, which based on the amount of impact that Zimura has on the growth will be -- we will decide whether to move forward and whether the results are good enough that potentially be counted as a one registrational trials. At this point, we are still evaluating, obviously, the competitors have already or the competitor has already set a certain impact already, but we are looking both at the efficacy and the safety to make those decisions. We have not provided any more detailed guidance publicly, but we are definitely -- obviously looking and seeing how the impact will make us decide whether and how to move forward.

(Operator Instructions) We will now take our next question from Anupam Rama of JP Morgan.

Hi guys, this is Tessa filling in for Anupam this morning. On the gene therapy pipeline that you are building, the Company has done a number of gene therapy deals over the last year, should we be expecting more gene therapy business development over the next 12 months to 18 months and perhaps you can talk, at a high level, about what you are looking for in gene therapy opportunities and how you are thinking about internal versus external manufacturing for your ongoing and potentially future programs? And then maybe a housekeeping question as well, how should we be thinking about your cash runway?

Okay, thank you. Good question, so I'll talk a little bit about the strategy. Our strategy on business development going forward will be focused only on gene therapy. The criteria that we mentioned is that we look for things that have great science. Obviously with the transactions we've done today, each of those institutions are known for great science and also that they are retina focused. So that's the kind of the box around that. I'll add a third dimension that we obviously look at each of those opportunities and the market capability, so there's always a financial model involved. Over the next 12 months to 18 months, we're active, we're looking, we'll continue to look, so if we find other interesting gene therapies or could expand our collaborations with the existing institutions, that would be priority one. As to the cash runway and guidance, I'll let Dave answer that question.

Well, thanks very much, Glenn. So we've said that we'll end 2019 with cash ranging between $80 million and $85 million. And we've said in the past, we continue to reiterate that we have more than sufficient resources to get us to next car turns, that's always been our overarching theme and we'll continue to see that happen as 2019 progresses.

Then your last question related to manufacturing, because of our size at this point in time, we will be committing capital to build a facility. So we will use a CMO approach to that, we have already selected a manufacturer for our adRP program. And as I've mentioned; one of the key criteria for 2019 is to select a CMO for the preclinical work that we have in BEST1 disease. I'm not sure we talked about that manufacture yet, but we'll disclose that shortly. I don't think anybody will be surprised. We believe they're one of the best, if not the best at this right now and more to come on that. But our strategy will be to use outside resources for manufacturing.

There are no further questions at this time. I would now like to hand the call back to Glenn for any additional or closing remarks.

Once again, thank you for listening to the call today. 2019 will be another very important year for us in terms of execution and moving our programs forward. So we look forward to continuing to provide updates throughout the year. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.