Ocugen Inc (OCGN) 2022 Q4 法說會逐字稿

Good morning, and welcome to Ocugen's fourth-quarter and full-year 2022 financial results and business update call. Please note that this call is being recorded at this time. All participant lines are in a listen-only mode. Following the speakers' commentary, there will be a question-and-answer session.

I will now turn the call over to Tiffany Hamilton, Ocugen's Head of Corporate Communications. You may begin.

Thank you. Joining me today are Ocugen's Chairman, CEO, and Co-Founder, Dr. Shankar Musunuri, who will provide a business update; and our Chief Accounting Officer and Senior Vice President of Finance, Jessica Crespo, who'll provide more detail on our financial results.

Earlier this morning, we issued a press release detailing business and operational highlights for the fourth quarter and full year of 2022. We encourage listeners to review the press release, which is available on our website at ocugen.com. This call is being recorded, and a replay with the accompanying slide presentation will be available on the Investors section of the Ocugen website for approximately 45 days.

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. We may, in some cases, use terms such as project, believe, potential, proposed, continue, estimate, anticipate, expect, plan, intend, may, could, might, will, should, or other words that convey uncertainty, a future event, or outcomes to identify these forward-looking statements.

Such statements are subject to numerous important factors, risks, and uncertainties and may cause actual events or results to differ materially from our current expectations. Investors should familiarize themselves with the company filing for complete details. Except as required by law, we assume no obligation to update forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise after the date of this presentation. Finally, Ocugen's 10K covering 2022 will be filed soon after today's call.

I will now turn the call to Dr. Musunuri.

Thank you, Tiffany. Good morning, and thank you, all, for joining us today. I'm excited to share with you the significant progress Ocugen made in 2022 and during the first months of 2023 to further advance our diversified pipeline, while continuously focusing on patients and pursuing courageous innovation. Fueled by our team's passion, dedication, and visionary mindset, we witnessed progress across all our clinical programs. I will also provide more on our objectives for 2023 leading into 2024.

Let me commence with an update on our gene therapy program. In December 2022, we announced that OCU400, our investigational drug candidate for the treatment of retinitis pigmentosa and Leber congenital amaurosis was granted expanded orphan drug designations by the US FDA, which supports the therapeutic potential of OCU400 to treat multiple inherited retinal diseases with a single product.

OCU400 is symbolic of Ocugen's gene modifier approach that is based on nuclear hormone receptors that regulate diverse physiological functions in the retina, such as development, metabolism, cellular functions, and thereby establishes homeostasis to potentially restore retinal health and function.

In the US, RP and LCA affect 110,000 and 15,000 people, respectively. And globally, these conditions affect approximately 1.6 million people. And at despite its prevalence, RP and LCA patients have limited treatment options as currently approved or in-development gene therapies focus on individual genes.

OCU400 addresses shortcomings of current gene therapy approaches as a broad-spectrum, gene-agnostic approach to genetically diverse inherited retinal diseases. We have completed enrollment of RP patients in the Phase 1/2 trial for protocol and continue to enroll patients with LCA. We also established a high dose to be the maximum tolerable dose. We plan to start the Phase 3 clinical trial near the end of 2023.

OCU200, our biologic product candidate, is a recombinant fusion protein consisting of two human proteins, tumstatin and transferrin, and is designed to treat severely sight-threatening diseases like diabetic macular edema, diabetic retinopathy, and wet AMD. Millions of patients worldwide are affected by these conditions. However, current therapies target only one pathway, either angiogenesis or inflammation, and up to 50% of patient populations experience limited or no response to current treatments.

OCU200 works with a distinct mechanism of action compared to existing therapies and targets multiple causative pathways such as angiogenesis, oxidation, and inflammation and has the potential to offer better treatment to all patients. Yesterday, we submitted an investigational new drug application, IND, with the US Food and Drug Administration to initiate a Phase 1 clinical trial of OCU200 for treating diabetic macular edema, DME. This regulatory milestone fulfills the company's commitment to file the IND for OCU200 within the first quarter of 2023. We are proud to further advance OCU200, one of Ocugen's founding ophthalmic programs.

Another major highlight in 2022 that I'd like to note is the expansion of our pipeline into cell therapy with NeoCart, a Phase 3-ready regenerative cell therapy technology that combines revolutionary advancement in bio engineering and cell processing to enhance the autologous cartilage repair process. We are developing NeoCart specifically for the treatment of articular cartilage defects in the knee.

Current therapies to treat cartilage damage in the knee are suboptimal with varying outcomes due to variable cellular responses. The current standard of care suffers from factors such as pain, reduced knee function, failure to address cartilage damage, donor tissue availability, and open surgery.

In addition to receiving a regenerative medicine advanced therapy designation from the FDA, we received a concurrence from the FDA on the confirmatory Phase 3 clinical trial design. We have already begun renovating our facility to accommodate cGMP manufacturing for clinical trials, and we are planning to initiate Phase 3 randomized controlled study in subjects with articular cartilage defects in the first half of 2024.

Now, turning to our vaccines portfolio and continued efforts to significantly mitigate the spread of COVID-19. From a public health perspective, we actively monitor the medical need for a more durable vaccine as more than 1 million cases of COVID-19 were diagnosed in the US over the last 30 days. The international health regulations emergency committee of the World Health Organization recently held a meeting in January this year to discuss the state of the COVID-19 pandemic, which revealed that the global risk of COVID-19 and its ongoing transmission as high.

This assessment was based on factors regarding circulating SARS-CoV-2 variants of concern, status of global vaccination, and hybrid immunity, and the unexpected and relatively early seasonal return of the flu, which further encumbers already constrained healthcare systems. The data back this up. More than 5 million cases were diagnosed and nearly 47,000 people died worldwide in the last 28 days.

Current COVID-19 vaccines are limited by a lack of durability and inability to stop transmission. As part of our commitment to address current gaps in the fight against COVID-19, we are developing a novel mucosal vaccine platform that includes OCU500, a bivalent COVID-19 inhaled vaccine; OCU510, a seasonal quadrivalent flu inhaled vaccine; and OCU520, a combination quadrivalent seasonal flu and bivalent COVID-19 inhaled vaccines.

The 500 series is based on a novel, ChAd platform designed to reduce transmission and protect against new variants. The OCU500 series is designed for annual boosters. For the 2022 to '23 flu season or 50% of the US population about six months of age received a seasonal flu shot, representing a market size of more than 170 million doses. The OCU500 series of vaccines and the development grants Ocugen a distinct product candidate profile status that could significantly impact major global health obstacles and maximize our opportunity to serve broader patient markets.

Regarding our injectable COVID-19 vaccine already in development, COVAXIN, we successfully completed enrollment for our COVAXIN Phase 2/3 immuno-bridging and broadening clinical trial in December 2022 and reported topline data in January 2023. This data showed that COVAXIN was well tolerated and demonstrated immunogenicity. We plan to present final data and analysis at midyear.

At the beginning of November 2022, we held Ocugen's first R&D Day since the company's inception to showcase our dynamic pipeline and world-class team to investors, analysts, KOLs, and other key stakeholders of the company. During that meeting, we shared the long-term outlook for the company. On this call, I would like to spend some more time recapping our key priorities over the next 12 to 18 months.

First, our gene therapy programs. We're anticipating OCU400 preliminary efficacy data midyear and plan to start the Phase 3 clinical trial near end of the year. For OCU410, we are on track to submit INDs to the FDA in the second quarter of 2023 to initiate Phase 1/2 trials for dry AMD and Stargardt disease. With OCU410, we believe we have a potential one-time curative therapy at a single injection. Dry AMD affects vision in 10 million people in the US and over 266 million people worldwide.

Also targeting severe eye diseases, we look forward to the initiation of our OCU200 Phase 1 clinical trial, with the preliminary data anticipated in the fourth quarter of this year. We plan to complete the cGMP facility construction for the manufacturing of NeoCart in the fourth quarter in support of initiating a Phase 3 clinical trial in the first half of 2024. For our inhaled vaccine series, we are planning to file an IND to initiate clinical trials in the fourth quarter of 2024.

One overarching and imminent objective for Ocugen is to identify synergies and partnership with organizations that can help drive the development of our comprehensive pipeline. With that, I'm thrilled about the recent appointment of a new Chief Business Officer, Quan Vu, who is a seasoned healthcare business executive with more than two decades of experience in business development, strategy, and finance. We look forward to benefiting from the prospects of Quan's leadership and together further evolve as a fully integrated, patient-centric biotech company.

Our strategic initiative to identify partnership for our programs is also critical for our operational objective to conserve capital and extend runway as appropriate. With that, I will now turn the call over to our Chief Accounting Officer, Senior Vice President of Finance Jessica Crespo to review our Q4 and 2022 financial metrics. Jess?

Thank you, Shankar, and good morning, everyone. I'll now provide a brief overview of our key financial results for the fourth-quarter and full-year 2022. Our research and development expenses for the quarter ended December 31, 2022, were $17.2 million compared to $7.1 million for the fourth quarter of 2021. For the full year ended December 31, 2022, research and development expense was $49.8 million compared to $35.1 million for the year ended at December 31, 2021, with the increase primarily driven by the advancement of our product candidates into clinical trials.

General and administrative expenses for the fourth quarter ended December 31, 2022 were $6.9 million compared to $7.5 million for the fourth quarter of 2021. General and administrative expenses for the full year 2022 were $35.1 million compared to $22.9 million for the year ended December 31, 2021.

Net loss was approximately $21.9 million or $0.10 net loss per common share for the quarter ended 2022, Q4, compared to a net loss of approximately $14.6 million or $0.07 net loss per share for the fourth quarter of 2021. Full-year net loss was $81.4 million or $0.38 net loss per share compared to a net loss of $58.4 million for the full-year 2021 or $0.30 net loss per share.

Our cash, cash equivalents, and investments totaled $90.9 million as of December 31, 2022, compared to $95.1 million as of the year-end December 31, 2021. We expect that our cash, cash equivalents, and investment balance will enable us to fund operations into the first quarter of 2024. We're continuously exploring opportunities to increase our working capital, and we'll be focused on seeking out partnerships and non-diluted funding as Shankar mention during his prepared remarks.

That concludes my update for the quarter. Tiff, back to you.

Thanks, Jess. We'll now open the call for question. Operator?

(Operator Instructions) Uy Ear, Mizuho Securities.

Hey, guys. Thanks for taking my question. I was wondering if you could speak a little bit about your -- some more about your COVID program, particularly with COVAXIN. Could you sort of just help us understand how it fits currently, I guess, within the changing landscape where the FDA, I guess, are moving forward with recommendations for bivalent, and as well as companies developing as you, guys, are also with the 200 series in combination with the flu vaccine? That's my first question.

And I guess my second question is on OCU400, could you help us understand what should we expect, I guess, from the Phase 2 readout in midyear, and how would that help you to move into Phase 3 in terms of, I guess, trial designs as well as what sort of primary endpoint you would propose to the FDA? Thanks.

Thank you. Yeah. Starting with the COVAXIN, first question to address. Yeah. The market landscape is moving obviously, and as we stated before, we're anticipating the full data analysis by midyear. And obviously, COVAXIN is a good vaccine. I mean, it has got solid data. It is given to few hundred million people across the globe, a favorable safety profile.

And unfortunately, in the US, we needed to do more work to bridge with the US demographic and population as stated by FDA. So the first trial obviously included immuno-bridging trials. That's what we are completing.

And the second one, obviously, we're anticipating a safety trial because we need to bridge, immuno bridge to efficacy, the large efficacy trial, done over by partners in India. And the second step is, of course, the safety bridge. And as we stated earlier, we needed to work with the government agencies.

Having more vaccine options is important especially with a favorable safety profile. We confirmed in our immuno-bridging trial that we didn't have any myocarditis, pericarditis, or thrombosis, any of the adverse events like you see with other vaccines, and again, consistently confirming the safety data generated by our partners elsewhere. So we believe this has a space, provided we do get some help and funding from the government.

So that's where the COVAXIN is. I mean, as I stated before, there's more work to be done. Obviously, there's a need for multiple tools and toolkit. COVID is not done. It will be there for many years. And we believe with the favorable safety profile vaccine, which is built on a traditional vaccine platform such Polio and other vaccines, this could be a vaccine in a toolkit which would be beneficial for many patients or many subjects.

Now coming to OCU400, obviously, the landscape is changing. That's why we are in our OCU500 series, as you stated, with inhalation vaccine, the potential to control transmission and durability. There are two things which are issues with the current vaccines.

And we believe the market is going to move to annual boosters. As we stated, there's a large market size for flu. Over 50% of Americans are taking flu shots every year. So ideally, if we can combine with our technology we have which is unique and ChAd platform and designing novel flu as well as COVID and also a combination vaccine will offer a long-term -- as Ocugen can contribute into that space for public health's perspective.

Now changing gears, coming to OCU400 question, as we said, Uy, we're monitoring multiple observational endpoints as a part of this efficacy analysis. And what we're anticipating is we have multiple things we are looking at from structural perspective as well as functional endpoints. Our goal is to identify one endpoint. I mean, ideally, the same endpoint works for multiple mutations is good, but again, the data is going to tell that, and so we have to wait until we get the data.

Our goal is to identify an appropriate endpoint based on the data from this Phase 2 clinical trial and then propose that endpoint with FDA and eventually EMA and finalize our Phase 3 design and then move on to Phase 3 clinical trial. And your question about the Phase 3 clinical design, it will be pretty similar to product which got approved in the US several years ago in the space on gene therapy product. So the design will be similar to that.

Okay. Thank you.

Jennifer Kim, Cantor Fitzgerald.

Hi. Good morning. Thanks so much for taking my questions. I have a few here. I guess the first one is OCU200. I saw that you're going to get the Phase 1 started up, and we're going to see some initial data in the fourth quarter. And I'm wondering, what are you looking for in that preliminary data, and how should we think about the design of that trial?

And then second, I think you mentioned that your runway gets you to the first quarter of 2024. I'm wondering how do you think about -- I think previously it was runway into the end of this year. I'm wondering, I guess, how should we think about like how you're managing cash as you're balancing all these programs, and how you are able to extend that? Thanks.

Yes. So OCU200, as we announce, it's a dose-escalation study in a small population. Our goal is to look at the range of doses, so we can pick one before we go into Phase 2. So as a part of that, I mean, obviously, we're going to look at CST, central subfield thickness, as other companies have looked at for DME space specifically.

Once again, the primary objective of any Phase 1 clinical trial is safety as a part of the dose escalation to finalize the dose, and we'll be looking at observational endpoints, and one of them is CST. And now the second question, extending the runway into Q1, I'll let Jess answer that.

Sure. Hi, Jennifer. So in terms of the extension of our runway into the first quarter, we did utilize our ATM a bit, so that has helped us extend our runway into Q1 of 2024. But as Shankar mentioned, I mean, we will need to raise capital in order to progress on all of our programs. And we're exploring many different options, including our focus on non-dilutive funding, as we stated.

Okay. Great. Maybe if I could squeeze one more question, with the two additional IND filings in the second quarter of this year, should we think about you -- or initiation of those clinical programs, could that come this year? Or are you thinking more in, I guess, early next year? Thanks.

For --

For 410 --

(multiple speakers) as we stated -- yeah, yeah. Yeah. Again, I just wanted to confirm, the 410 and 410ST, we call it -- we separated it out because 410 targets dry age-related macular degeneration. Specifically, we'll be targeting late-stage patients in geographic atrophy, and that's targeted for filing in second quarter of this year. Similarly, OCU410ST, targeting orphan disease, Stargardt, is also targeted for second quarter of this year, IND filing.

Jonathan Aschoff, Roth MKM.

Hi. Thank you. Most have been answered, but did you say the NeoCart trial would start in the fourth quarter of next year or just sometime next year?

No, actually, we stated the NeoCart clinical trial would start first half of next year. We are constructing a cGMP manufacturing facility, and that will be complete by the end of this year.

Okay. And can you give us a little clarity on how much is left on the ATM as of today?

Yes. So as part of our, I would say, general corporate housekeeping, we've canceled the ATM in connection with converting our automatic shelf into a regular shelf. So you'll see those filings come through today. So we'll put the ATM back up when and if it's appropriate for the appropriate amount. So at this point, it's been canceled.

Okay. But can you tell us how much of that ATM was actually used overall from the (technical difficulty)?

Sure. Yeah. Under the ATM, we've sold approximately $14 million in terms of gross proceeds, and we've netted about #13.6 million.

Yes. I thank you very much. That is all.

You're welcome.

Robert LeBoyer, Noble Capital Markets.

Good morning. Thank you for laying out some of the milestones for the COVAXIN programs. Could you give any timeframes for -- well, you had mentioned the midyear top line or conclusions and full data. Could you give some of the timeframes for the Phase 3 and some of the other program starts and milestones?

Robert, good morning. Are you specifically referring to COVAXIN or other programs?

Excuse me?

Are you referring to COVAXIN and other programs?

Yes.

Okay. Yeah. As I stated before, yeah, the COVAXIN, we are finishing up the current study, and we'll have a final data analysis expecting midyear this year. And as I stated before, we may need to do a safety clinical trial. We're still waiting for FDA respond their comments on our safety protocols. And once we get that, obviously, as we stated, we are seeking government funds to conduct that clinical trial.

So as far as other Phase 3 clinical trials are concerned, there are two more we talked about during this earnings call. One of them is our signature OCU400 modifier gene therapy platform. So we have completed recruitment in our retinitis pigmentosa portion of the Phase 1/2 clinical trial. And so based on data read, we're anticipating midyear on efficacy signal, and we are going to get into -- planning to get into Phase 3 by the end of this year for OCU400 gene therapy Phase 3 clinical trial.

And the second Phase 3 clinical trial is related to NeoCart, our cell therapy platform. And the rate-limiting for that is it's autologous cell therapy. It's almost like a personalized medicine. So we are building our own manufacturing facilities, renovating the existing facilities to convert them into cGMP manufacturing for cell therapy production. And we're anticipating that construction will be complete by the end of the year, and that will allow us to initiate Phase 3 clinical trial in the first half 2024.

Okay. Thank you very much.

Sean Lee, HC Wainwright.

Good morning, guys. Just a quick question from me. So for the proposed NeoCart study, have you finalized on the endpoints in the study design yet?

Yeah. I think the study design, as we agreed with the FDA includes chondroplasty as the controlled, and that's different than prior controlled they used in the prior studies. And the second thing is the endpoints will include pain and function.

Compared to the previous Phase 3 that Histogenics ran NeoCart, what would be the key differences?

The key differences are they had a microfracture act as the control, which is -- I mean, so what we did is we looked into the current standard of care, which is chondroplasty. And so based on that, we actually wanted to use chondroplasty, and FDA agreed with that. The second thing is we're also going to restrict the lesion size to 3-centimeter-square and really focus on that, so that it's not very broad like they did before.

So I think with these changes, we anticipate we'll have a better prospect of relatively easily recruiting patients. That's important because chondroplasty is the standard of care, not microfracture. And that's really important. That's important change. And also, focusing on a specific range for lesion size is very important for us.

Great. Thanks for that. One last final follow-up for the new manufacturing facility that you're building, would that be only for supporting materials for the Phase 3? Or could you scale that up to potential commercial later as well?

Good question, Sean. The new building -- this personalized medicine, any cell therapies, this is like a scale out, not scale up. So these are very small. You can call them bioreactors. We call them tissue engineering process units type. So these things are very small suites, so this can be used for commercial manufacturing, too.

I see. Yeah. Thanks for that. That's all the questions I have.

Daniil Gataulin, Chardan.

Hey. Good morning, guys. Thank you for taking the question, and congrats on all the progress. Just a couple of follow up, one on the cash runway in terms of funding, are you expecting to fund the OCU500 series vaccine programs internally or look for external funding?

That's one. And two, in relation to 410 and 410ST, the two INDs that you plan to file this year, are you planning to initiate the actual trials this year as well? Are you planning to initiate those in 2024? Thanks.

Okay. Good morning. The first one is related to OCU500 series inhalation vaccines. So as we stated before, we are funding the development of those vaccines and taking it to the clinic. So we are also in parallel working with various government agencies because of the need, we believe, we are trying to secure funding from them.

So we do need their support to move them into the clinic. But the development part and preclinical studies, we have budgeted for it, and we're going to complete that.

And the second question you had on OCU410 and OCU410ST, targeting dry AMD and Stargardt disease, those INDs are scheduled to be filed running in the second quarter of this year. And as soon as we get a positive mark from FDA, we will start dosing patients this year.

Got it. Thank you very much.

This concludes the Q&A portion. I will now turn the call back over to Chairman and CEO, Dr. Shankar Musunuri.

Thank you, operator. I'd like to conclude the call with some additional remarks. I think it's clear that we are staying true to our mission as an integrated, patient-centric biotechnology company that targets unmet medical needs.

We believe we are in a position of strength, and we are poised to execute our goals with our pipeline over the course of 2023. We look forward to keeping you updated on our programs throughout the year. Thanks for your time today, and have a great week.

Thanks, everyone. Have a great day.

Thank you all for joining today's meeting. You may now disconnect.