Ocugen - Earnings Call - Q2 2020
August 14, 2020
Transcript
Speaker 0
Good morning and welcome to the Ocugen Conference Call. At this time, participants are in a listen only mode. A question and answer session will follow the presentation. Please note this conference is being recorded. I will now turn the conference over to Lisa D'Senza, Vice President of Integrated Communications at La Jolla Health Science to introduce the Ocugen team.
You may begin.
Speaker 1
Thank you, operator. I'd like to welcome you to our conference call. With me today are Ocugen's Chairman and CEO, Doctor. Shankar Moussinari our CFO, Sanjay Subramanian and our acting CMO and Chair of the Scientific Advisory Board, Doctor. Mohammad Jiniak.
Earlier this morning, Ocugen issued a press release, including a business update and Q2 twenty twenty financial results. We encourage listeners to review the press release, which is available on the Ocugen website at www.ocugen.com. This call is also being recorded and a replay will be available on the Investors section of the Ocugen website for approximately forty five days. Before we begin our formal comments, I'll remind you that various remarks we make today constitute forward looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our business strategy, future results of operations and financial position, our ability to raise capital on terms acceptable to us, our prospective products, product approvals, research, development costs, timing and likelihood of success and plans and objectives of management for future operations. These forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our expectations and forecasts and can be identified by words such as anticipate, believe, contemplate, continue, could, estimate, expect, intend and other words of similar meaning.
Any such forward looking statements are not guarantees of future performance. You should read carefully the risks and uncertainties described in today's press release as well as the risk factors included in our filings with the SEC. Note that our 10 Q was filed this morning. Any information we provide on this conference call is provided only as of the day of this call, 08/14/2020, and we undertake no obligation to update any forward looking statements we may make on this call on account of new information, future events or otherwise. I will now turn the call over to Ocugen's Chairman and CEO, Doctor.
Shankar Mussanuri.
Speaker 2
Thank you, Lisa. Good morning, everyone, and thank you for joining us this morning. I'm very excited about the progress we have made this quarter despite the challenges of the global pandemic as we work to develop transformative therapies with the potential to cure blindness diseases. Our first gene therapy product candidate, OCU400 for retinitis pigmentosa, is on track to enter the clinic with the two parallel phase onetwo trials in the next year. Our second gene therapy product, OCU410, for dry age related macular degeneration, and our first novel biologic, OCU200, for major retinal diseases, are on track to enter the clinic in 2022.
Our business strategy of diversifying our product approaches to ensure portfolio diversification and reduce risk was shown to be prudent, and in June, when we decided to discontinue the phase three trial of OCU300 for ocular graft versus host disease. A preplanned interim sample size analysis indicated the trial was unlikely to meet its co primary endpoints upon completion. As a result, we ceased development of OCU300 and initiated a workforce reduction as a part of our shift in focus towards the modifier gene therapy platform and novel biologics program. We will add resources where needed in the coming year to further strengthen our R and D and clinical development groups in support of our planned short term and midterm goals of initiating four early stage clinical trials within the next one to two years. We were successful in raising capital through our ATM programs to extend our runway into 2021.
We will continue to raise capital to support our short and mid term value creation goals for our patients as well as shareholders. Today we will provide an update on our progress as we drive our product pipeline forward. Sanjay will then share highlights of our second quarter twenty twenty financial results before the Q and A. Our management team and advisors are dedicated to creating long term value for our shareholders. As evidenced by the appointment of Doctor.
Mohammad Jiniong as Chair of our Retinal Scientific Advisory Board, We're attracting top talent to drive our product development initiatives forward. Doctor. Jinyard is an ophthalmologist, retina specialist, and inherited retinal disease expert with over twenty years of experience in ophthalmology and gene and cell therapies. His deep experience in ophthalmology and gene therapy will be instrumental as we advance our breakthrough modifier gene therapy platform into the clinic next year. He's also offering tremendous support to Ocugen as an acting chief medical officer.
We continue to be very excited about our modifier gene therapy platform, which has the potential to treat a variety of inherited retinal diseases with a single gene therapy product. One of the biggest advantages of our modifier gene therapy platform is that it has the potential to eliminate the need for individual gene replacement and gene editing strategies, and may therefore be highly differentiated from traditional gene therapy for eye diseases. Last month we were granted our third FDA orphan drug designation for OCU400 for the treatment of Rho mutation associated retinal degenerative diseases. The Rho mutation is part of the retinitis pigmentosa group of rare genetic disorders that involve a breakdown in loss of cells in the retina, and can lead to visual impairment and blindness. This is one of the more common mutations within the class, accounting for approximately twelve percent of retinitis pigmentosa patients in The United States.
Adding to the orphan drug designations for OCU400, for NR2E3, and CEP290 mutation associated retinal degeneration, the ODD4Ro gene mutation associated retinal degeneration further supports Ocugen's breakthrough modifier gene therapy platform's potential to treat multiple blindness diseases with a single product. This week we announced receipt of our fourth FDA orphan drug designation for OCU400 and PDE6B, a gene mutation resulting in retinitis pigmentosa and autosomal dominant congenital stationary night blindness. Four orphan designations for a single gene therapy product. OCU400 is distinct in the ophthalmology space. And we are excited about taking this program into clinic next year for patients who are in desperate need of rescue from blindness diseases.
Inherited retinal degenerations, such as retinitis pigmentosa, affect over one point five million people worldwide. Over one hundred and fifty gene mutations have been identified as associated with retinitis pigmentosa, and this number represents only sixty percent of the retinitis pigmentosa patient population. The remaining forty percent of these patients cannot be genetically diagnosed, make it difficult to develop individual treatments. We believe our modifier gene therapy has the potential to eliminate the need for developing more than 150 individual products, and provide one treatment option for all these patients. This month our Chief Scientific Officer, Doctor.
Rasappa Armugam, will highlight our breakthrough modifier gene therapy platform as a part of the Next Generation Therapy seminar at this year's World Orphan Drug Congress USA Conference on August 24. We will also be providing updates at the four investor conferences in The US, and the gene therapy conference in Europe in September and October. Our strategic partnership with CNCino Bio further solidifies our plans to enter the clinic in the next year for the development of OCU400. Our manufacturing activities are going well, and as planned, including scaling up to 200 liter batch size for our planned phase onetwo trials. Our plan to scale up manufacturing to commercial levels at this time minimizes the risk for product inconsistency in future.
Product consistency is extremely critical for any gene therapy product. We are on track with our IND enabling GLP toxicology studies. Overall we are very happy with the progress on this program, and very excited to enter into the clinic next year as planned. For OCU200 we anticipate a pre IND meeting with FDA later this year for this novel biologic for the treatment of major retinal diseases, including diabetic macular edema, diabetic retinopathy, and wet age related macular degeneration. We're also planning to secure manufacturing partner soon.
For OCU410, to treat dry age related macular degeneration, we are planning to meet with the FDA during the first half of next year to agree on roadmap for IND enabling studies and early stage clinical trials. Before I turn the call over to Sanjay, I just want to mention our continued commitment to our shareholders as we drive the development of our product pipeline and our deep commitment to patients by addressing rare and underserved blindness diseases through gene therapies and novel biologics. I will now turn the call over to Sanjay to provide our second quarter twenty twenty financial update. Sanjay?
Speaker 3
Thank you, Shankar, and good morning, everyone. As Shankar mentioned before, the second quarter has been a very eventful quarter for Ocugen and strengthens our mission to develop gene therapies to cure blindness diseases. I will now provide an overview of key financial results for the second quarter of this year. We ended the quarter on 06/30/2020 with cash, cash equivalents and restricted cash totaling $15,100,000 compared to $7,600,000 as of year end twenty nineteen. The increase in cash extends our runway well into the 2021.
In the second quarter of this year, we recorded revenues of $43,000 pursuant to a collaboration agreement with Adwait Inc. With respect to the development of Adwait's COVID nineteen testing kits. At this time, we do not expect this agreement to be significant to Ocugen's overall business, but we will update the market as things develop. Our research and development expenses for the three months ended 06/30/2020 were $1,600,000 compared to $1,200,000 for the three months ended June 3039. The increase was primarily due to severance related costs, partially offset by the reimbursement pursuant to the collaboration agreement with Adwait.
General and administrative expenses for the three months ended 06/30/2020 were $1,800,000 compared to 1,100,000 for the three months ended June 3039. The difference was driven by the increase in public company insurance expense and severance related costs. Net loss was $3,600,000 or $0.19 loss per share for the three months ended 06/30/2020, compared to a net loss of $3,500,000 or $0.58 loss per share for the three months ended June 3039. We ended the quarter with 135,000,000 shares outstanding. In April, we completed an amendment in exchange of the CDC warrants for 21,900,000.0 shares of common stock and non interest bearing unsecured notes of $5,600,000 To date, the company has made prepayments of $3,100,000 on the unsecured notes from proceeds received under the May 2020 and June 2020 ATMs.
As a reminder, the warrant amendment and exchange helped address the overhang in our capital structure, and we currently do not have any of the pre merger financing warrants outstanding. With that, we will open up the call for questions. Operator?
Speaker 0
Our first question comes from Keith MacKay with Chardan. Your line is now open.
Speaker 4
Yes. Thank you. Two questions for you. First one, do you anticipate the publication of any additional preclinical data in any journals during the second half of the year?
Speaker 2
Any additional data? Could you repeat the question, Keith?
Speaker 4
Yes. A publication of any preclinical data.
Speaker 2
On OCU400?
Speaker 4
Yes. Or any of your gene modifier technology?
Speaker 2
Good question, okay. Currently, you know, we're doing this year, based on the agreement we reached with FDA in the pre IND meeting, we're executing our IND enabling studies. We have started our GLP toxicology studies. And obviously some of the work is getting done, and, the interim of any tox information will be available in the first half of next year.
Speaker 4
Okay. Great. And to what extent is COVID impacting your ability to get that IND tox work done pre IND tox work with us.
Speaker 3
K. I'm sorry. Your your line is not very clear.
Speaker 2
Could you please repeat that question, please?
Speaker 4
Sure. Can you hear me better now?
Speaker 3
Yes. Yes. Better. Yes.
Speaker 4
My my question was to what extent is COVID nineteen impacting your ability to complete the pre IND tox work?
Speaker 2
Actually, so far, you know, we don't have any impact of the COVID nineteen. And our studies are ongoing as planned.
Speaker 4
Okay. And and the fact that, Kansino is busy developing their own SARS CoV two vaccine, that's that's not impacting you on the the manufacturing side at all?
Speaker 2
It's a great question, Kaye. Yeah, they are on the forefront and they're very busy. However, there's a strong commitment to our program. They're very excited to support us and they're continuing to support us, including as I mentioned in my just earlier, they're trying to scale up the process to 200 layer scale, which is a commercial scale to minimize any risk on the CMC and manufacturing side. So we have a complete support and cooperation from Kansino.
Speaker 4
Okay. Well, very good. That's all I have.
Speaker 2
Thank you.
Speaker 3
Thank you, Dave.
Speaker 0
Thank you. Our next question comes from Sikh Namakula Ramakanth with Vanguard. Your line is now open.
Speaker 5
Thank you. Good morning, Shankar and Sanjay. Can you hear me?
Speaker 2
Yeah. Could you speak a little louder?
Speaker 5
Sure. How about now? Is it better?
Speaker 2
It's fine. Yep. Thank you.
Speaker 5
This this is RK from Hetzee Rain Drive. A couple of quick questions. In general, regarding the retinitis pigmentosa patients, what percentage of these have the NR2E3 driven mutations? And are these mutations routinely identified? Or do you need to do some kind of some kind of diagnostic on these patients before you enroll them into your clinical trials?
Speaker 2
Yeah, it's a good question, RK. On the prevalence rates, you know, this is, again, it's about less than one thousand patients in The US. And all the clinical trials for this, we have to do the genotyping. And I will also ask Doctor. Jinnier, our acting CMO is on the call, to further you know, address this.
Doctor. Jinya?
Speaker 6
Yes. Thank you, Shankar. To answer your question, you know, so we definitely need to genotype those patients prior to enrollment in our clinical trial. And this is kind of standard, you know, procedure being done right now in gene therapy trials, and we're definitely very confident to do that with our clinical site investigators. They are trained to do that.
And so that will be a part of the process. Regarding the prevalence, as Shankar mentioned, these are rare diseases. But as you know, retinitis pigmentosa is one of the most common inherited retinal diseases and retinal degeneration. Still rare, but it's not, you know, like, ultra rare, you know, or for, know, disease is very common as as you saw the prevalence in our slide. Regarding the n r two e three, which what which which is one of the mutation of the gene modifiers, this this this genetic mutation have different clinical phenotype.
This is only one. So one of them is retinitis pigmentosa, but there's other clinical disease implicated with this gene mutation. And that's the whole notion about the oxygen for 100 program that you apply in a one product for multiretin degenerative diseases. For your question about RP or retinitis pigmentosa, they can see that around one, two percent of autosomal dominant retinitis pigmentosa.
Speaker 5
So thank you very much for that, doctor G. Are is the genetic test currently available and validated, or do you need to do some work, to get a validated test before applying that to your, to your screening protocol?
Speaker 6
Is Mohammed. Need
Speaker 3
Yes. Go ahead.
Speaker 6
Yes. No. These are standard, you know, testing. You know, the genetic testing for patient with inherited diseases or genetic disease have been done, you know, for years right now, close, you know, to twenty plus years or even earlier for systemic, you know, indications. So you take blood samples, you know, and you send it to a genetic lab, you know, and they look at the mutations on the chromosomes, you know, according to which mutation.
And so this is well established for the data that has been done before, and there's some, you know, commercial product in the eye, you know, for gene therapy. So we're using the same procedure, nothing different, you know, than what had been used before in all the other cancer trials for genotyping.
Speaker 5
So perfect. And then, Shankar, in general, I know you're planning to do to get four programs up and running in the clinic over the next year, year and a half. In general, what would be the design of these phase one studies? And also, how should we think about the development plans for these these four programs that you want to you want to get going within the next twelve months or so?
Speaker 2
Yeah. Yeah. Good question, RK. I'll briefly explain high level, then Doctor. Janiyar can add in.
The gene therapy programs, we outlined in our deck, we're planning to initiate two parallel phase one, two trials. And again based on the guidance from FDA and the agreement, these are going to be small. You're talking about nine patients in each trial with the three cohorts for a one year study, because you have to monitor the patient's safety for one year, along with exploratory endpoints, and then you're going to pick one of them to finalize and move into phase three. And then OCU200 and OCU410, again, these are targeting major retinal diseases. And the phase one, two programs will have, obviously, a lot more patients than RQ 400.
And, Mohammad, you want to add anything?
Speaker 6
Yeah. Absolutely not. Thank you, Shankar. A little more highlights. So for the Ocufour 100, which is using the GM modifier platform technology in house, we're gonna start, you know, with the first in here, which will be the safety, you know, the multi ascending dose trial.
And that's what the FDA and the health authority require, especially with the novel product and what has other been done also in gene service based. So it will be multi ascending. We'll be at least three dose of low, mid, high dose of our OptiPerformance product. Different concentration, obviously, different genomic load. And then we will have, you know, independent, you know, safety review to look at all the score before we escalate.
And then we will look out as well as as as safety to look at the efficacy trends in those patients. It will we will look at two different mutations in the first study or the two trial study will start in in human by Nexeo's Ocu four hundred. The first one will be for patient with n r n r two e three mutation, and the other one will be the redoxin, so RHO, you know, associated mutation. That will be the first, you know, trial using the Ocuf 400. Shifting to the Ocuf 200, which is not, you know, lithium therapy.
You know? It's a novel biologic program in house. We will be targeting now the first indication for retina will be diabetic macular edema as our first lead indication with our novel biologic. We will start, you know, with the phase one two a. It will be, like, around, you know, close to 50 patient trial.
We will look at patients with diabetic macular edema, and we will look at our standard, you know, efficacy and point safety, obviously, gonna be the main objective. Also, we look at other efficacy and point on the facial acuity and the retina thickness, you know, which has been the standard, you know, endpoint for the patient population. That would be the idea, you know, with the two major programs, Office 400 and the Office 200. And then the Office 410, you know, the upcoming, you know, early in 2021. That's a 2022.
Speaker 5
Thank you. Thank you very much, Shankar and Sanjay. We'll talk to you soon.
Speaker 2
Thank you, RK. Thank you, RK.
Speaker 0
Thank you. And our last question comes from Kristen Kluskey with Cantor Fitzgerald. Your line is now open.
Speaker 7
Hi, good morning, everybody. Hope you're all doing well. Maybe just a follow-up from one of RK's questions. Given the 400 pipeline focuses on patients with very prevalent rates, what are you doing now to try to locate where some of these patients could be for the trial? And also what are your broad thoughts on genetic testing efforts in general given the marketing of and also the increased number of clinical trials focusing on RP patients?
Speaker 2
Doctor. Go ahead.
Speaker 6
Yeah. Absolutely. No. No. Thank you for your question.
Great question. So we definitely are planning now to build, you know, our patient registry. And one of our plan is working now with the center of excellence in the country, not only in US, you know, also in Europe. And as you know, for this kind of patient, you know, I'm a retina surgeon. So you see this patient, you're a general retina clinic, but it's it's more specialized.
So we have centers of excellence, you know, for retina generation in this country. So we are working, you know, with our collaborator, you know, in the in the country and also elsewhere in in in in Europe, you know, for in finding these patients. And we have the volume, and we have their database, which we will be partnered with, you know, to identify those patients. We really did, you know, groundwork around that with our clinical sites and our potential investigators in our trials. And so we will continue, you know, on that, you know, work now as we go, you know, further our development.
Regarding, you know, the genotyping and on strategy for late development, you know, and and our commercial, you know, strategy, that would be one of the key, you know, thing, you know, for our, you know, clinical development and even, you know, product development strategy. But it's fine to station in registry. And we're working on with with the clinical scientist that earlier, the clinical procedure, also with the patient as as the group, you know, which we are very close, you know, connected to. And gonna work with other foundations, you know, for each disease. You know?
We're targeting, Foundation for the Blindness and other, you know, foundation that has, you know, their own registry for those patients. So this is one of the areas we're looking at very carefully. And we started the work, and we'll continue, you know, our, you know, work on that space.
Speaker 7
Okay. Great. Thank you very much.
Speaker 2
Thank you, Christine.
Speaker 0
Thank you. Ladies and gentlemen, this concludes our question and answer session.
Speaker 6
I would now like
Speaker 0
to turn the call back over to Lisa D'Senza for any concluding remarks.
Speaker 1
Thanks to everyone for taking the time to join the call this morning. We're dedicated to filling significant patient needs by bringing to market transformative therapies for blindness diseases. We look forward to providing further updates in the coming months. Thank you.
Speaker 0
Thank you. Ladies and gentlemen this concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.