Ocugen - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 results: total revenue $1.373M, net loss $(14.739)M, and diluted EPS of $(0.05); operating expenses fell year over year to $15.2M (R&D $8.4M; G&A $6.8M), and cash, cash equivalents, and restricted cash were $27.3M, with cash runway guided into Q1 2026.
• Strategic updates: initiated dosing in OCU410ST Phase 2/3 GARDian3 (Stargardt), EMA eligibility to submit OCU400 MAA via centralized procedure, and a binding term sheet for exclusive Korean rights to OCU400 with up to $11M in upfront/near-term milestones, 25% royalty, and sales milestones.
• OrthoCellix reverse merger announced to unlock NeoCart/regenerative cell therapy value while focusing capital on gene therapy platform; leadership and Retina SAB strengthened to support commercialization and partnerships.
• No Wall Street consensus estimates were available from S&P Global for revenue/EPS to assess beats/misses; investors should anchor on upcoming clinical catalysts (Stargardt masked interim at ~8 months, OCU410 Phase 2 12‑month data 1Q26) and potential BD funding as stock drivers. S&P Global consensus unavailable.

What Went Well and What Went Wrong

What Went Well

• Initiated dosing in the OCU410ST Phase 2/3 GARDian3 pivotal confirmatory trial after FDA cleared the IND amendment and granted Rare Pediatric Disease Designation; management highlighted urgency and favorable Phase 1 efficacy (48% slower lesion growth, ~2‑line BCVA gain, p=0.031).
• OCU400 Phase 3 liMeliGhT recruitment progressing; EMA granted eligibility to submit MAA via centralized procedure; DSMB reported no SAEs related to OCU400 and recommended continuing dosing.
• Signed binding term sheet for OCU400 exclusive Korean rights with up to $11M in upfront/near-term milestones, 25% royalty, and sales milestones, preserving larger geographies and manufacturing control; management emphasized non‑dilutive BD funding potential.

What Went Wrong

• Cash decreased to $27.3M from $58.8M at year‑end, necessitating continued BD and capital markets activity; debt stood at ~$28.0M and net loss remained sizeable at $(14.739)M for the quarter.
• OCU500 (inhaled vaccine) Phase 1 start moved to Q3 2025 from earlier expectations (Q2 2025), modestly delaying that program’s timeline.
• Minimal revenue ($1.373M) remains from collaborative arrangements; with no S&P Global consensus, investors lack an external beat/miss anchor, increasing reliance on clinical/regulatory execution to support the equity story. S&P Global consensus unavailable.

Transcript

Speaker 5

Good morning and welcome to Ocugen's second quarter 2025 financial results and business update. Please note that this call is being recorded at this time. All participants' lines are in listen-only mode. Following the speaker's commentary, there will be a question and answer session. I'll now turn the call over to Tiffany Hamilton, Ocugen's Head of Corporate Communications. You may begin.

Speaker 4

Thank you, Operator, and good morning, everyone. Joining me on today's call and webcast is Dr. Shankar Musunuri, Ocugen's Chairman, CEO, and co-founder, who will provide a business update and an overview of our clinical and operational progress. Ramesh Ramachandran, our Chief Accounting Officer, is also on the call to provide a financial update for the quarter ended June 30, 2025. Dr. Huma Qamar, Chief Medical Officer, and Dr. Arun Upadhyay, Chief Scientific Officer, will be available to answer questions following the presentation. This morning, we issued a press release detailing associated business and operational highlights for the second quarter of 2025. 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 predicts, believes, potential, proposed, continue, estimates, anticipates, expects, plans, intends, may, could, might, will, should, or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Such statements include, but are not limited to, statements regarding our clinical development activities related to anticipated timelines. Such statements are subject to numerous important risk factors, risks and uncertainties that may cause actual events or results to differ materially from our current expectations.

These and other risks and uncertainties are more fully described in our periodic filings with the Securities and Exchange Commission, the SEC, including the risk factors described in the section entitled Risk Factors in the quarterly and annual reports that we file with the SEC. Any forward-looking statements that we make in this presentation speak only as of the date of this presentation. 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. I will now turn the call over to Dr. Musunuri.

Speaker 6

Thank you, Tiffany, and thank you all for joining us today. We're very enthusiastic about the progress of our novel modifier gene therapy platform. All three candidates are advancing through the clinic, two in late stage, and we are on track to meet our goal of three Biologics License Application and Marketing Authorization Application filings in the next three years. We remain steadfast in our mission to provide a one-time therapy for life to address considerable unmet medical needs that exist for millions of patients facing the terrifying prospect of losing their vision. Patients are actively being recruited in the United States and Canada for the novel modifier gene therapy OCU400 Phase III Limelight clinical trial for retinitis pigmentosa, and we are on target for BLA and MAA filings in 2026.

You may have seen our recent social media collaboration with Molly Burke, an outspoken RP patient and an advocate, to raise awareness for the Limelight clinical trial. It's gratifying to see the increased visibility for the work we are doing, and the response has been very positive. Notable accomplishments this quarter included the FDA's agreement to proceed with the Phase II-III Guardian III pivotal conformity trial for OCU410ST for Stargardt disease following rare pediatric disease designation, RPDD, and dosing of first patient earlier this month. Additionally, Phase I 12-month preliminary data for OCU410ST and OCU410 is positive, demonstrating favorable safety and efficacy with improved structural and functional outcomes. The OCU400 Phase III Limelight clinical trial is the only global broad RP gene-agnostic trial to address multiple genetic mutations with a single therapeutic approach.

OCU400 has obtained multiple designations to assist with regulatory review, including Regenerative Medicine Advanced Therapy designation and Orphan Drug designation from the U.S. Food and Drug Administration, as well as Orphan Medicinal Product designation, OMPD, and Advanced Therapy Medicinal Product, ATMP, classification from the European Medicines Agency, EMA. In the second quarter, the EMA granted eligibility to submit the OCU400 Marketing Authorization Application, MAA, through the centralized procedure based on the current study design and statistical analysis plan. Due to its novel gene-agnostic mechanism of action, OCU400 has potential to address more than 100 different mutations associated with RP. In contrast, a traditional gene therapy approach would require the development of over 100 products to treat each individual mutation, which is commercially not feasible. Currently, the only approved gene therapy for RP targets a single gene, RPE65, which accounts for 1-2% of RP patient population.

As a result, approximately 298,000 people in the U.S. and Europe with other forms of RP remain without any approved treatment options. In anticipation of the planned BLA filing in 2026, we're actively ramping up preparation for commercialization. Process validation and manufacturing activities remain on track for completion this year. The Data and Safety Monitoring Board recently convened and reported no serious adverse events related to OCU400 and recommended continuing the study dosing as planned. Stargardt disease is an inherited retinal disorder primarily caused by mutations in the ABCA4 gene, with over 1,200 different mutations in this gene identified to date. It typically presents in childhood or adolescence and affects approximately 100,000 individuals in the United States and Europe combined, and an estimated 1 million people globally. Despite its prevalence, there is currently no FDA-approved treatment available for Stargardt disease.

The OCU410ST clinical trial is progressing well, having achieved key milestones: receipt of rare pediatric disease designation in May, IND amendment clearance in June, and first patient dosing in July in registration trial. There is a clear sense of urgency from the agency to bring treatment options to patients who currently have no approved therapies. As we initiate the Phase II-III registration trial, we're potentially accelerating clinical development of OCU410ST by two to three years, potentially delivering an innovative gene therapy to patients in critical need even sooner than originally anticipated. The Guardian III clinical trial builds upon encouraging results and positive data from the Phase I Guardian trial, which included a dose range and dose escalation study to evaluate the safety and preliminary efficacy of OCU410. In the Phase I trial, evaluable treated eyes demonstrated a 48% slower lesion growth at 12-month follow-up compared to untreated eyes.

Additionally, treated eyes showed a statistically significant, with a p-value of 0.031, and clinically meaningful improvement of nearly two-line or nine-letter gain in best-corrected visual acuity, BCVA, at 12-month follow-up when compared to untreated eyes. Our third novel modifier gene therapy candidate, OCU410, is specifically designed to treat geographic atrophy secondary to dry age-related macular degeneration, DAMD, a leading cause of irreversible vision loss in the elderly. Unlike current treatment options that target only one pathway, the complement system requires frequent intravitreal injections, typically 6-12 per year, with associated safety concerns. For example, approximately 12% of patients develop with AMD. OCU410 offers a more comprehensive and one-time therapeutic approach. OCU410 has the potential to regulate all four pathways related to disease progression: lipid metabolism, inflammation, oxidative stress, and the complement system, thereby addressing the underlying causes of disease with a single subretinal injection.

The Phase I data at 12 months demonstrate 23% slower lesion growth in the treated eye when compared to the untreated fellow eye after a single subretinal injection. In addition to the structural improvement, treated eyes also demonstrated a stabilization or gain in visual function, low light, low luminance sense, visual acuity, with a two-line or 10-letter gain when compared to untreated fellow eyes. Preliminary results from six-month interim analysis in 31 subjects demonstrated a 27% lesion growth reduction and the preservation of retinal tissue in the treated eyes when compared to untreated control eyes. The 27% reduction in lesion growth at six months is more pronounced compared to currently approved intravitreal therapies. Monthly and every other month, PEG/CytoCoplan injections demonstrated reductions of 13% and 12% respectively.

In addition to improved lesion reduction, a single subretinal injection of OCU410 demonstrates greater efficacy in preserving retinal tissue surrounding GA lesions compared to monthly and every other month PEG/CytoCoplan treatments. We plan to provide full 12-month data from the Phase II study in the first quarter of 2026 and initiate Phase III in 2026. During the second quarter, we signed a binding term sheet for our first regional partnership for OCU400, announced the spin-off of NeoCart into Orthocelix, two significant strategic events that we expect will make a considerable impact on Ocugen's financial position. Aligned with Ocugen's business development strategy for OCU400, the company signed a term sheet to negotiate and enter into a licensing agreement with a well-established leader in the pharmaceutical and healthcare sector in Korea for exclusive Korean rights to OCU400. We're expecting to close the definitive agreement by September.

This regional partnership approach will allow Ocugen to retain rights in larger geographies, maximizing global patient reach while generating value for shareholders. We're actively engaged in discussions to explore a range of strategic partnership opportunities for OCU400 and all of our gene therapy candidates. The proposed reverse merger with Orthocelix, a wholly owned subsidiary, and Karisma Therapeutics will create a Nasdaq-listed late clinical stage regenerative cell therapy company with a first-in-class technology platform focused on orthopedic diseases. The combined company will focus on the development of Orthocelix's NeoCart technology for the treatment of knee articular cartilage defects. This strategic move is intended to create value for Ocugen stockholders without dilution of Ocugen stock, as Orthocelix is planned to be funded with $25 million in private financing under the exchange ratio formula in the merger agreement. Orthocelix's value is estimated at $135 million.

We believe there's a significant valuation increase opportunity for Orthocelix upon initiation of Phase III NeoCart clinical trial, given the more than $2 billion market cap of the only other autologous cartilage implant on the market today. Ocugen and industry experts believe this market is significantly underpenetrated, and NeoCart could represent a true step forward in the innovation for ACIs. With our business rapidly evolving, it was imperative to make new appointments to our Board of Directors to round out the skill set needed at this pivotal time. During the annual meeting in June, we announced appointments of Blaise Coleman and Dr. Satish Chandran. Blaise, a pharmaceutical executive, brings deep financial expertise and a proven track record of leading successful transformations, most notably at Endo. Blaise also held senior financial roles at AstraZeneca, including CFO of the U.S. diabetes business.

Satish brings more than 30 years of leadership experience across academic research, early and mid-stage biotechs, and large pharmaceutical companies, including Wyeth and Pfizer. Satish has his name on countless patents and in recent years considers himself as a serial entrepreneur leading biotech companies focused on developing products across a variety of therapeutic indications. We also made updates to the Retinal Scientific Advisory Board to reflect the absolute best guidance in this space as we move closer to commercialization. Three renowned retinal surgeons who are at the forefront of research and cutting-edge advancements for retinal disease, Doctors Jeff Heyer, Peter Kaiser, and Arshad Khanani, have joined the SAB to help us bring meaningful, innovative therapeutic options for patients living with serious retinal diseases.

Finally, to optimize Ocugen's R&D and clinical efforts and build upon positive momentum pursuing strategic partnerships and developing commercial strategy, we strengthened the company's internal expertise in critical functions. Vijay Tamara joined Ocugen in the newly created position of Chief Development Officer and brings over 32 years of global regulatory leadership with deep expertise in biotechnology, biosimilars, and complex regulatory submissions. Abhi Gupta has been named Executive Vice President in Commercial and Business Development following the retirement of Mike Shine. Abhi has more than 20 years of experience across commercial strategy, gene therapy, and corporate development in the biopharmaceutical industry. Michael Blackton is our new VP of Manufacturing and Supply, bringing over 30 years of experience in quality, operations, and manufacturing across the biotechnology and pharmaceutical industries.

I'm delighted with these leadership changes and confident that we have the best people at the helm to take Ocugen to the next level of our success. With that, now I will turn the call over to Chief Accounting Officer Ramesh Ramachandran to provide an update on our financial results for the second quarter ending June 30, 2025. Ramesh.

Speaker 3

Thank you, Shankar. The company's cash equivalents and restricted cash total $27.3 million as of June 30, 2025, compared to $58.8 million as of December 31, 2024. The company had 292.2 million shares of common stock outstanding as of June 30, 2025. Total operating expenses for the three months ended June 30, 2025, were $15.2 million, including $8.4 million in research and development expenses and $6.8 million in general and administrative expenses. This compares to total operating expenses for the three months ended June 30, 2024, of $16.6 million that included research and development expenses of $8.9 million and general and administrative expenses of $7.7 million. As always, we are constantly exploring strategic and shareholder-friendly opportunities to increase our working capital and continue to pursue strategic partnerships that will drive long-term strategy. That concludes my update for the quarter. Tiffany, back to you.

Speaker 4

Thank you, Ramesh. We will now open the call for questions. Operator?

Speaker 5

Your first question comes from the line of Michael Okunewitch from Maxim Group. Your line is live.

Speaker 1

All right. Thank you, everyone. Thanks for taking my questions today and congrats on all the progress you've made. I guess to start out here, you've been quite busy. You did the Orthocelix spin-out. You did the Korea license agreement all in the past couple of months. Are there any other deals that you might be looking to execute, whether these be, you know, regional license agreements, asset sales, or spin-outs? Is there anything that you've been working on in the pipeline or you've identified as a goal?

Speaker 3

Michael, yes. As we stated, we are continuously looking for potential partnership opportunities, including regional partnerships for all our gene therapy programs.

Speaker 5

Go ahead, Mike.

One moment. He just dropped the line. I'll put him back in now.

Speaker 4

Okay.

Your line is live again, Michael. My apologies.

Speaker 1

Thank you. Yeah, I just wanted to follow up on the Stargardt Phase II-III now that that's started to enroll. Could you remind us how many sites you're including, and do you anticipate that the rare nature of the disease may make it more challenging to enroll versus something like RP or GA?

Speaker 3

I will let Huma answer the question.

Speaker 4

Thank you for the question. Stargardt Phase II/III pivotal confirmatory trial has already started dosing, and we have not only dosed one, but quite a few patients have enrolled altogether in the month of July. We do not anticipate any challenges in enrolling Stargardt patients because the stats in the United States are 44,000 approximately patients for Stargardt, and there is no approved product. Our inclusion-exclusion criteria is very amenable and palatable to the population in terms of the BCVA, and also this particular OCU410 is for all ABCA4-related retinopathies as well, covering all the mutations that fall under Stargardt. We have 15 centers activated, and we are going to activate a couple of centers to make 15 centers according to the protocol, and we are on track for the enrollment and the BLA in 2027.

Speaker 1

Thank you very much for the additional caller. One last one from me, and I'll hop back into the queue. I'd like to see if you could help us contextualize what a 27% lesion growth in GA might look like in terms of a patient perspective, in terms of delaying loss of vision and preservation of function.

Speaker 3

Okay. Want to take that?

Speaker 6

Sure. Thanks, Shankar. Thanks for asking this question. As you know, photoreceptors are critical to maintain the vision in these patients. If you look at translational perspective, like how this 27% in six months would translate in long term, the way we look at other prior approved products, even after a year or two years, you see very limited reduction in lesion growth. From that perspective, when I look at 27% reduction in lesion growth, we see that it will help these patients, you know, basically prevent them losing their visual function, significantly. As you know, this is a modifier gene therapy approach. Not only is it going to preserve the photoreceptors, but also it is going to enhance the function of the photoreceptor, which eventually we believe that will lead to the gain in the functional vision in these patients.

What we have noticed in the Phase I patients, like, you know, in terms of low luminescence visual acuity. In summary, I would say we would see the better impact on these patients as this modifier gene therapy product starts making changes in the photoreceptor function in these patients over the course of time.

Speaker 1

All right. Thank you. I appreciate it. Once again, congrats on all the progress you've made.

Speaker 6

Thank you.

Speaker 5

The next question comes from the line of Boris Peaker from Chardan Capital Markets. Your line is now live.

Speaker 2

Great. Thanks for taking my questions. Maybe I'll start with OCU400 in RP. When the DSMB convened to look at the interim data, was there a futility analysis or was this just purely a safety analysis to continue moving forward?

Speaker 4

I'll take that question. There is no futility analysis. This was just purely safety. The Data and Safety Monitoring Board convened, and there were no serious adverse events or any adverse events of special interest related to the investigational product reported.

Speaker 2

Great. Maybe we'll move on to OCU410. Can you talk about the potential interim update, confirm the kind of estimated timing for that update, as well as what will be analyzed during that update?

Speaker 4

Yes. In terms of OCU410, geographic atrophy or moderate trials secondary to dry age-related macular degeneration, we are going to update the interim analysis data in the fourth quarter. We will be providing structural and functional outcomes for that analysis.

Speaker 3

Boris, just to clarify, we just gave some data at six months, and we had total subjects, including untreated control group, is 31 patients. That's a 21% reduction in lesion growth. That's a structural, and the data looks promising. Compared to currently approved market products, which are much lower in the lesion growth, the second thing, obviously, as Arun stated before, from the structural changes to functional change, such as an LLVA or visual acuity, it takes a little longer. By the time the fourth quarter, we'll have some data from the later time points, like nine months, maybe in some patients' flow, that should really enlighten any changes in the functional benefit to the patients.

Speaker 2

Gotcha. Maybe my last question is, on the EMA or the European regulatory front, when will we get some feedback to kind of get a sense of if the pivotal study is sufficient to get approval there or not?

Speaker 3

Actually, on RP, we already have it. On Stargardt, we should be able to get it by fourth quarter this year.

Speaker 2

Okay. All right. Actually, maybe lastly, just an accounting question for this Korea partnership. When will we see that $11 million recognized on the income statement?

Speaker 3

That's over a period, a certain period of time, which will extend up to into 2027. It's in different phases. It's not at one point of time.

Speaker 2

Okay. Got it. Thanks for clarifying. Thank you very much for taking my questions.

Speaker 3

You're welcome.

Speaker 5

The next question comes from the line of Swayampakula Ramakanth from H.C. Wainwright & Co. Your line is live.

Speaker 2

Thank you. Good morning, Shankar. A couple of quick questions from me. Regarding the Limelight trial, can you give us what the current enrollment % is, and also, when should we be expecting top-line data from this study?

Speaker 4

We are on track for the enrollment and on track for our BLA in 2026. As this is a blinded study, we will be releasing just the periodic safety updates, but the other data would be available after the last patient last visit is done.

Speaker 3

In '26?

Speaker 4

In 2026, or yeah.

Speaker 2

Okay. Thank you for that, Huma. Is there any additional DSMB looks into this study, or the next major data update is when you release that efficacy top-line in early, I mean, in 2026?

Speaker 4

Yes, we will have another safety update in the fourth quarter.

Speaker 2

Okay. Thanks for that. Shankar, on the Orthocelix, I'm just trying to understand, would you get any non-dilutive funding from this spin-off? Also, on the financial side of things, with your current funding, how do you plan to bring in additional funds so that you can get all these three programs to the completion?

Speaker 3

Yeah. Good question, RK. Just as any growing biotech, the programs are moving well. Obviously, we're working hard on potential business development opportunities, partnership, and that has tremendous potential to bring in non-dilutive funding. In addition to that, as the market opens up, we will be opportunistic, you know, as needed, we can also look into some equity. Those are the things we always want to balance. You know, the shareholder dilution, we take that pretty seriously. If there are ways we can, you know, minimize that with strategic partnerships, non-dilutive funding, we'll try to maximize that. As far as Orthocelix is concerned, once the company is formed, after that, the company can independently seek any potential government grants because there may be a need in that area, and so they're open to all that.

Speaker 2

Thank you. Thanks for taking my questions.

Speaker 3

Thank you.

Speaker 5

Your final question comes from the line of Daniil V. Gataulin from Poseidon. Your line is live.

Speaker 6

Good morning, guys. Thanks for taking the question and congrats on all the progress. Just a couple from me. First, on OCU200, in your press release, you mentioned that it intends to complete the Phase I trial in the second half. How would you describe patients' and physicians' interest in this program, given a fairly large number of effective and approved options for these patients? What are the expectations for the initial data from the program?

Speaker 4

Yes. Here, Daniil. This is Huma. In terms of OCU200, just the progress, we are successfully dosing in cohort three right now, and the data is expected towards later this year with both the safety and efficacy report on OCU200, our novel biologic tumescent and transferrin recombinant infusion protein. In terms of the interest from the investigators, actually, it is good because not only from the safety perspective, but also the dual nature of tumescent and transferrin novel recombinant infusion protein and also how the responders and the rescue therapies are there. This seems like a potential not only safe product in terms of intermittent administration, but also to prevent the choroidal neovascularization and also to look at the responders' and non-responders' treatment in further trial and also currently the rescue treatment that are being given with patients of macular edema who have got the approved therapies.

Speaker 3

I think, RK, just to clarify further, that currently there's a significant portion of the population for non-responders to current treatments. That's where OCU200 comes in. We think potentially this can treat both non-responders and responders.

Speaker 2

Thank you. Another question on the OCU400 with respect to that licensing agreement in Korea. Can you tell us what the regulatory path or approval path would look like for OCU400 in Korea and potentially in other Asian markets?

Speaker 3

Yeah. Just as the EMA didn't require, I mean, they have a clinical trial. They're willing to take U.S. data, the U.S. clinical trial to give approval. Similarly, there are many markets. If you get FDA or EMA approval, since it's an orphan drug, many countries, we can use our U.S. FDA approval to get approvals in other countries. Korea is the same path. They potentially don't need any further clinical trials, and they can use our U.S. FDA approval to get approval to launch the product in Korea. Similarly, we're looking at the other markets who don't have answers yet, including Japan. We're still working with the PMDA. When we get a definitive response from them, we'll update the markets.

Speaker 2

Okay. Got it. Makes sense. One last question. In terms of your interactions with the FDA, how would you describe the conversations in the past few months? What changes, if any, do you expect with the recent departure of Dr. Prasad from CBER?

Speaker 3

Good question. The FDA already has put somebody in place of the super office in charge with all the changes, and we're still getting pretty good response. Number one, the Stargardt disease, all the decisions they made working with us, approving our IND amendment in a record time, and getting the design, everything lined up in the last three months, and they're very supportive. In addition, any questions we have, any of our programs from RP to Stargardt, they're reacting very promptly. From our perspective, we're not seeing any impact on our programs.

Speaker 2

Got it. Okay. All right. Thank you very much for taking my questions.

Speaker 3

You're welcome.

Speaker 5

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

Speaker 3

Thank you, everyone, again. Thank you, Operator. Thank you, everyone, for joining today. The meaningful progress Ocugen is making across its novel modifier gene therapy platform, along with notable leadership changes and significant external alliances, are evidence of a strong first half 2025. We look forward to providing critical program updates and data in the coming months. Have a great day.

Speaker 5

This concludes the meeting. You may now disconnect.