Ocular Therapeutix, Inc. FY 0 Earnings Call

Good afternoon. Thank you for joining us at the H.C. Wainwright 6th Annual Ophthalmology Virtual Conference. For this session, we'll have a fireside chat with Dr. Pravin Dugel, Executive Chairman, President, and CEO of Ocular Therapeutix. Dr. Dugall, I understand Ocular recently announced that the company has reached alignment with the FDA regarding the NDA submission for AXPAXLI as a treatment for wet AMD. Could you help us distinguish between the FDA agreeing that the proposed package is acceptable for submission and agreeing the package will ultimately be sufficient for approval? What specifically did the agency agree to in the written minutes, and what remains subject to the review team?

Zhiyi, thank you again, first of all, for the opportunity to speak with you and for inviting us here. It's a pleasure and an honor to be here, and thank you for the opportunity to talk about Ocular Therapeutix. It's a great question. Let me just start by saying this is not something that happened suddenly. This is not an epiphany. This is something that we've worked on very thoughtfully, methodically, systematically for over two years, and this simply is the culmination of a lot of work. The FDA's guidance has never changed and never altered throughout the entire process. To summarize, the guidance is very, very clear and very, very simple. As you know, submitting with a single trial is not a new thing. It's been done in almost half the cases of all drugs approved.

The guidelines, the evidentiary standards, have not changed at all for decades. It has nothing to do with commissioners. It has nothing to do with politics. It's simply evidentiary guidelines, and let me just describe what they are. There are two evidentiary guidelines or two evidentiary standards that are prior to the CART turn and two evidentiary standards that are after the CART turn. The two prior to the CART turn are, first, the study has to be properly masked. This is where really virtually no one else in retina qualifies because sham is not regarded as proper masking. Now, that doesn't mean that a study with sham can't get approved. Of course it can, but it simply cannot get approved with a single trial because it doesn't meet the evidentiary standard for single-trial approval. Clearly, we meet that guideline.

The second one is that it has to be properly powered. Now, both of those boxes have been checked as per our SPA. As you know, we have a SPA for SOL-1, both of those pre-CART turn boxes have already been formally checked and validated. Post-CART turn, there are two other evidentiary standards. The first one is the P value has to be less than 0.001. Ours is less than 0.0006. The second is that you have to be able to present at least 300 patients exposed to the drug for safety purposes. It can be a different target, but the drug dose has to be either the same as the proposed dose or a higher dose. We are clearly able to do that by using some of the patients from SOLAR.

The FDA doesn't really care where it comes from as long as that evidentiary standard is met. What we formalized with the FDA was that we meet all of these evidentiary standards. Therefore, what we will be submitting in the fourth quarter of this year constitutes a complete package submission for approval. That was the gist of the meeting.

That's been helpful. Thank you. What are the remaining issues you need to resolve at the third quarter pre-NDA meeting? What feedback could still delay the fourth quarter submission or require incremental analyses of data?

Well, first of all, look, it's important to know what the pre-NDA meeting is. I know the title sounds ominous, but it's really not. It has absolutely nothing to do with content whatsoever. There is no decision-making in that meeting, period. It is entirely and purely operational. It is important. It's important because it can cause delays if the operations aren't done properly. What do I mean by operations? Things such as what tables do they want? Where do they want the tables to be located? Literally, what font size do they want? Maybe the most important is where do they want the hyperlinks, and what kind of hyperlinks do they want? I'll give you an example.

If your reviewer sees something and there are improper references, that reviewer will turn the book back to us, and we'll go ahead and need to satisfy what they want, which may cause a two- to four-week delay. It's better to have the hyperlink in the right position exactly where it should be from the very beginning. Those are the kind of things that are discussed. It is, again, entirely operational. There are no content decisions that will be made. That meeting we have announced is going to occur in the third quarter of this year, and our complete NDA submission will occur in the fourth quarter of this year.

Thank you. Among the proposed confirmatory evidence, what elements did the FDA appear to view as most persuasive? Has the agency agreed that a proposed confirmatory package is sufficient or only agreed to review it?

Again, I just want to be very clear. They have said that we have very compelling data, and they will accept our Package which constitutes a complete submission. I want to make that very, very clear. That's in the minutes. It's in their minutes. We're about as confident as we can possibly be. Again, look, this is not a single meeting. This process has been going on for a long, long time, and the response and the collaboration that we've gotten from the FDA has been absolutely consistent and unwavering. We would never be doing this if there was any doubt whatsoever. There's simply no doubt in our mind that the path that we're taking is exactly aligned with the FDA, period.

Thank you. Now, under the 505(b)(2) pathway, exactly which prior findings for axitinib will the application rely upon, and what clinical, non-clinical, or CMC bridging work is still needed to support the intravitreal administration?

Well, as you know, the 505(b)(2) pathway has been formally agreed to by the FDA. That is the pathway that we'll be taking, which will save us a great deal of time. What that means is that the FDA has independently already approved both components of this drug, which is the TKI, as well as the hydrogel. That means that all the systemic toxicity studies, et cetera, are already available to them, and that saves us at least two months on the front end. On the back end, we believe that we'll be very efficient because we have a SPA, so things such as the statistical analysis, the trial design, all of that has already been verified and approved formally based on the SPA.

In terms of all the other things you asked, such as CMC, which is very important, realize that we are currently commercializing another product, DEXTENZA, which has the exact same hydrogel as AXPAXLI. We've had numerous reviews from the FDA when DEXTENZA has been commercialized. We've never had an issue. It's passed with flying colors. We'll satisfy all of their requirements. We're ready to do that. Again, this is something that we've been working on for at least two years, and we're absolutely ready for a single-trial approval and for submission on time.

Got it. What is your current base case or expectation for standard versus priority review, or whether there will be an advisory committee, and also the approximate review for time?

Yeah. Listen, we haven't guided you to those kind of things. Again, as far as what results there will be, whether there'll be committees and so on, that's up to the FDA. I don't mean to speak for the FDA. We'll do one thing at a time. I just want to emphasize that the outcome of that meeting, in minutes, is that we have compelling data and that we will be submitting a complete package that will be accepted, period. At this point, at this stage, that's about as good as it can possibly get, and that makes us as confident as we can possibly be.

I can tell you that meeting with the FDA could not have gone better. I repeat, it absolutely could not have gone better. It was predictable, it was aligned with all the interactions we've had with the FDA since this group has been here more than two years ago.

Got it. Thank you. What is the realistic target label at initial approval in terms of dosing frequency, and how dependent is the repeat dosing language on the SOL-1 year two safety update?

Yeah, great question. Obviously it's way too early to have labeling discussions, but our expectations are that we will have the first and only superiority label, and we are confident that we'll get that. We believe that we'll have a dosing frequency flexibility of every 6-12 months for obvious reasons. We've hit both. Clearly, we'll have redosing there as well. As you know, everybody in SOL-1 was redosed at week 52. When we submit some of the patients from SOLAR, all of those patients, for safety reasons, obviously, all of those patients will have been redosed. There's plenty of redosing experience that we have, and we expect to have the finest label of any drug in the market. Again, a superiority label, the first and only superiority label with flexibility of dosing 6-12 months with repeatability.

Got it. The SOL-1 trial demonstrated superiority of AXPAXLI to a single injection of aflibercept two milligram. How do you address the criticism that this established substantially greater durability but does not directly establish better vision outcomes than contemporary maintenance regimens such as EYLEA HD of Vabysmo?

First of all, look, the job of this company, as any other company, when they believe they've got a great drug that can help patients, is to get the drug approved. Without that, nothing else matters. We had a clear path for approval for superiority, again, for superiority that was validated by a SPA. The FDA has guidelines, specific guidelines on what they want to see for a superiority study. We followed those guidelines precisely. The study design was really constituted by that SPA and the FDA. This is what they wanted for approval. This is exactly what we gave them, and we exceeded spectacularly in terms of the P value, which is their main concern. Our safety profile is outstanding. We've done everything they've ever wanted to do, and we expect approval with this trial. Again, this has been validated by a SPA.

It is reasonable then to say, is there enough, and I think this is what you're getting to, is there enough data in the SOL-1 study alone for physicians to feel comfortable using this drug? The answer is absolutely. First of all, and I say this somewhat facetiously, look at our history in retina. There is not a single retina drug that is used per phase III study or per label. There is no treat and extend in any label, yet that's what we do. Remember, the best-selling drug that we have by volume is Avastin, and that was based on two patients with a retinal vein occlusion. We have a history of having a great drug and then deciding as a community with evidence how to use that drug, and that's exactly what's going to be done here.

Let me talk about the evidence that already exists. What physicians want to know, and I can tell you this confidently, having practiced for 30 years and been part of every anti-VEGF thus far, is they want to see safety first and foremost. They want to see durability, and they want to see disease control. We've provided all of that in a spectacular fashion in SOL-1. As far as safety is concerned, look, we've been about as transparent as possible. I don't know how many companies there are that give you patient-level safety data from the get-go, and that's exactly what we've done. We've given patient-level safety data. There's nothing to be concerned about in our safety profile. As far as durability is concerned, there couldn't be a purer study to show durability of a drug.

We've seen here that two-thirds of patients are rescue-free with a single injection after one year. As far as disease stability is concerned, day to day, we measure that with the OCT. That is the most objective barometer of disease stability and disease control. What we've shown is that with a single injection after nine months, the majority of patients have OCT stability within 30 microns. Again, I repeat, 30 microns after a single injection at month nine. That's unheard of. What I would argue is, look, there is more than enough data in SOL-1 for doctors to feel very, very comfortable with this drug. What we have done, as I hope everybody else will do, is to be completely and totally transparent with our data so doctors can see this for the benefit of the patient and use this immediately as soon as it's approved.

Got it. In a trial, approximately 69% of AXPAXLI patients remain rescue-free at one year. What distinguish the patients who can achieve annual dosing from those requiring earlier rescue? Can physician identify those patients prospectively?

That's a great question, that's not a question that necessarily is unique to SOL-1 or to AXPAXLI. That's something that is an important question for the broad field, which is, do we have any indications of disease stratification? The answer is, that's a really important topic that we as a community need to and are working on. When patients come in, they all look the same. However, they behave completely differently. That's why we have treat and extend, because we don't know how they're going to behave. What we do know from SOL-1 is that this is the strongest drug that we've ever seen in terms of disease control in arguably the most difficult patient group that was ever studied. Let me back up a little bit.

In the 30 years that I've been doing this, there isn't a single drug that has actually done better in the community than it has done in a phase III study. That's expected. That's actually quite logical because in a phase III study, you want patients that are going to respond the best. This drug will be the first one that'll be an exception. This drug will do far better in the community than even it has done as well as it's done in the SOL-1 study. Remember that the patients that we recruited in SOL-1 deliberately were patients who were designed to lose vision. Those aren't necessarily the majority of the patients coming in, that's not where this will be first looked at in the community. The majority of patients in a doctor's office are actually quite stable. They just want increased durability.

Those are the easiest patients for this drug to work in. Just a little bit of increase in durability will dominate the market. Think about EYLEA and Lucentis. Seven years after Lucentis was in the field, there came EYLEA from a company at that time that was completely unknown with one week more increase in durability and absolutely dominated the market. We see that with Vabysmo now. Two more weeks, and it's doing really well in the market. We're in a different orbit. We're talking about two-thirds of patients, as you mentioned, that last for one year with a single injection. Given that, what I believe will happen is that from day one, this drug will be absolutely impressive in the community, even more so than in the phase III study.

Got it. In the trial, the enrollment criteria includes fluid stability, and some other enrichment criteria. In real-world practice, what proportion of patients will fit that profile? Should investor assume a narrower initial target patient population than the overall wet AMD market?

Another way of asking that question, I've asked this to a lot of people, and I've gotten the same response, is when this drug is approved, who would you not use it in? Who would you not give the benefit of better disease control, of a great safety profile, of phenomenal durability? Who would you deny those benefits from? The answer is no one. This will be used in every patient. I would also say, and we're talking about wet macular degeneration, let's not forget other diseases as well. There is no drug that's an anti-VEGF that inhibits the VEGF receptor that has worked in wet macular degeneration that has not worked in diabetic retinopathy, diabetic macular edema, retinal vein occlusion, et cetera.

The impact of this drug is going to be tremendous, and it's going to be used in all patients, in my opinion, with wet macular degeneration, as well as all patients in other diseases where VEGF suppression is of benefit as well.

Got it. The SOL-1 trial reported no endophthalmitis or retinal vasculitis through week 52, but vitreous floaters and several other ocular events did occur with AXPAXLI. Which events were transient versus persistent, and which are directly attributable to the hydrogel depot or injection procedure?

It's a great question. Look, the first thing that I would say is with the anti-VEGFs that we have, even the second-generation anti-VEGFs, these are magnificent drugs. They've dominated the market for almost 4 decades. They wouldn't have if they weren't magnificent drugs. First and foremost, if you're going to challenge those drugs, your safety profile has to be absolutely clean. In retina, as you've just mentioned, transparency is everything, not just in efficacy, but particularly in safety. There are drugs where there are safety issues that have occurred that are far less than 5%, less than 2%, that have derailed drugs, and you know those drugs that are out there.

Simply giving non-transparent data of saying, "I am only going to give you 5% or above a safety look, or 2% or above safety look," simply does not work in this field because you need to know, are there patients with endophthalmitis? Even if it is 1% or less, that is a problem. You need to know, are there patients with retinal vasculitis? Because that causes blindness in most cases, and even one or two of those cases is going to be a problem. For that reason, we gave patient-level safety data, and I would suggest that you ask every company showing data in retina to give patient-level safety data. What came out of that, which was unexpected to me, the great thing was, as you said, we had no cases of endophthalmitis. We had no cases of vasculitis. That is the most important thing I can tell you.

What I did not expect was people to ask about floaters, because we knew what the floaters were. They are not floaters. That is drug. They are supposed to be there, and they were seen by the doctor. They were not seen by the patient. They were very far in the periphery. When this was pointed out, what we said was, "Look, let us prove to you that this is drug particle. These are not the floaters that you think they are. They are drug particles far away from the visual axis and not affecting the patient at all." We showed data, and that is the way to respond to things is to show data. We showed when they occurred, exactly when the drug is supposed to elute. We showed that it had no impact on vision. We also showed when they went away, and since then, there really has been no questions whatsoever about this.

Why was it coded as a floater? For a simple reason. There is no MedDRA coding for drug particles. There will be because of us after this summer, but we asked doctors to code it as floaters because that was the closest code that was available to drug particles. This has really become an absolute non-issue. The lesson here is we need to have this kind of transparency, and when there are questions, we need to answer these questions with data, period.

Thank you. In your view, which patients will drive the first two years of adoption after approval? Could they be treatment-naive patients, frequent injectors, poorly adherent patients, incomplete responders, or maybe just stable patients seeking fewer visits?

The answer is yes. I'll repeat what I said. Who would not get this drug when approved? Which patient would you sit there in front of and say, "Look, I'm not going to give you a drug that I believe has a fantastic safety profile, that has the best durability of any drug that has ever been studied, that has the best disease control of any drug that has ever been studied, and has the first and only superiority label to an anti-VEGF." Who would you not give that drug to? The answer to your question is yes to all, everybody's going to get this drug.

Got it. How much commercial infrastructure must be in place before approval?

We already have it. Yi, remember that we do have DEXTENZA. We have a commercial team, people have often asked me, "Why haven't you spun out DEXTENZA?" Because obviously it's not a retina drug, we're a retina company. There are many reasons, one of the very important reasons is because we have a fantastic commercial team, I want to keep the commercial team. You may or may not know that in the height of Lucentis sales, Genentech had, I think, 55 representatives. We don't need a whole bunch of people, we just need really, really good people in retina, we already have that. Most importantly, who we have is David Robinson, who is the architect of the most successful launch in retina with EYLEA, having David is having the best person possible to lead this launch. We are already set. We're set with commercial, we're set with CMC.

We are scaling up not just for wet macular degeneration, but also for diabetic retinal disease. We're set to go for both.

Got it. I understand the company had $667 million of cash at the end of first quarter. How much additional capital do you think is required to reach commercial self-sufficiency?

At this point, I think we're very well capitalized. We use our finances very judiciously. We are obviously pulling up everything because of the single trial approval. We have said very conservatively that we're financed into 2028 and up to the point of launch, that has not changed at all.

Okay. Got it. I guess my final question is, do you believe the company is currently in a better position than any of your direct competitors?

Yeah. I don't know which competitors you mean, the company is in fantastic position at this point. It couldn't be in better position. Again, the main takeaway message here is that this just didn't happen by happenstance or suddenly or serendipitously. This happened following at least two years of very thoughtful, very careful interactions with the FDA, who have been nothing but unbelievably collaborative and supportive because we have done everything they asked us to do exactly the way they want us to do it, validated by a SPA. We will have a single trial approval. We will be submitting a complete package. We are ready to launch this commercially. We're doing everything we need to do to have the most impactful, successful drug that this field has ever seen.

Got it. That's very helpful. Thank you very much for the update, and I wish you- Yi, thank you very much success in all the clinical, regulatory, and commercial efforts.

Thank you. Thanks again. Thank you, Yi.

Thank you very much for this opportunity. I appreciate any opportunity to talk about AXPAXLI, but having this invitation is very special, and thank you for having us here.