Ocugen, Inc. (OCGN) Q3 2023 Earnings Call

Ocugen, Inc. (NASDAQ:OCGN) Q3 2023 Earnings Conference Call November 9, 2023 8:30 AM ET

Company Participants

Tiffany Hamilton - Head of Corporate Communications

Shankar Musunuri - Chairman, Chief Executive Officer and Co-Founder

Michael Breininger - Corporate Controller, Interim Chief Accounting Officer

Arun Upadhyay - Chief Scientific Officer

Conference Call Participants

Swayampakula Ramakanth - H.C. Wainwright

Robert LeBoyer - Noble Capital Markets

Operator

Good morning and welcome to Ocugen’s Third Quarter 2023 Financial Results and Business Update. Please note that this call is being recorded at this time. All participants’ line 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.

Tiffany Hamilton

Thank you, operator and good morning, everyone. Joining me on today’s call and webcast is Dr. Shankar Musunuri, Ocugen’s Chairman and CEO and Co-Founder, who will provide a business update and an overview of our clinical and operational progress; Michael Breininger, our Corporate Controller is also on the call to provide a financial update for the quarter ended September 30 2023; Dr. Arun Upadhyay, Chief Scientific Officer, Head of Research, Development and Medical, will be available to answer questions following the presentation.

This morning, we issued a press release detailing associated business and operational highlights for the third quarter of 2023. 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, estimate, anticipate, expect, 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 and related anticipated timelines.

Such statements are subject to numerous important 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, SEC, including the risk factors described in the section titled, Risk Factors, and the quarterly and annual reports we file with the SEC. Any forward-looking statements that we make in this presentation speak only as of the date of the 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.

Finally, Ocugen’s quarterly report on Form 10-Q covering the third quarter of 2023 has been filed.

I will now turn the call to Dr. Musunuri.

Shankar Musunuri

Thank you, Tiffany, and thank you all for joining us today. As emphasized in the press release we put out this morning, we continue to make significant headway with the development of our pipeline assets, particularly with our first-in-class ophthalmic gene therapy programs, and I'm proud of the momentum we have achieved to-date.

Following additional positive and encouraging clinical study results from our novel modifier gene therapy based Phase 1/2 OCU400 study in September 2023. We believe we have strong clinical evidence to initiate our Phase 3 clinical trial in retinitis pigmentosa, RP, patients in early 2024 based on FDA conference. Utilizing a dual-track strategy, we also intend to expand our OCU400 Phase 3 trial in the second-half of 2024 to include patients with Leber Congenital Amaurosis LCA, contingent upon favorable results from the Phase 1/2 study.

With enrollment begun for our OCU410 and OCU410ST programs, we are diligently working to those patients this quarter. We anticipate clinical updates from our OCU400, OCU410, and OCU410ST studies in the later part of 2024. Our clinical and regulatory teams continue to work on responses to the FDA regarding our IND submission for OCU200, the company's ophthalmic biological product candidate, and we plan to initiate a Phase 1 clinical study in the first-half of 2024 contingent on the lift of the FDA hold and adequate availability of funding.

For our regenerative cell therapy candidate for knee cartilage repair, NeoCart we are on track to complete construction of our state-of-the-art cGMP facility at the end of this year, and are planning to complete qualifications of the facility in the first-half of 2024. We plan to initiate the Phase 3 clinical trial in the second-half of next year. Last month, we were delighted to be selected for inclusion in a Phase 1 clinical trial funded by National Institute of Allergy and Infectious Disease to investigate the administration of our COVID-19 mucosal vaccine candidate, OCU500.

Safety and immunogenicity of OCU500 will be evaluated using inhaled and intranasal routes of delivery during the Phase 1 clinical trial in the first-half of 2024. All these catalysts considered, we can safely reiterate that 2024 will be transformative for Ocugen. Our mission to introduce critically needed therapies into the market is imminent, with the planned initiation of Phase 3 trials encompassing gene and cell therapies in the near-term.

Our R&D team's dedication and hard work has yielded significant progress and compelling results for our first-in-class modifier gene therapy OCU400 program for RP and LCA patients. Throughout the Phase 1/2 trial, our primary objective has been to observe safety and tolerability of the subretinal administration of OCU400 in subjects, as well as immune response and systemic distribution.

For a preliminary science of efficacy, we focused on a few visual function and functional vision indicators, namely Best-Corrected Visual Acuity, BCVA; Low-Luminance Visual Acuity, LLVA, and MultiLuminance Mobility Test, MLMT. More details on our trial design can be found on clinicaltrials.gov with the identifier code listed at the bottom of the slide.

Let me provide a situational analysis around the unmet need and under deserved market for RP and LCA patients, an estimated 1.6 million people globally are affected by RP and LCA combined. In the U.S. alone, we're looking at about 125,000 patients total. RP and LCA are classified as inherited retinal diseases from a group of heterogeneous disorders that affect the retina. These diseases often lead to sight loss and ultimately blindness.

That said, the earlier homeostasis can be stabilized in patients with either of these diseases, the better. Through relevant medical meetings and continued engagement with advocacy groups, we aim to create awareness for the prevalence of retinitis pigmentosa and Leber congenial amaurosis and potential emerging therapies like our novel platform. Our ultimate objective is to provide treatment to people suffering from vision impairment and blindness caused by RP and LCA for whom currently no therapeutic options exist.

I listed our three exploratory endpoints for visualizations, stabilization, and improvement observed in patients treated with OCU400 on slide four. BCVA, LLVA, and MLMT. And the 12 cumulative subjects that have undergone a minimum of six months follow-up post-OCU400 dosing, we observe the following metrics. This venn diagram demonstrates that eight out of 12 subjects showed either stabilization means no change from baseline, plus minus four Lebers change for BCVA and LLVA, and zero Lux level change for MLMT, or improvement in all three parameters of BCVA and LLVA, which means five or more Lebers, and MLMT greater than or equivalent to on Lux level, demonstrating initial efficacy of OCU400. Non-responders are listed outside the circles for each group.

To recap, what we know from our findings to-date is that OCU400 has a favorable safety and tolerability profile in patients. Positive trends are observed in all set visual [Indiscernible] instability and improvement factors, which details that 83% of subjects demonstrated stabilization or improvement in the treated eye either on BCVA,LLVA or MLNT scores from baseline. 75% of subjects show stabilization or improvement in treated eyes and MLMT scores from baseline. 86% of RHO mutation subjects experienced either stabilization or improvement in MLMT scores from baseline, among which 29% demonstrated three lux luminescence level improvement, demonstrating the gene agnostic mechanism of action of OCU400.

The RHO mutation affects more than 10,000 people in the U.S. alone. Based on this data, we are highly enthusiastic about the future of OCU400 and the vision-saving potential it may provide to RP and LCA patients. The execution of critical elements of the OCU400 Phase 1/2 trial, including the completion of dosing of RP and LCA patients sets the stage for us to execute a Phase 3 clinical trial for both indications in 2024 upon FDA concurrence.

OCU410, our modified gene therapy candidate for dry age-related macular degeneration, AMD, is a potential one-time curative therapy with a single subretinal injection that targets multiple pathways causing dry AMD, including lipid metabolism, inflammation, oxidative stress, and complement activation. Unlike other currently market products targeting a single pathway, complement activation. We are currently enrolling patients in the Phase 1/2 OMPD study to assess the safety and efficacy of OCU410 for geographic atrophy secondary to dry AMD.

Geographic atrophy, an advanced form of dry age-related macular degeneration, affects approximately 1 million people in the United States alone. From a competitive standpoint, we believe OCU410 is differentiated among other therapies available and in development for geographic atrophy and dry AMD by its frequency of administration, one-time versus multiple injections per year, reduced side effects from structural impact, strong safety profile, its mechanism for restoring homeostasis and preserving the conditions that promote self-help.

The slide demonstrates how OCU410 utilizes an AAV delivery platform for the retinal delivery of RORA gene. In preclinical studies, OCU410 demonstrated efficacy in regulating multiple pathways involved with the disease, including lipid metabolism, reducing drusen inflammation, regulation of inflammation, suppressing information, oxidative stress, improving cell survival, membrane attack complex -- complement, restoring anti-complement protein.

On this slide, we have captured a proposed program design for OCU410. In 63 adult subjects, 50 or older, with geographic atrophy, secondary to dry AMD, we will observe the treatment effect of our single unilateral subretinal injection OCU410, starting with safety and efficacy in patients. We're employing a three-plus-three design with a low, medium, and high dose in addition to a dose expansion exercise using a one-to-one-to-one design, randomizing subjects to either two treatment groups or dose levels or one control group.

Using a similar approach, our orphan drug designated OCU410ST modifier gene therapy platform of Stargardt disease leverages nuclear hormone receptors to modulate cell activity and utilize this and AIV delivery platform for retinal delivery of the RAR-related orphan receptor A. OCU410 delivery and preclinical studies of Stargardt disease demonstrated a structural and functional improvement. In the OCU410ST Phase 1/2 trial, we intend to treat and investigate 42 subjects, 30 of which are adults, and 12 are children with Stargardt disease. The adult inclusion criteria look at adult patients between 18 to 65 and pediatrics between six to 17.

We're employing a three-plus-three design with a low, medium, and high dose cohort in addition to your dose expansion exercise using a one-to-one-to-one design, randomizing subjects to either two treatment groups per dose levels or one control group. Our team's diligent efforts resulted in NIAID selecting OCU400 for inclusion in a project next-gen Phase 1 clinical trial of our mucosal vaccine candidates for COVID-19 likely to be initiated in the first-half of 2024.

From our own development efforts, we observed vaccine-induced high neutralizing and effector responses during preclinical studies on OCU500. We believe the inhaled route of administration has the potential to be the holy grail for broad and durable protection from severe diseases and can suppress the transmission rate.

As a refresher, Project NextGen, a multi-government agency initiative overseen by NIAID, is a $5 billion multi-government agency initiative to develop the next generation of vaccines and therapeutics to combat the spread of COVID-19. NIAID will execute the clinical trial for OCU500. Upon completion of the trial, Ocugen will possess full rights of reference to the findings. This initiative is a testament to the fact that COVID-19 is still rampant with emergence of new variants and needs more durable vaccines to treat them.

In a recent Harris Poll, we favorably found that 66% of Americans would prefer to have more vaccine options. The poll also found that 52% of Americans would be more open to getting an intranasal or inhaled versus injectable COVID-19 vaccine. In line with NIAID's missions to support innovation and public health, we look forward to potentially expanding the platform to the flu and other respiratory viral diseases and infections.

I would like to bring our pipeline updates to a close by providing a brief update on NeoCart. Ocugen’s autologous regenerative cell therapy, which uses patients' own cartilage cells, is on track to begin its Phase 3 clinical trial in the second-half of 2024. A cGMP facility for manufacturing NeoCart is expected to be completed at the end of 2023, and qualification is expected in the first-half of 2024.

OCU200 is an ophthalmic biological product candidate in preclinical development for treating severely sight-threatening diseases like diabetic macular edema, diabetic retinopathy, and wet, isolated macular degeneration. We are working on responses and continue to interact with the FDA regarding the clinical hold on our OCU200 IND submission and expect to initiate a Phase 1 clinical study in the first-half of 2024.

With that, I will now turn the call over to our Corporate Controller, Michael Breininger, to provide an update on our financial results for the third quarter ended September 30, 2023. Michael?

Michael Breininger

Thank you, Shankar. Our research and development expense for the quarter ended September 30 2023, were $6.3 million, compared to $15.6 million for the third quarter of 2022. General and administrative expenses for the quarter ended September 30 2023, were $9.1 million, compared to $7.5 million during the same period in 2022.

Net loss was approximately $14.2 million or $0.06 net loss per share for the quarter ended September 30, 2023, compared to a net loss of approximately $21.9 million or $0.10 net loss per share for the third quarter of 2022. Net loss was approximately $53.6 million, or $0.22 net loss per share, for the nine months ended September 30, 2023, compared to a net loss of approximately $59.4 million or $0.28 net loss per share for the nine months ended September 30, 2022.

Our cash, cash equivalents and investments followed $53.5 million as of September 30, 2023 compared to $90.9 million as of December 31, 2022. As always, we are constantly exploring strategic and shareholder-friendly opportunities to increase our working capital, and we'll be focused on seeking out corporate partnerships for gene therapies and non-dilutive funding for vaccines.

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

Tiffany Hamilton

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

Question-and-Answer Session

Operator

[Operator Instructions] We have a question come from the line of [Indiscernible] H.C. Wainwright. Your line is open.

Swayampakula Ramakanth

Hey, good morning, Shankar and team. Here is RK Arthur for RK. Congrats on the progress. So I just had a couple questions 400. So when could we expect the complete data set from a Phase 2 study, especially for the LCA patients. So if you can give some color on that would be really appreciated?

Shankar Musunuri

Yes, the LCA, We just dosed, so I think it'll take until later part of next year.

Swayampakula Ramakanth

How about the other patient left in the RP group?

Shankar Musunuri

Yes, the RP patients will get it in the first-half. However, we believe we have adequate information and we're working with regulatory agencies, FDA and DMA for Phase 3.

Swayampakula Ramakanth

Okay, so speak of the Phase 3 study. So from what you said in the press release and the core, is the Phase 3 will be a single Phase 3 packed together, both RP patients as well, LCA, or it could be two separate Phase 3 study?

Shankar Musunuri

We'll start with RP because that's the data we have right now and then we're going to add LCA arm little later in the clinical trial.

Swayampakula Ramakanth

Okay, so that would be in the single Phase 3 or?

Shankar Musunuri

Yes, single Phase 3.

Swayampakula Ramakanth

Okay, okay, I see. And the last question on 400 is, one is for regarding -- have you requested a meeting with FDA and based on your own proposal, which endpoint could be your primary endpoint? If you can…

Shankar Musunuri

I'll let Dr. Upadhyay answer that our CSO. Go ahead, Arun.

Arun Upadhyay

Thanks, Shankar. So we are considering a combinatorial approach and we have proposed that to the FDA and we are going to have a meeting with them this quarter and accordingly once we have alignment with FDA then we will update the market, yes.

Swayampakula Ramakanth

All right. Sounds great. Thanks for taking my question.

Shankar Musunuri

Thank you.

Operator

Our Next question comes from the line of Robert LeBoyer with Nobel Capital Markets. Your line is open.

Robert LeBoyer

Good morning and thanks for taking my question. I just had a follow-up on the Phase 3 for OCU400 and wondering if you have any information or could disclose how many patients you expect to be in the trial or what the length of follow-up is going to be for the patients?

Shankar Musunuri

Good morning, Robert. I'll let Arun address that.

Arun Upadhyay

Yes, so we are planning in the range of close to 100 subjects in Phase 3 in 1:1 randomization and one year follow-up.

Robert LeBoyer

Okay, thank you very much.

Arun Upadhyay

Just to confirm it is 100, okay.

Shankar Musunuri

It's 100 patients, Robert.

Robert LeBoyer

Yes.

Operator

[Operator Instructions] There are no further questions at this time. I will now turn the call over to Chairman and CEO, Dr. Shankar Musunuri.

Shankar Musunuri

In closing, I'd like to reiterate our unwavering commitment to groundbreaking science and clinical innovations in order to create effective and positively impactful therapies that are accessible to patients globally. As we continue to execute stated plans, we remain focused on delivering long-term value for our shareholders, who have supported us and for prospects of Quant's seeking to be part of our story. Thank you and have a great day.

Tiffany Hamilton

Thanks everyone.

Operator

This concludes today’s conference call. You may now disconnect.