Ocugen Inc

NASDAQ:OCGN

Earnings Call Analysis

Ocugen Prepares for Pivotal Phase III Trials in 2024

Ocugen, a pioneering biopharmaceutical company, shared upbeat updates on their modifier gene therapy-based Phase I/II OCU400 study, preparing to begin their Phase III trial in retinitis pigmentosa patients early 2024 after FDA discussions. They aim to expand the OCU400 trial for Leber congenital amaurosis later that year, contingent on positive Phase I/II results. Ocugen is on track with other programs such as NeoCart and noted inclusion in a NIAID-funded Phase I COVID-19 vaccine trial. They expect a transformative 2024 with initial Phase III starts and revenue growth forecasted at 5-10%. Financially, R&D costs have decreased from $15.6 million to $6.3 million, and the company holds $53.5 million in cash and investments.

Exciting Clinical Developments and Future Outlook

The press release and subsequent discussion revealed significant advancements in Ocugen's ophthalmic gene therapy programs, hinting at a momentous year ahead. With hopeful clinical evidence from the Phase I/II OCU400 study, Ocugen is poised to start Phase III trials early in 2024 for retinitis pigmentosa (RP) patients, pending FDA concurrence. Anticipating successful results, the trial aims to expand its scope to include patients with Leber congenital amaurosis (LCA) in late 2024. Furthermore, the OCU410 program for dry age-related macular degeneration is breaking new ground as a multi-pathway targeting, potential one-time curative therapy. Ocugen is actively enrolling patients for the Phase I/II ArMaDa study, with later parts of 2024 slated for clinical updates. The company's dedication to developing solutions for vision impairment and blindness caused by RP and LCA embodies their vision to meet unmet medical needs.

OCU400 Shows Promise for Vision Impairment Treatment

OCU400, focusing on inherited retinal diseases like RP and LCA, shows potential with safety, tolerability, and initial efficacy. About 1.6 million people globally and approximately 125,000 in the U.S. may benefit from this therapy. The first-in-class modifier gene therapy has been well received, with 83% of subjects demonstrating stabilization or improvement in treated eyes. These results are encouraging as Ocugen prepares for future clinical trials.

Unique Positioning for OCU410 in Dry AMD Market

Targeting the 1 million Americans affected by geographic atrophy, a severe form of dry AMD, OCU410 stands out with its one-time administration and favorable safety profile. The ongoing Phase I/II ArMaDa study will shed more light on its efficacy, potentially offering a differentiated solution from the current multiple-injection therapies on the market.

Advancements in Cartilage Repair and COVID-19 Vaccine Development

NeoCart, Ocugen's regenerative cell therapy for knee cartilage repair, is gaining momentum with plans to complete a cGMP facility by the end of 2023 and commence Phase III clinical trials in the latter half of 2024. Also, the company's inclusion in a Phase I clinical trial by NIAID for their COVID-19 mucosal vaccine candidate, OCU500, promises an innovative approach to vaccination, with trials expected to begin in the first half of 2024.

A Transformative Year Ahead with Diverse Clinical Programs

Ocugen's portfolio continues to expand with a spectrum of gene and cell therapies, aiming to introduce critically needed treatments. The company is moving confidently into 2024, with its planned initiation of Phase III trials and a strong pipeline that includes solutions for conditions like Stargardt disease and severe sight-threatening diseases. All these clinical programs pave the way for a transformative year for the company.

Financial Highlights and Strategic Focus

Ocugen's financial report indicates careful management of its resources with a decrease in research and development expenses from $15.6 million in Q3 2022 to $6.3 million in Q3 2023, while general and administrative expenses saw an increase from $7.5 million to $9.1 million in the same period. The net loss narrowed, with a $0.06 net loss per share for Q3 2023 compared to a $0.10 net loss per share for Q3 2022. The company ended the quarter with $53.5 million in cash, cash equivalents, and investments, down from $90.9 million at the end of 2022. Despite the reduction in cash reserves, Ocugen is actively exploring strategic partnerships and non-dilutive funding opportunities to advance its mission.

Earnings Call Transcript 2023-Q3

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

[Tiffany Hamilton, executive]

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. 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 predict, believe, 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 and related anticipated time lines. 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 in 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, executive]

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 I/II OCU400 study in September 2023, we believe we have strong clinical evidence to initiate our Phase III clinical trial in retinitis pigmentosa, RP patients, in early 2024 based on FDA conference. Utilizing a dual-tract strategy, we also intend to expand our OCU400 Phase III trial in the second half of 2024 to include patients with Leber congenital amaurosis, LCA, contingent upon favorable results from the Phase I/II study.With enrollment begun for our OCU410 and OCU410ST programs, we are diligently working to dose 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 I clinical study in the first half of 2024, contingent on the list 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 III clinical trial in the second half of next year.Last month, we were delighted to be selected for inclusion in a Phase I 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 I 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 III 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 I/II 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 preliminary signs 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 Multi-Luminance Mobility Testing, MLMT. More details on our trial design can be found on clinicaltrials.gov with the identifier code listed at the bottom of this 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 site 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 congenital 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 3 exploratory endpoints for visualization stabilization and improvement observed in patients treated with OCU400 on Slide 4, BCVA, LLVA and MLMT. In the 12 cumulative subjects that have undergone a minimum of 6 months follow-up post OCU400 dosing, we observed the following metrics. This Venn diagram demonstrates that 8 out of 12 subjects showed either stabilization, means no change from baseline, plus/minus 4 letter change for BCVA and LLVA, and 0 lux level change for MLMT. Or improvement in all 3 parameters of BCVA and LLVA, which means 5 or more letters, and MLMT greater than or equal to 1 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 visualization stability and improvement factors, which details that 83% of subjects demonstrated stabilization or improvement in the treated eye, either on BCVA, LLVA or MLMT scores from baseline. 75% of subjects show stabilization or improvement in treated eyes in MLMT scores from baseline. 86% of RHO mutation subjects experienced either stabilization or improvement in MLMT scores from baseline, among which 29% demonstrated 3 Lux luminance level improvement, demonstrating the gene agnostic mechanism 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 our OCU400 and the vision-saving potential it may provide to RP and LCA patients. The execution of critical elements of AOCU400 Phase I/II trial, including the completion of dosing of RP and LCA patients, sets the stage for us to execute a Phase III 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 marketed products targeting a single pathway, complement activation. We are currently enrolling patients in the Phase I/II ArMaDa study to assess the safety and efficacy of ACU410 for geographic atrophy, secondary to dry AMD. Geographic atrophy is an advanced form dry age-related macular degeneration that 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 delivery of RORA gene. In preclinical studies, OCU410 demonstrated efficacy in regulating multiple pathways involved with the disease, including lipid metabolism, reducing drusen formation, regulation of inflammation, suppressing inflammation, oxidative stress, improving cell survival, membrane effect complex complement, restoring anticomplement protein.On this slide, we have captured our 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 a single, unilateral subretinal injection, OCU410, starting with safety and efficacy in patients. We're employing the 3-plus-3 design with a low, medium and high dose. In addition to a dose expansion exercise using the 1:1:1 design, randomizing subjects to either 2 treatment groups or dose levels or one control group.Using a similar approach, our orphan drug designated OCU410ST modified gene therapy platform for Stargardt disease leverages nuclear hormone receptors to modulate cell activity and utilizes an AAV delivery platform for retinal delivery of the RAR related orphan receptor A. OCU410 delivery in preclinical studies of Stargardt disease demonstrated a structural and functional improvement. In the OCU410ST Phase I/II trial, we intend to treat and investigate 42 subjects, 30 of which are adults and 12 are children at start of disease. The other inclusion criteria look at adult patients between 18 to 65 and pediatrics between 6 to 17. We're employing a 3-plus-3 design with a low, medium and high dose cohort in addition to your dose expansion exercise using a 1:1:1 design, randomizing subjects to either 2 treatment groups per dose levels or one control group.Our team's diligent efforts resulted in NIAID selecting OCU400 for inclusion in a Project NextGen Phase I clinical trial of our mucosal vaccine candidate 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 that inhaled form of administration has the potential to be a 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 COVD-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 a 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 III 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 age-related macular degeneration. We're 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 I 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, executive]

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 9 months ended September 30, 2023, compared to a net loss of approximately $59.4 million or $0.28 net loss per share for the 9 months ended September 30, 2022.Our cash, cash equivalents and investments totaled $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, executive]

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

[Operator]

[Operator Instructions] We have a questions come from the line of [ Arthur Harris ], H.C. Wainwright.

[Unknown Analyst]

Here's RK -- Arthur for RK. Congrats on the progress. So I just had a couple questions on 400. So when can we expect the complete data set from a Phase II study, especially for the LCA patients? That -- so if you can give some color on that, it'd be appreciated.

[Shankar Musunuri, executive]

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

[Unknown Analyst]

How about the other patients left in the RP group?

[Shankar Musunuri, executive]

Yes. The RP patients will get it in the first half. However, we believe we have adequate information, and we are working with the regulatory agencies, FDA and the EMA, for Phase III.

[Unknown Analyst]

Okay. So speak of the Phase III study. So from what you said in the press release and the call, is the Phase III will be a single Phase III packed together, both RP patients as well LCA? Or it's going to be two separate Phase III study?

[Shankar Musunuri, executive]

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

[Unknown Analyst]

Okay. So that would be in the single Phase III or --

[Shankar Musunuri, executive]

Yes.

[Unknown Analyst]

Okay. Okay. I see. And last question on 400 is for -- have you requested a meeting with the FDA? And based on your own proposal, what -- which endpoint going to be your primary endpoint, if you can --

[Shankar Musunuri, executive]

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

[Arun Upadhyay, executive]

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 everything, we'll update the market.

[Unknown Analyst]

Okay. Sounds great.

[Operator]

Our next questions comes from the line of Robert LeBoyer with NOBLE Capital Markets.

[Robert LeBoyer, analyst]

I just had a follow-up on the Phase III 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, executive]

Robert, I'll let Arun address that. Go ahead.

[Arun Upadhyay, executive]

Yes. So we are planning in the range of close to 100 subjects in Phase III in 1:1 randomization and 1-year follow-up. Just to confirm, it is 100, okay?

[Shankar Musunuri, executive]

It's 100 patients, Robert.

[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, executive]

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 prospective ones seeking to be part of our story. Thank you, and have a great day.

[Tiffany Hamilton, executive]

Thanks, everyone.

[Operator]

This concludes this conference call. You may now disconnect.