Ocugen Inc

NASDAQ:OCGN

Earnings Call Analysis

Ocugen Achieves Significant Milestones in Gene Therapy Development

In the third quarter of 2024, Ocugen made notable strides, securing Health Canada's approval for its Phase III OCU400 trial and FDA's expanded access program for retinitis pigmentosa, enhancing treatment access. Their lead candidate, OCU400, aims to treat multiple gene mutations, targeting a substantial market with approximately 300,000 affected patients. A $30 million debt financing extends their operational runway into early 2026. The company anticipates completing OCU400's Phase III enrollment by mid-2025, seeking regulatory submissions by mid-2026 and potential commercialization in 2027. Additionally, clinical trials for OCU410 and OCU410ST are advancing well, addressing unmet needs for geographic atrophy and Stargardt disease.

Strategic Advances in Gene Therapy

Ocugen is forging ahead with its innovative modifier gene therapy platform, which addresses critical therapeutic areas in ophthalmology, notably in treating conditions like retinitis pigmentosa (RP), geographic atrophy (GA), and Stargardt disease. During the third quarter of 2024, Ocugen achieved significant milestones, including Health Canada's approval to commence the Phase III liMeliGhT clinical trial for its lead product OCU400, and U.S. FDA's approval for an expanded access program for adult patients with RP. This is a necessary step toward reaching patients in need, allowing OCU400's availability beyond clinical trials.

Clinical Development Progress

The company reported that enrollment for the Phase III clinical trial of OCU400 is set to ramp up, with a maximum of five sites planned to be utilized to expedite participant recruitment. OCU400’s gene-agnostic approach represents a significant innovation, intending to treat various gene mutations associated with RP, a drastic consideration given the current therapies are limited to specific mutations. The firm aims to finish enrollment by the first half of 2025, targeting the submission of both the biologics license application (BLA) and market authorization application (MAA) in Europe by the first half of 2026, followed by commercialization set for 2027.

Financial Health and Future Potential

As of September 30, 2024, Ocugen’s cash and restricted cash stood at $39 million, slightly lower than $39.5 million at the end of 2023. The total operating expenses dropped to $14.4 million for the quarter, compared to $16.1 million in the same period last year. Notably, their research and development costs were $8.1 million, suggesting a controlled burn rate within its operations. Recently, Ocugen secured $30 million in debt financing, extending their financial runway into the first quarter of 2026, ensuring they can continue their pivotal clinical trials and operational commitments without interruption.

Opportunities in Unmet Medical Needs

Ocugen is also advancing its OCU410 candidate, targeting geographic atrophy, where no approved options currently exist in Europe. The Phase II ArMaDa clinical trial is progressing as planned, with initial data from the trial expected soon. The company's inclusion of OCU410ST, addressing Stargardt disease—a condition affecting around 100,000 in the U.S. and Europe, also capitalizes on an unmet need in the market. The lack of available treatments positions Ocugen advantageously in potentially capturing market share.

Management's Vision and Strategic Outlook

Dr. Shankar Musunuri emphasized the safety profile of their therapies, noting no adverse events reported in ongoing clinical trials. He expressed confidence in the company’s innovative trajectory and the capability to provide life-changing treatments for patients suffering from degenerative eye diseases. The strategic focus on high-quality product development, coupled with skilled surgical partnerships, positions Ocugen uniquely in the biotechnology landscape for ophthalmology.

Anticipating Clinical Showcase

In an upcoming clinical showcase, the preliminary safety and efficacy data for OCU410 and OCU410ST are set to be presented, including functional endpoints for geographic atrophy treatment—key learning points which could shape future regulatory interactions and market strategies. Ocugen's commitment to engaging with key stakeholders reflects its proactive approach to ensuring transparency and building investor confidence in its expanding therapeutic capabilities.

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, and welcome to Ocugen's Third Quarter 2024 Financial Results and Business Update. Please note that this call is being recorded at this time. [Operator Instructions] Following the speaker's 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, 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. Ramesh Ramachandran, our Chief Accounting Officer, who is transitioning from Mike Breininger, Interim Chief Accounting Officer, is also on the call to provide a financial update for the quarter ended September 30, 2024. Dr. Huma Qamar, Chief Medical Officer; and Dr. Arun Upadhyay, Chief Scientific Officer, who 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 2024. 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, estimate, anticipate, expect, plan, intend, 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, the SEC, including risk factors described in the section entitled Risk Factors, and 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 the presentation.

Finally, Ocugen's quarterly report Form 10-Q covering the third quarter of 2024 will be filed next week. I will now turn the call over to Dr. Musunuri.

[Shankar Musunuri, executive]

Thank you, Tiffany, and thank you all for joining us today. We are excited to share the ongoing progress of our novel modifier gene therapy platform across all 3 clinical programs as well as recent announcement regarding our OCU200 biologic candidate, which I will highlight later in the presentation.

During the third quarter, we accomplished notable clinical and regulatory milestones, including approval from Health Canada to initiate the OCU400 Phase III-liMeliGhT clinical trial in Canada and approval from the U.S. FDA for an expanded access program, or EAP, for the treatment of adult patients aged 18 and older with retinitis pigmentosa, RP, using OCU400.

These accomplishments and consistent trial enrollment are bringing the company even closer to providing potential onetime treatment for life to patients living with RP. Our modifier gene therapy programs, leveraging the RORA gene. OCU410 and OCU410ST are advancing through their respective clinical trials as planned. We are currently dosing patients in OCU410 Phase II ArMaDa clinical trial for the treatment of geographic atrophy, GA, an advanced stage of dry age-related macular degeneration, dAMD.

We completed the Phase I dosing in the Phase I/II OCU410ST/GARDian clinical trial with a favorable safety and tolerability profile. The Data Safety Monitoring Board, DSMB, approved enrollment for the second phase of the Phase I/II clinical trial. Stargardt disease is the most common inherited retinal disease, and there remains a large unmet medical need with no currently approved FDA treatment.

I'm encouraged by these achievements and confident in our path forward to achieving our near-term inflection points. This week, we announced the closing of a debt financing that secured $30 million from Avenue Capital Group. This funding is expected to extend our runway into the first quarter of 2026. Dosing is well underway in the pivotal Phase III liMeliGhT clinical trial for OCU400, our lead gene therapy candidate that utilizes an NR2E3 gene.

As previously mentioned, we received Health Canada approval to initiate the Phase III clinical trial for OCU400 in Canada. Expanding the clinical trial to Canada is a significant opportunity for Ocugen as it will allow us to reach a broader patient population encompassing numerous gene mutations associated with RP.

We plan to enroll subjects across a maximum of 5 sites expediting recruitment, and broadening the commercialization potential of this gene-agnostic treatment in the United States and Europe.

OCU400 also received FDA approval for an EAP for the treatment of adult patients with RP aged 18 and older. The EAP is a meaningful step forward as it makes OCU400 available to qualifying patients beyond our Phase III clinical trial, offering hope and optimism for a wider population of patients desperate for a therapeutic option. This approval also serves to validate the positive safety data generated in the previous Phase I/II OCU400 clinical trial.

Furthermore, this is the first Phase III gene therapy candidate to treat patients with RP regardless of mutation. The Phase III clinical trial is on track to complete enrollment in the first half of 2025, file the biologics license application, BLA, and market authorization application, MAA, in Europe in the first half of 2026, and pursue commercialization in 2027.

Let me take a moment to highlight the unmet need and underdeserved market for RP patients. There are approximately 300,000 patients in the U.S., Europe and Canada that are affected by this disease, which is caused by mutations in roughly 100 different genes. The only approved gene therapy on the market and one currently in development each address one mutation associated with the disease.

Other candidates in development, including optogenetics are intended only for a very small patient population. OCU400 has showcased its potential to provide a totally new category of treatment using its gene-agnostic approach. Rather than one-to-one approach, modified gene therapy targets many genes associated with this underserved disease through the use of master gene regulators, resetting the functional network of the retina and restoring overall health.

We continue our extensive campaign to indicate key stakeholders about the differentiated mechanism of action of our modifier gene therapy platform, and its advantages over current therapies. During third quarter, we had the opportunity to provide updates on our 3 clinical-stage modifier gene therapies to significant investor audiences as well as industry decision-makers during meetings like the Cell and Gene Meeting on the Mesa, hosted by the Alliance for Regenerative Medicine.

Now let's move on to our development in OCU410 and OCU410ST, which aim to treat GA secondary to dAMD, and the Stargardt disease, respectively, with a single subretinal injection, that could be a onetime treatment for life for patients living with these debilitating blindness diseases.

OCU410 is specifically designed to address multiple pathways implicated in the pathogenesis of dAMD and offer distinct advantages over current treatment options that target only one pathway, the complement system. Currently approved treatment options require frequent intravitreal injections, about 6 to 12 doses per year and are accompanied by various safety concerns. For example, roughly 12% of patients develop wet AMD following treatment.

OCU410 has the potential to regulate all 4 pathways related to disease progression, lipid metabolism, inflammation, oxidative stress and the complement system, thereby addressing the underlying causes of the disease. With approximately 2 million to 3 million GA patients in the U.S. and Europe combined, OCU410 represents a considerable market that is primed for new entrants, given the shortcomings with the current therapies. Additionally, there is no approved product for GA in Europe. We are currently in Phase II of the Phase I/II ArMaDa clinical trial, and plan to complete dosing in early 2025.

A preliminary safety and efficacy update on the OCU410 Phase I/II ArMaDa clinical trial will be shared at the upcoming clinical showcase next week. To date, 9 patients with GA have been treated with the low, medium and high doses in the OCU410 Phase I study, and 410 demonstrated a favorable safety and tolerability profile. To date, no serious events, SAEs related to OCU410 have been reported.

The Phase II dose expansion, SSR-blinded clinical trial is recruiting patients, and will assess the safety and efficacy of OCU410 in a larger group of patients who will be randomized into 1 of 3 groups: a medium-dose treatment group, a high-dose treatment group on an untreated control group. Participants must be aged 50 or older, be able to identify 24 letters or more on a BCVA, which is like the charts you read at optometrist office and have a total geographic atrophy area between 2.5 and 20.5 square millimeters. Turning on to OCU410ST, which has received orphan drug designation from the FDA for the treatment of ABCA4-associated retinopathies, including Stargardt disease. Phase I dosing of the Phase I/II GARDian clinical trial has been completed and OCU410ST demonstrated a favorable safety and tolerability profile.

To date, no SAAs related to OCU410ST have been reported. The Data and Safety Monitoring Board has approved proceeding to Phase II of the clinical trial. Stargardt disease affects approximately 100,000 people in the U.S. and Europe, and no approved therapy is available. This condition is the most common form of inherited macular dystrophy with [ symptom ] soft bilateral central vision loss typically forming during childhood, and gradually worsening over a person's lifetime.

A preliminary safety and efficacy update on the OCU410ST Phase I/II GARDian clinical trial will also be featured at the upcoming clinical showcase.

Lastly, I would like to call attention to our biologic platform OCU200, which possesses unique features to treat vascular complications of diabetic macular edema, DME. In recent news, we announced that the FDA cleared the investigational drug application for the Phase I clinical trial evaluating OCU200, a recombinant fusion protein consisting of tumstatin and transferrin for treatment of DME. DME causes blurriness in vision and progressive vision loss as the disease advances. Approximately 746,000 patients in the United States are affected with the DME. The condition is becoming more prevalent as a number of people with the diabetes in the U.S. raises, making it more imperative to address.

Approximately 30% to 40% DME patients are refractive to current anti-VEGF therapies, and we believe that OCU200 has the potential to provide a new treatment option for a significant percentage of people living with DME, including nonresponders to the current standard of care.

We plan to initiate Phase I clinical trial of OCU200 this quarter. Our efforts across platforms represent our commitment to treating blindness diseases, focusing on innovative solutions that aim to provide lasting patient benefits. We look forward to sharing further updates as we advance these therapies through clinical development. I will now turn the call over to Ramesh Ramachandran to provide an update on our financial results for the quarter ended September 30, 2024. Ramesh?

[Ramesh Ramachandran, executive]

Thank you, Shankar. The company's cash and restricted cash totaled $39 million as of September 30, 2024, compared to $39.5 million as of December 31, 2023. Total operating expenses for the 3 months ended September 30, 2024, were $14.4 million and included research and development expenses of $8.1 million, and general and administrative expenses of $6.3 million. This compares to total operating expenses for the 3 months ended September 30, 2023, of $16.1 million that included research and development expenses of $7 million, and general and administrative expenses of $9.1 million.

As stated earlier, we recently completed a successful debt financing of $30 million, extending our runway into the first quarter of 2026. As always, we are proactively exploring shareholder-friendly opportunities to increase our working capital, including partnerships that will drive long-term strategy for our scientific platforms.

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

[Tiffany Hamilton, executive]

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

[Operator]

[Operator Instructions] Our first question comes from the line of Jason McCarthy with Maxim Group.

[Unknown Analyst]

Congrats on the quarter. So at the upcoming clinical showcase, we're expecting some of the initial data in GA. Could you just help us understand what we can be looking for from that, the bar for success and then in particular for gene agnosticism.

[Shankar Musunuri, executive]

Huma?

[Huma Qamar, executive]

So thanks for the question. So in the upcoming clinical showcase, we will be presenting the geographic atrophy in our other gene therapy trials, preliminary safety and efficacy. Particularly for the GA, we have established the safety at this point. And what we will be showcasing the efficacy endpoints like geographic atrophy lesion and other parameters would be functional as well as structural. So we will be presenting that data in the upcoming clinical showcase on November 12 at [ NASDAQ ]

[Unknown Analyst]

Okay. Great. And then for the Stargardt study, when could we expect to see data? And then also as a follow-up with a couple of small molecule drugs in Stargardt and late-stage development. How do you sort of see those fitting in with OCU410ST, if they are approved?

[Huma Qamar, executive]

Okay. That's a great question currently. Just to address that there are no approved therapeutic or any treatment approved for Stargardt so there is significant unmet medical need out there. In our upcoming clinical showcase, we will also be presenting the safety as we have already apprised the market through our [ DSMB ] press releases. But for efficacy, we will also be presenting that in our upcoming clinical showcase. So stay tuned for all the updates.

[Shankar Musunuri, executive]

So Jason, I know there are some couple of products in the development. However, we are planning for a treatment option, only treatment option with our therapy. At this time, we're not thinking about any co-therapies.

[Unknown Analyst]

Got it. And then I just thought I'd bring up since it's topical. If you could just -- given the recent issues with existing gene therapies, Pfizer dropping out, bluebird coming under fire for safety. Can you just talk a bit about how modifier gene therapies avoid some of those pitfalls impacting the space at large?

[Shankar Musunuri, executive]

Yes. I mean good question, Jason. I think two things, I think we need to consider when you're doing any gene therapies. First and foremost, product quality is extremely important. And during the course of last few years with the 3 parallel clinical trials going on, in ophthalmology space, probably we have the biggest ophthalmology clinical trials in gene therapy space.

We have not seen any adverse events SAEs related to our product. The product seemed to be safe and effective. Therefore -- that's number one. Quality of the product is very important. We believe we are consistently making high-quality product.

Number two, we target subretinal surgeries to get this gene therapy into retina. And so we do have highly skilled experienced retinal surgeons in our network, and we formed a very good network of the surgeons for all our clinical trials. So that's very important. The procedure is important. So those are the two things we're focusing on. And obviously, there are also differences. I just wanted to point out for listeners, systemic gene therapy versus ophthalmology gene therapy.

I mean, our target dose typically in ophthalmology space because we directly go into the target, goes from 10 to 10 to the 10 to 11 gene copies. Systemic gene therapies go into 10 to the 14 and higher. And so there is a significant difference, almost like 1,000-fold to 10,000-fold increase. And so there are other things come up when you go to systemic gene therapies

[Operator]

Our next question comes from the line of Daniil Gataulin from Chardan.

[Daniil Gataulin, analyst]

Congrats on the progress. I had 1 question on geographic atrophy program. So given there are no still no approved options for it in Europe, how are you thinking of taking advantage of the opportunity. And have you had any interactions with the regulators regarding your program?

[Shankar Musunuri, executive]

Great question, Daniil. Yes, we will start interactions this year -- I mean the next few quarters with the EU. Obviously, the Phase II is limited to U.S. What EU regulators are looking for is some functional improvement or stabilization for geographic atrophy patients. The current therapies which are in the market in U.S., they use structural endpoints to get approvals. So we'll be definitely looking for functional endpoints, and some of that data will be shared next week in our showcase.

[Daniil Gataulin, analyst]

Got it. And a quick follow-up on for OCU410ST program. Do you see -- given it's a rare disease, do you see any potential of modifying your Phase II trial or Phase II portion of the trial to make it a pivotal?

[Shankar Musunuri, executive]

Yes, that's a great question. That's why after Phase I clinical trial, we are taking a pause even though DSMB gave approval to move forward with the Phase II with the previously designed study approved by FDA. We're going to take a pause. We're going to spend a few months for discussions with the FDA because there are some new guidance.

There is an opportunity for orphan disease with the gene therapies to convert Phase II into a pivotal trial, for a registration trial. So we're going to closely work with agency and seek their advice and guidance before we move forward to Phase II/confirmatory trial.

[Daniil Gataulin, analyst]

Got it. And again, congrats on the progress.

[Operator]

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

[Shankar Musunuri, executive]

Thank you, operator. We appreciate the continued interest and involvement of our key stakeholders as we move forward with our transformative initiatives. We look forward to closing a successful fourth quarter of 2024 as we continue to solidify Ocugen's position as a biotechnology leader in ophthalmology. Have a great day.

[Operator]

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.