Ocugen Inc

NASDAQ:OCGN

Earnings Call Analysis

Ocugen's Progressive Strides in Gene Therapy

Ocugen, a forward-looking biotechnological firm, actively pursues innovation in gene and cell therapy. With a strategic alliance under NIH's NextGen initiative and renovations at their cGMP facility, they're readying for 'NeoCart' production, aimed for a market around $8 billion by 2028. Their gene therapy candidate, 'OCU400', which saw FDA alignment for Phase III trial design, addresses retinitis pigmentosa with no minimum mutation requirement and the company's marking a pivotal transition to this trial phase. Financially, Ocugen asserts a stable cash position with $39.5 million as of year-end 2023, anticipating sufficient runway into Q4 2024 despite a need to restate previous financials due to noncash accounting errors.

Ocugen Sets Sight on Novel Gene Therapies for Blindness

Ocugen has advanced its mission in 2023 with strides in its modified gene therapy programs targeting blindness diseases. With emotional testimonials evidencing its treatments' potential, the company stands poised for a transformative 2024. Important milestones include substantial advancements in their flagship OCU400 gene therapy for retinitis pigmentosa, FDA recognition, and strategic moves in the vaccine and cell therapy space amid a supportive regulatory environment.

A Financial Foundation for Future Innovations

Despite needing to restate certain financial documents, Ocugen's financial position remains secure with the company maintaining an adequate cash runway into Q4 2024. The financial stewardship ensures continuity for their ambitious clinical programs, underpinning the advancing gene therapy portfolio and pursuit of strategic partnerships, notably in progressing their OCU400 program.

Clinical Horizons: Pioneering Trials and Regulatory Synergy

Ocugen stands at the precipice of starting the Phase III trial for OCU400, advancing towards potential commercialization. Expert leadership, affirmed by Dr. Huma Qamar’s appointment as Chief Medical Officer, and constructive dialogue with the FDA, further position the company at the helm of addressing retinitis pigmentosa's unmet medical needs. Additionally, cohesive plans to initiate NeoCart's Phase III trials and secure necessary funding illustrate a well-oriented path toward clinical success and global patient access.

Earnings Call Transcript 2023-Q4

[Operator]

Good morning, and welcome to Ocugen's business update with certain financials for the year ending 2023. 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 Communications. You may begin.

[Tiffany Hamilton, executive]

Thank you, operator. Joining me today is Ocugen's Chairman, CEO and Co-Founder, Dr. Shankar Musunuri, who will provide a business update. Michael Breininger, Corporate Controller, is also on the call and will provide certain financials for the year ending 2023. Finally, Dr. Huma Qamar, Chief Medical Officer, will be available to answer questions during the Q&A.

This morning, we issued a press release detailing business and operational highlights for the year ending 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, 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 timelines. Such statements are subject to numerous important factors, risks and uncertainties and 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 entitled Risk Factors in any 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.

Finally, our annual report on Form 10-K is expected to be filed no later than April 16, 2024. I will now turn the call over to Dr. Musunuri.

[Shankar Musunuri, executive]

Thank you, Tiffany. Good morning, and thank you all for joining us today. Looking back at 2023, our team's unwavering dedication has set the stage for a transformation 2024 in our modified gene therapy programs for blindness diseases. The strides we have made are not just in signs, they are profoundly personal evidenced by the significant benefit of our therapies can potentially offer to patients.

Allow me to briefly share an inspiring account that justifies the core of our model. Courageous innovation from a patient in the OCU400 Phase I/II trial for retinitis pigmentosa, a rare genetic disorder that degrades retinal sales and affects approximately 100,000 people in the U.S. and 1.6 million people worldwide.

A 60-year-old patient began experiencing the onset of RP in his 40s. As the disease progressed and his vision worsened, it increasingly threatened his livelihood and his ability to function independently. Before joining our trial, he faced a future dominated by visual impairment with no available treatment options. This trial has proven to be a life-altering experience, not just for him but also for his family.

A year following his treatment with OCU400, he reports a gradual restoration of site in his treated eye. As a matter of fact, he shared that his dosed eye was worse of the 2 and now it is better than the untreated eye. It's getting to know patients like these and hearing their real-world stories that fortified or resolve for bold innovation to deliver safe and effective therapies for significantly underserved diseases.

For reference, we have also posted this patient video in the patient section of our corporate website. As we review our 2023 milestones, we are proud of having achieved recognition from the FDA and other agencies in several areas. First, I will touch upon our vaccines and cell therapy platforms. On the vaccine development front, our team's diligent pursuit of nondilutive funding revenues has culminated in a collaboration with the NIAID, part of NIH to include OCU500 in the project NextGen initiative to test the therapeutic potential of several early-stage vaccine candidates in combating COVID-19.

The initiative's commitment to cover costs for early-stage vaccine candidates is a strategic leap forward, allowing us to address this public health imperative with a minimal financial impact on our shareholders.

In addition, our state-of-the-art cGMP facility renovations were completed last year, paving the way for the production of NeoCart, our Phase III-ready 3-D regenerative cell therapy platform. Acquiring this asset from our predecessor presented us with invaluable opportunity. After thoroughly evaluating its compatibility with Ocugen's existing pipeline and R&D expertise, we acknowledged our responsibility to future patients eagerly awaiting it. With the cell therapy market poised to reach around $8 billion by 2028 and an encouraging regulatory landscape, we are now strategically evaluating alternatives to ensure NeoCart development stays on track to maximize value for patients and shareholders.

Before I get into the modified gene therapy update, I would like to take a moment to discuss the broader landscape of the gene therapy market and Ocugen's position within it. We believe the gene therapy market is on the cusp of a significant transformation. Current market economics indicate a growing interest in genetic and cell therapies fueled by technological advancement, increased investment and clinical activity and a supportive regulatory environment.

M&A transaction within the past year symbolized appeal and need for gene therapies. Industry analysts project that the global gene therapy market is expected to surpass $30 billion by the end of the decade. This immense growth projection is driven by unmet medical needs of growing pool of millions of patients globally suffering from diseases that until recently were untreatable.

Last year, we achieved alignment from the FDA on the design aspects of OCU400 Phase III study. As we prepared to initiate our pivotal OCU400 Phase III clinical trial, I'd like to emphasize that we will be the only gene therapy Phase III trial with a broad RP designation.

The FDA's alignment on our Phase III trial design for OCU400 is rooted and compelling positive preliminary safety and efficacy results demonstrated in the Phase I/II trial last year. Multi-luminance mobility testing, MLMT, low luminance visual acuity, LLVA, and best corrected visual acuity, BCVA were the efficacy measurements for patients receiving the treatment. In each category of these measurements, results indicated improvement or preservation in eyes treated with OCU400. The results are from our understanding of the gene-agnostic mechanism of action.

In the design of the proposed Phase III study for RP patients, the FDA has included luminance dependent navigation assessment, LDNA, a measure of functional vision changes in patients with inherited retinal diseases as the primary endpoint.

The upcoming multicenter randomized 150-patient Phase III study will feature 2 arms, row and gene agnostic with up to 75 patients in each arm. In each arm, the 75 participants will be randomized 2:1 to the treatment group and untreated control growth.

Upon receiving approval from the FDA, we anticipate initiating the Phase III trial for patients with RP. Our collaborative and interactive conversations with the FDA to advance OCU400 to Phase III affirm the acute need for a therapy for RP patients and our clinical data has potential to foster a transformative impact.

Now on to OCU410 and OCU410ST. The current treatment landscape for both geographic atrophy, GA and Stargardt disease is extremely limited. The estimated 1 million patient GA market in the U.S. saw some momentum with recent drug approvals. However, these treatment options have significant limitations as they require multiple injections per year, impacting patient compliance and only target 1 pathway contributing to GA.

OCU410 regulates multiple pathways involved with the disease, including the lipid metabolism, inflammation, oxidative stress and membrane attack complex, complement and has the potential to provide a onetime treatment for life. Presently, there is no approved treatment for people living with Stargardt disease, an orphan blindness disease that affects approximately 40,000 people in the U.S. alone.

In the first quarter of 2024, we have completed dosing of cohort 1 in both the OCU410 ArMaDa and OCU410ST GARDian Phase I/II clinical trials. The data and safety monitoring board for the OCU410ST clinical trial determined that the safety and tolerability profile for OCU410ST is favorable and approved to proceed to dosing with the medium dose of OCU410ST in the dose escalation fate of the study.

The FDA orphan drug designation for OCU410ST last year further underscores our commitment to blindness conditions that require ongoing treatment with high unmet medical need. Collaborations with the premium retinal surgery center across the U.S. have been pivotal in bolstering our patient recruitment efforts and deepening our understanding.

With a maturing pipeline of clinical progress, Ocugen is positioned at the forefront of this [indiscernible] gene therapy market. The FDA RMAT and orphan drug designations granted to our gene therapy programs demonstrate our potential to lead in this area. Based on the patient testimony from our OCU400 clinical trial, we are not only making headway, but already making a meaningful difference.

Our ultimate goal at Ocugen is to develop and deliver safe and effective therapies to patients battling conditions that impact quality of life and functional independence. At our February 2024 clinical showcase, we shared our expected pathway for the market approval of OCU400.

To help us navigate this critical phase and ensure we deliver on our long-term strategy, we recently announced the appointment of Dr. Huma Qamar as our Chief Medical Officer. Dr. Qamar's extensive experience and contributions to date in our previous role as our Head of Clinical Development and Clinical Operations are pivotal to our team. Our expertise and foundational large of Ocugen's modifier gene therapy platform will be instrumental to the success of our clinical programs.

I will now turn the call over to Mike Breininger, our Corporate Controller, to provide financials. Mike?

[Michael Breininger, executive]

Thank you, Shankar. In our press release this morning, we noted that we will restate our consolidated financial statements as of and for the year ended December 31, 2022, in connection with the filing of our 2023 Form 10-K.

Similarly, the company will include restated unaudited financial information for the first 3 quarters of 2023 and 2022. The identified errors in each of the restated periods relates to the company's noncash accounting for the estimated cost in one of its collaboration arrangements.

However, the company does not expect the errors to result in any impact on its cash position, cash runway or financial projections. Ocugen's cash, cash equivalents and investments totaled $39.5 million as of December 31, 2023, compared to $90.9 million as of December 31, 2022. We expect our current cash, cash equivalents and investments will enable us to fund operations in the fourth quarter -- into the fourth quarter of 2024.

I will now turn the call over to the operator for questions.

[Operator]

[Operator Instructions] Your first question comes from the line of Swayampakula Ramakanth with H.C. Wainwright.

[Swayampakula Ramakanth, analyst]

So on the OCU400 program, when should we expect to hear a next clinical update? And also what else needs to be completed before you can get the Phase III program started?

[Shankar Musunuri, executive]

Okay. I will let Dr. Qamar answer the question. Go ahead.

[Huma Qamar, executive]

Thank you, Shankar, and thank you for the question. So for OCU400 Phase I/II study, we have completed the enrollment for retinitis pigmentosa patients and the LCA as well. We will be periodically providing the updates as they come, but we have completed the enrollment for our retinitis pigmentosa and LCA portion of the study.

[Shankar Musunuri, executive]

Okay. Mark, are you expecting us to -- are you talking about Phase III?

[Swayampakula Ramakanth, analyst]

Yes, what else needs to get done for that?

[Huma Qamar, executive]

Okay. For Phase III, we are actively working with the FDA. We are anticipating. We have been working very closely with the FDA, and we are grateful for their support on the FDA environment of our clinical protocol. So if all goes well, we will be commencing our study in April, which is this month.

[Swayampakula Ramakanth, analyst]

Good. And then regarding the Data and Safety Monitoring Board approving you to move to the next dose level in OCU410ST. So at this point, how many patients would be entering into the next phase of that dose evaluation? And also, would you be releasing any of the data from the initial cohorts? Or would you do this at a time when you have enough data from multiple cohorts?

[Huma Qamar, executive]

So that's a good question. So we are moving towards the medium dose, which is cohort 2. The Phase I portion of the study is a 3+3 design, which is the dose escalation portion. So we will be enrolling 3 patients in there as well as when -- after that, there will be a high-dose cohort with the 3 as well. And from there, we are planning to update periodically on the safety update, preliminary safety updates pretty soon once we have the DSMB go from the high dose board as we look towards the dose escalation portion of the study.

[Swayampakula Ramakanth, analyst]

And one last question from me is on the NeoCart. So based on your comment, it looks like you are ready in terms of manufacturing part of -- manufacturing the product needed for the study. What else is needed to get started? And in your conversations with potential collaborators, what are they looking for so that you can move the conversation to the next level?

[Shankar Musunuri, executive]

Great question. Yes, the facilities are ready and we have alignment from FDA to move into Phase III with RMAT designation. Everything is set. I mean, obviously, this is a Phase III. It's a 2-year study and take some recruitment time. So there is a capital commitment needed.

So that's exactly what we are working with the potential partners to make sure we got the funding lined up to continue the clinical trial because once we start it, we need to make sure we have adequate funding support so we can finish it.

[Operator]

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

[Daniil Gataulin, analyst]

Congrats on the progress. I have one on Phase III OCU400 trial. Is there a minimum number of mutations that you will need to be looking at that you'll need to include to gain a broad mutation agnostic label?

[Huma Qamar, executive]

So I will take that question, and the answer is no. We are excluding the dosing in one arm and then the other gene agnostic arm, where we will have 75 patients -- 75 patients in [indiscernible] arm, 75 in the gene agnostic approach, 50 being in the active arm and 25 in the control.

[Daniil Gataulin, analyst]

Okay. And internally, do you -- are you guiding on how many gene agnostics RP gene agnostic patients you will be looking at that are different?

[Huma Qamar, executive]

No, we are not. That's exactly what we have, the broader RP indication for our product. So that is we are addressing the patient's unmet medical needs here, and we are opening this Phase III trial to actually validate our novel modified gene therapy platform.

[Operator]

This concludes the Q&A portion. I will now turn the call back over to Dr. Shankar Musunuri.

[Shankar Musunuri, executive]

Thank you. As we close today's session, I want to highlight our 2023 journey and our 2024 strategy. Our focus on patients has manifested in numerous regulatory milestones and advancements in our gene therapy pipeline. With our OCU400 program on the cusp of its Phase III trial, in line with the 2026 BLA approval target timeline and the completion of fast cohort dosing in our OCU410 and 410ST trials, we stand at an exciting juncture of clinical progress and potential.

The gene therapy market's dynamic growth and our strategic position within it signal a future right with the opportunity. And while we continue to advance the pipeline, we also continue to pursue partnership opportunities for OCU400. I want to thank all our stakeholders for their continued trust and support. We entered this year with a great momentum and clear objectives driven by a mission to bring game-changing gene and cell therapies and vaccines to market and working even harder to provide access to patients globally. Thanks again, everyone. Have a great day.

[Operator]

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