Q2 2022 Ocular Therapeutix Inc Earnings Call

August 8, 2022

Good afternoon ladies and gentlemen.

Thank you for standing by and welcome to the Ocular Therapeutics second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode.

Later, we will conduct a question and answer session and instructions will follow at that time. It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer of Popular Therapy Dix. Please go ahead, sir.

Thank you operator. Good afternoon everyone and thank you for joining us on our second quarter 2022 financial results and business update conference call. This afternoon after the close, we usually press release providing an update on the company's product development programs and details of the company's financial results for the quarter ended June 30, 2022. The press release can be accessed on the investor's portion of our website at investers.cocts.co.

Leaving the call today will be anti-modific, our President and Chief Executive Officer, who will provide an update on the course of progress of the extended and in summary of our corporate developments. Also, speaking on the line today, it will be Dr. Rabia Azden, our Chief Medical Officer, who will give an update on our clinical development and apply apply.

Following our obvious remarks, I will provide an overview of the financial highlights for the quarter before turning the call back over the and eighth grade summary in question.

For Q&A, we will be joined by Chris White, our chief business officer, and Scott Corning, our senior vice president commercial. As a reminder, on today's call, certain statements we will be making may be considered forward looking for the purposes of the private security litigation reform act of 1995. In particular, any statements regarding our regulatory and product development plans, as well as our research activities and our financial projections are forward looking statements.

These statements are subject to a variety of risks and uncertainties that may cause actual results to differ from those forecasted, including those risks described in our most recent quarterly report filed this afternoon with the FTC and our annual report on form 10K filed on February 28th with the FTC. This was filed on February 28th with the FTC.

I will now turn the call over to Anthony.

Thanks, Tom. The second quarter of 2022 was another quarter of great progress at the Dr. DeRaputex, most notably the development of our pipeline. For those of you following the October story, you will know that by far the most anticipated development for the company and for the hope of a more durable treatment for patients with wet AMD.

is our US-based Phase 1 clinical trial for OTX-TKI, our assistant containing hydrogel implant for treatment of wet AMD and other retinal diseases.

We are developing OTS-TKI to reset the standard care for durability of a single injection in the treatment of WEMD from two to three months to be on. We are developing OTS-TKI to reset the standard care for durability of a single injection in the treatment of WEMD from two to three months to reset the standard care for durability of a single injection in the treatment

To assess this, we have embarked upon a very important study in the U.S. preparing a single injection of O.T.X.T.K.I. that live resett dose every eight weeks.

I am delighted to announce that all 21 patients in the study have now been on study for 24 weeks or more and we plan to perform an analysis after 28 weeks.

The trial plan don't tell them nicely with the American Academy about Somology meeting in Chicago, where we have already been granted a late rigorous lot on Friday September 30th. The late rigorous lot on Friday September 30th.

While OTX-TKI is our lead program in retinal disease, we also have R&D efforts seeking to develop more durable treatments for geographic aprophy and gene therapy delivery platforms that minimize inflammatory risk and maximize temperature change with any worst possible treatments.

Telescope all of our red and the assets together. We are delighted to announce the addition of Dr. Peter Kaiser to the ocular team as our chief medical advisor, Redna. Dr. Peter Kaiser Kaiser, Dr. Peter Kaiser, Dr. Peter Kaiser, Dr. Peter Dr. Peter Kaiser, Dr. Peter Kaiser, Dr. Peter Kaiser, Dr. Peter

The feeder added to the considerable red and X-RT is already at the October . We believe we are in a position to plan the optimal path forward for OTX-DKI, as well as other in-house programs for any potential collaborations in the red and the space.

On the glaucoma front, OTX-PIC, our trial approach containing intracameral implants being developed for the treatment of open angle glaucoma or ocular hypertension to improve patient compliance continues to enroll its first phase two trial.

We have designed this trial to assess the safety, tolerability, and efficacy of OTX-TIC.

In our completed Phase 1 clinical trial, we observed that OTX-TIC did not harm endothelial cells, so we were developing OTX-TIC for chronic or repeat dosing.

While this program seldom gets the attention of its sibling, OTX-TKI, we are equally enthusiastic about its prospects.

In the treatment of dry eye disease, we have two programs. OTF-CSI, our cyclosforin, contain intercanallicular insert for the chronic treatment of dry eye disease.

and OTX-DED, our dexamethasone-containing intracannolicular insert for the short-term treatment of signs and symptoms of dry eye disease.

I would like to advance both programs.

We are acutely aware of the need to preserve cash in the current challenging financial environment and the need to find ways to improve our chances for success in the very difficult regulatory environment of dry eye disease.

As a way to continue momentum on these programs while satisfying both objectives, we plan to embark upon a small trial with OTX-DED that will pioneer a trial design that tests OTX-DED against a more appropriate placebo comparator.

Simultaneously, we are developing new formulations for OTIC-CFI designed to be retained longer in the cantilever. We are developing new formulations for OTIC-CFI designed to be retained longer in the cantilever.

Finally, helping to favor the development of our exciting pipeline is our commercial business with Extensa.

For the second quarter, the extensive recorded net product revenue of $12.1 million, a 9% improvement over the same quarter of prior year, and down slightly compared to the prior quarter.

We were seeing both in the market and also with our own field force.

is that staffing levels continue to be a drive on potential growth.

Despite the slow issuance of the current market, we are optimistic about the final two quarters of the year and continue our guidance of between $55 million and $60 million of net product revenue for the full year.

Beyond this, we are also very happy that the recent Outpatient Prospective Payment System, or OBPS proposed rule,

stated that the extensive should remain separately payable in the AFC through 2023.

As a result, we are optimistic that we can continue to grow our surgical business as we add to the future potential of the office environment.

In summary, we're making great progress at Ocular and are gearing up for a significant moment in our history with presentation of the results of our US-based OTX-TKI phase one trial in late September .

To go into more detail in the pipeline, I'll hand over to our newly promoted Chief Medical Officer, Dr. Ravi Azan, our very own Dr. Oz.

Thanks, Anthony. Let me begin with an update on our Back of the Eye program, OT-XTKI. In February , we presented an update from the ongoing Australia-based Phase 1 trial of OT-XTKI for the treatment of VET-AMB at the angiogenesis, exudation, and the generation 2022 meeting. In the background, this study was designed to assess the safety and tolerability of OT-XTKI.

and preliminary biological activity.

Our goal for the study was to answer the question, can a tyrosine kinase inhibitor administered intributarially as a monotherapy show biological activity in vite

We believe the best way to show this is to start with patients with active subretinal and or intralesin of fluid and follow them to see if OTKI can eliminate that fluid.

This is the patient population that was enrolled in this Australian study.

The data we shared at androgenesis was very encouraging, and we found a clinically meaningful decrease in intralutinal and or subretinal fluids in many subjects and in some subjects which was eliminated entirely. In addition, extended durational activity of six months or more was observed in over 60% of subjects across all cohorts.

and over 80% of subjects in Cohort 3A, 600 micrograms, which we believe could represent a compelling drug product profile.

We are also currently running a US-based phase 1 clinical trial that is now fully enrolled. This is a multi-center prospective randomized control trial that is evaluating a 600 microgram OTXTKI dose in a single implant containing azetinib compared to apilabarzate.

administered every eight weeks in subjects previously treated with anti-vigid therapy and without any intra-retinal or subretinal fluid. In other words, with already dry retinas.

This clinical trial is being conducted under an exploratory I&D application at six sites, targeting a total of 20 randomized subjects with three-to-one randomization, weighted toward OT-XTKI-treated subjects.

The trial is designed to assess the safety, durability, and tolerability of OTX-TKI and to assess preliminary biological activity in subjects by measuring anatomical and functional changes of the retina.

Our goal in this trial is to answer the question of how long a single 600 microgram OTX-TKI containing absuthenate keeps subjects dry without the need for retreatment.

We look forward to reporting 28-week data at the upcoming AO meeting at the end of September .

We believe achieving a similar response rate and durability to that seen in the Australia-based study would represent a compelling drug product profile.

Moving to our GRO-COMA program, OTXTIC.

We recently presented data from the completed US-based Phase I clinical trial evaluating the safety, biological activity, durability, and tolerability of OTX CIC in subjects with primary open angle glaucoma, or ocular hypertension, at the Glaucoma 360 meeting held on February 11.

We believe the Phase 1 data show that OT-XT-IC caused a clinically meaningful decrease in interocular pressure or IOP.

comparable to Travoprost as early as two days following administration and for as long as six or more months with a single implant while preserving corneal health representing its potential for a novel and differentiated drug product profile.

With this data enhanced, we have initiated and are actively dosing subjects in a US-based Phase II clinical trial.

This trial is a prospective, multi-center, randomized, controlled trial evaluating the safety, tolerability, and efficacy of OT-XT-IC for the treatment of patients with primary open-angle glaucoma or ocular hypertension.

The trial will enroll approximately 105 subjects in three different arms.

about 35 subjects per arm randomized one to one to one, in which the subjects will receive a single OTX-TIC implant containing a five microgram or 26 microgram dose of tricloprost compared with an implant of the wrist.

The 5 microgram arm is utilizing a fast degrading implant, while the 26 microgram arm is utilizing a standard degrading implant.

The trial will observe the changes in diurnal IOP from baseline at 8 a.m., 10 a.m., 4 p.m., at 2, 6, and 12 p.m., and follow duration of IOP response over time.

Regarding our ulcerative surface disease program, we remain committed to the development of our two dry eye programs.

OTX-DED, a low dose intracannolicular insert containing dexamethasone for the short-term treatment of the signs and symptoms of the RAI disease, and OTX-TSI, a cyclosporine intracannolicular insert for the chronic treatment of patients with RAI disease.

With regard to OTX-DED, we intend to conduct a small trial to evaluate the performance of OTX-DED versus short duration biodegradable color jump labs.

Specifically, we intend for this trial to explain the magnitude of the placebo effects seen in both the OTX-DD and the OTX-CSI phase II trials, in which the vehicle hydrogel placebo insert or placebo comparator remain in the canaliculus longer than anticipated, performing more like an active comparator than a placebo.

We believe that the data from this small trial may inform the selection of a more appropriate placebo comparator for both the OTX-DT and the OTX-CSI programs moving forward.

We currently expect this trial to begin in the first half of 2023.

Also, we continue with the formulation work to expand the durability of the OTX CSI insert.

Our goal is to select the most appropriate formulation for the OTX CSI program going forward.

I would now like to turn the call back over to Donald to review our second course of financial results. she had her own alright in the chat I will now start the way over to Nancy in a little

Thanks, Robica. Net revenue, which includes both gross product revenue, net of discounts, rebates, and returns, which the company refers to as total net product revenues, and collaboration revenue, was $12.3 million for the second quarter and represented an approximately 5% increase over the same period in 2021. Net product revenue extends it in the second quarter of 2022. Thank you.

with $12.1 million versus $11.1 million in a comparable quarter of 2021, reflecting a 9% increase.

Total net revenue for the second quarter of 2022 also included collaboration revenue of $1 million from our licensing agreement with Avermet.

Research and development expenses for the second quarter were $13.1 million versus $13.9 million for the comparable period in 2021, driven primarily by a reduction in clinical and preclinical spending offset by an increase in unallocated personnel costs and other expenses.

Selling and marketing expenses in the quarter were $10.1 million, as compared to $8.4 million for the comparable quarter of 2021, due primarily to an increase in professional fees related to trade shows, conferences, and advertising.

General and administrative expenses were $7.8 million for the second quarter versus $8.6 million in the comparable quarter of 2021, primarily reflecting a decrease in professional fees.

The company reported a net loss of $18.8 million, or a loss of 24 cents per share on a basic basis and a loss of 25 cents per share on a diluted basis for the second quarter ended June 30, 2022.

This compares to a net loss of $8.5 million or a loss of 11 cents per share on a basic basis and a loss of 25 cents per share on a diluted basis for the same period in 2021.

Net loss in the second quarter of 2022 was reduced by a $2.8 million non-cash item attributable to a decrease in the fair value of the derivative liability associated with the company's convertible notice as the price of its common stock declined during the quarter.

Non-cash charges for stock face compensation and depreciation and amortization were $4.8 million in the second quarter versus $4.9 million for the same quarter in 2021.

As of August 5th, 2022, the company had 77 million shares outstanding.

As of June 30, 2022, the company had $134.5 million in cash and cash equivalents versus $145.4 million at March 31, 2022.

based on current plans and related estimates of anticipated cash inflows from the extended and anticipated cash inflows from operating expenses.

The company believes that existing cash and cash equivalents are sufficient to enable the company to fund planned operating expenses.

debt service obligations, and capital expenditure requirements through 2023. This guidance is subject to a number of assumptions, including the impacts from the ongoing COVID-19 pandemic, the revenues, expenses, and reimbursement associated with the extender, and the pace of research and clinical development programs, among other aspects of the business.

I would now like to turn the call back over to Anthony for some final thoughts.

Thanks, Donald.

So before opening the call, after questions, let me do a quick summary.

All patients in the US-based Phase 1 trial evaluating OTX-TKI in patients' burst ilea and wet AMD have now been on study for at least 24 weeks.

We've been granted a late breaker slot at the AO, but we plan to present 28 week data.

OGST IC continues to enroll patients in phase two trial for the treatment of open angle glaucoma or ocular hypertension.

On our commercial business, <expletive> tends to remain the source of tremendous opportunity.

The proposed OPPS rule providing for separate reimbursement in the AFC through at least 2023. The proposed OPPS rule providing for separate reimbursement in the AFC through at least

Despite the market still being hampered by staffing issues, we have great confidence in our ability to grow our surgical business and expand the expense of franchise even further as we add on the future potential of the office environment.

We are reiterating our net product revenue guidance for 2022 of between $55 to $60 million, representing approximately 26% to 38% year-over-year growth, driven predominantly by sales and PAR andamia chrysoc

We look forward to a strong remaining 2022 and with that I will turn the call over to questions.

Up.

At this time, I would like to remind everyone in order to ask a question, press star then the number 1 on your telephone keypad.

The first question comes from the line of,

John Wolbin from JNP Security.

Your line is open.

Hey, good afternoon and thanks for taking the questions guys. Maybe starting with the extended and then I got a follow up on TKI. Guessing, what gives you confidence that you'll see the staffing issues at AFC bounce back in the second half of the year to reiterate your guidance and then you mentioned you're a little understaffed or anything. Could you provide a little more colour on what's going on with your reps as well?

Yeah, the confidence is essentially the confidence that you have in the overall economy that things are going to normalize.

And we do think there will be a number of factors that will improve as the year goes on. I think it's really important, the OBPS ruling that gives us continued visibility in 2023, I think that will give people comfort to be able to continue to stock up in the final quarter and maybe to move some volume over to the next ends as well. But yeah, it would look like 55 to 60 million was something we were highly, highly, highly confident of at one point. That was going to be a little bit of a stretch, but we still think we can get there and we think that the market's going to break.

besides just dose of the drug, but any differences in the hydrogel there, we should think about.

Robby, you want to go ahead and answer that?

Sure. Thanks, Anthony. And thank you for the question, John . Maybe I'll just give a background about the Australia trial first. The Australia trial is designed to provide the safety and tolerability of OT-XTKI and to show prediminated biological activity in patients with the active subretinal and intraretinal fluid.

And that was a dose escalation trial, and we started with a single implant of 200 micrograms. Then with two implants and then three implants, we reached to 600 micrograms loading those for those three implants.

3B cohorts in that trial is two implants, 200-microgram implants with an anti-VEGF injection. But again, we should remember that study was done in patients with active retinal fluid. What we have seen was that when a patient was in a

Some subjects, we have seen the flute was decreased and kept that way for a duration of time, at least six months. And some subjects, the flute was completely eliminated. And we have seen durability, all that, keeping the retina dry for, again, at least six months. We see more complicated figureman work, which is creating the vasDemandification cheratin for

Most of the subjects, I should say all subjects, at least 50 percent, and the group of three, core three was about 82 percent of the subjects were kept dry.

at least six months.

That being said, coming to the Phase 1 in the U.S., we have a single implant, which is 600 microgram loading dose. That being said, coming to the Phase 1 in the U.S., we have a single implant, which

This study is being done in subjects with already dry retinas. The subjects were enrolled in the trial with dry retinas.

trying to answer the question, a single implant would keep the retina dry, how long it would keep the retina dry, and that's what we are looking.

The old question is, and the data we're going to present at AAL is going to be the 28-week follow-up data of the US Phase 1 trial.

The question you were asking is that the...

Those, of course, are different, and also 200 versus 600 in a single implant. And actually, we have a single implant in the eye. What we have observed in some patients, the patients, if we increase the number of the patients, patients were actually disturbed visually, they were seeing.

the implant sometimes from time to time in their visual access. That's the other difference compared to Australia's right.

That's helpful. Thanks for taking the questions and looking forward to a yo

Your next question comes from the line of Dane Liam from Raven James. Your line is open.

Hi guys, this is Sean on for Dane. Thanks for taking the questions. Can I ask a question on OTX-DED for us? For the......

For the new trial, can you kind of put some bounds around what you mean by short-lived comparator for the collagen implant and kind of what you're expecting for, you know, the amount of time until degradation and then maybe give us a little bit of characterization of what you're thinking for in terms of material, whether or not that would be, you know, sufficiently similar to what you're looking at for the for the hydrogel or if you want it to be markedly different in how you're thinking about designing that trial.

You want to go ahead and answer that? Sure.

The.

Maybe again, you know, like quick information on our phase two trial with DED. That trial was a double mass trial of 0.2 and 0.3 dexamethasone compared to our hydrogel vehicle.

We were able to hit the primary endpoint in that trial, primary endpoint of other conjunctival redness.

we were able to just show a differentiation compared to hydro-jowl vehicles.

What we have seen though, the effect of the placebo comparator we use, which is a hydrogel vehicle, actually behaves like an active comparator. The placebo effect, the magnitude of the effect was larger than you would expect from a real, true placebo.

That was the exact same thing we have seen also in our CSI Phase II trial. What we are now trying to do is to risk our upcoming development program is actually trying to find a more appropriate placebo, a real placebo cooperator. What we are planning to study is...

the commercially available soft collagen plugs, which is like two to five days.

staying in the caniculus, and then it would just disappear. That would actually provide a true placebo in a way that the patients would then be inserted during the trial. They are active versus this placebo patient and wouldn't feel the difference.

And then, ultimately, if this collagen plaque is quickly dissolved, would actually provide that true placebo comparator in our trial. That's what we would like to study and see if the commercially available collagen plaque is going to provide that true placebo for our trial.

so that we can de-risk our upcoming Phase 2-3 drives.

Thank you.

Thank you. Thank you.

Your next question comes from the line of Stacy Q. from Cowan. Your line is open.

Thanks so much for taking our questions and congratulations on the quarter. We have a few questions all on OTXTKI. As we await the Phase 1 results, can you remind us the rescue criteria? Maybe you've set the expectations in the past, but can we discuss the safety considerations, what profile we're looking for? This is the first question. The question is, can you remind us the safety considerations, what profile we're looking for? Can you remind us the safety considerations, what profile we're looking for?

The second question, also discuss your early thoughts on the potential retreatment trial design, or at the very least, could you discuss what a potential phase 2 or 3 might look like in more details? What steps are you taking and considering for the next study? Then our last question is, what are the other potential retinal indications where you think OT-XTKI could be competitive? Maybe discuss some potential opportunities you thought about where there might be additional on that need.

population were what we call more difficult because those patients came into trial with active retinal fluid.

And it was our first in-human study, and we had a risky criteria. It's us. We shared those criteria, and I can just comment that those criteria, not only, you know, like safety of the patient was really taught us for those criteria, but how they state their sponsorcharge and both know ourus and told us our

And what we try to do, just make sure that the disease state is answered when the investigators, the doctors are treating our study patients.

The disease state is also considered during that, you know, the trial. And the rescue criteria is designed that way. And I can say they are, the treatment, the treatment criteria has somewhat lower bar compared to the other trials, the PKI trial.

When we move into the US phase 1 trial, the patients coming in, they had more controlled patients, because they came into trial with dry retinas. And we again kept our criteria strict. On the bedside, this was just a regular case.

a very similar criteria to Australia trial, and we just wanted to make sure the investigators, there's always another criteria, which is an investigator discretion. That was also considered when the rescue treatment is done. That's why, you know, like in summary, I can say our criteria are...

of their shares by everyone is more strict and the, you know, like at least the, and also including the disease take consideration by the investigators.

We are looking at not only in our Australia trial, ultimately that's exactly what we plan to do in our phase one trial, just understanding how the rescue is done to inform our further study.

That was the first question. I think that also answers the retreatment question for the Phase 2-3. The retreatment criteria, the rescue criteria that you will see in the planned trials is very similar to what we currently use in our Phase 1 trials. That's how I can say. We will just further discuss.

I think we would just, in our upcoming studies, include the disease state considerations more in the design of better treatment criteria.

And your third question was other retinal indications. There are other retinal indications out there that are tried by everyone for other drugs that you would use in the treatment of patients. Of course,

diabetic retinopathy, BME, all of those are open, you know, in front of us. What we think is that, you know, our studies so far in PKI, not just one, but two phase one trial.

We believe that we are in a great position having the data in different populations in BET-AMD, having opportunities to study a different number of the implants with various doses. And also, Dr. Peter Keiser, Peter, working more closely with us, we're going to do our first strategy.

comes from.

Yai Chen from HC, Wainwright, your line is open.

Hi, this is Lee. Thank you for taking my questions. First question is, within your net product revenue guidance of $55 to $60 million, how much of those will come from the extensive for allergic conjunctivitis this year?

We've guided that it's predominantly or, you know.

It's predominantly from the surgical setting. We have not...

guidance for a large number of the allergic conductivitis because we are doing a beta test at the moment.

Okay. Can you comment on the potential sales in AC for 2023 at this point?

No, we haven't gotten into what those sales would be in 2023 at this point.

How many people are currently in the team dedicated to AC?

We have a team of four key account managers. We've staffed up now for about a little over a month. We have a field reimbursement specialist and manager for the team.

Okay. How large is the entire sales team right now?

We have about 40 key account managers and we have about seven or eight field reimbursement specialists and then three regional people.

Got it. Got it.

Got it. And so in the current US TPI trial, what is the average anti-VEGF injections?

do these patients had before enrollment into the trial.

Robert you want to have it?

So, um, the, we are collecting that data and the, that data is going to be shared with everyone, but in the upcoming a or.

Okay. All right. For the TIC Phase II trial,

When do you expect to complete enrollment?

We have not guided the completion date for TIC phase 2 trials. Again, just to maybe a quick background, that is a phase 2, double-masked, randomized trial with two formulations of OTX-TIC compared to DORISTA in patients with open-angle glaucoma and ocular hypertension. We're going to enroll 105 subjects in these three arms.

And the enrollment is currently going well. And again, we just would like to just continue as we go. And then, you know, just sometime later, when we expect the enrollment would be finished.

Okay, got it. All right, thank you.

Got it. All right, thank you. Thank you.

The next question comes from the line of,

Joe Cantazzari from Piper Sandler. Your line is open.

Hi everyone, this is Albert on for Joe. Thanks for taking my question. Just a quick one from me. I was wondering if we can still expect to see an update from the Australia trial later this year.

Hi, Jo. Yes, we would like to do an update on Australia's trial in the upcoming AEO meeting, as well....

Okay, all right, great. Thanks. Thanks for listening to the updates.

Thank you.

There are no further questions at this time. This concludes today's conference call. You may now disconnect.

you

Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the Ocular Therapeutics second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode.

Later, we will conduct a question and answer session and instructions will follow at that time. It is now my pleasure to turn the call over to Donald Knottman, Chief Financial Officer of Ocular Therapeutics. Please go ahead, sir. You may disconnect at this time.

Thank you, operator. Good afternoon, everyone, and thank you for joining us on our second quarter of 2022 Financial Results and Business Update conference call. This afternoon after the close, we issued a press release providing an update on the company's product development programs and details of the company's financial results for the quarter ended June 30, 2022.

The press release can be accessed on the investors portion of our website at investors.ocutx.com.

Leading the call today will be Anthony Modicich, our President and Chief Executive Officer, who will provide an update on the commercial progress of DexDensit and a summary of our corporate developments. He Internationale r limb Needs to be

Also speaking on the line today will be Dr. Rabia Osman, our Chief Medical Officer, who will give an update on our clinical developments and pipeline.

Following Ravi's remarks, I will provide an overview of the financial highlights for the quarter before turning the call back over to Anthony for a summary and question.

For Q&A, we will be joined by Chris White, our Chief Business Officer, and Scott Corning, our Senior Vice President Commercial. As a reminder, on today's call, certain statements we will be making may be considered forward-looking for the purposes of the Private Securities Litigation Reform Act of 1995. In particular, any statements regarding our regulatory and product development plans, as well as our research activities and our financial projections, are forward-looking statements. These statements are subject to a variety of risks and uncertainties.

that may cause actual results to differ from those forecasted, including those risks described in our most recent quarterly report filed this afternoon with the FCC, and our annual report on Form 10-K filed on February 28th with the FCC.

actual results to differ from those forecasted, including those risks described in our most recent quarterly report filed this afternoon with the FCC and our annual report on Form 10-K filed on February 28th with the FCC. I will now turn the call over to Anthony.

Thanks Tom. The second quarter of 2022 was another quarter of great progress in ocular therapeutics, most notably the development of our pipeline. For those of you following the ocular story, you'll know that by far the most anticipated development for the company is the ocular

and for the hope of a more durable treatment for patients with wet AMD.

is our US-based Phase 1 clinical trial for OTX-TKI, our assistant containing hydrogel implant for treatment of wet AMD and other retinal diseases.

We are developing OT-STKI to reset the standard of care for durability of a single injection in the treatment of wet AMD from two to three months to six months and beyond.

To assess this, we have embarked upon a very important study in the U.S. comparing a single injection of OTX-TKI against that LibriZet dose every eight weeks.

I am delighted to announce that all 21 patients in this study have now been on study for 24 weeks or more and we plan to perform an analysis after 28 weeks.

The trial plan dovetails nicely with the American Academy of Ophthalmology meeting in Chicago, where we have already been granted a late-breaker slot on Friday, September 30.

While OT-XTKI is our lead program in retinal disease, we also have R&D efforts seeking to develop more durable treatments for geographic atrophy and gene therapy delivery platforms that minimize inflammatory risk and maximize transduction potential. To help us pull all of our retina assets together, we are delighted to announce the addition of Dr. Peter Kaiser to the ocular team as our Chief Medical Advisor Retina. At ITN, I'm Dr. Peter Kaiser.

With Peter added to the considerable retina expertise already at Ocular, we believe we are in a position to plan the optimal path forward for OTX-DKI, as well as other in-house programs or any potential collaborations in the retina space.

We have designed this trial to assess the safety, tolerability, and efficacy of OTX-GIC.

In our completed Phase 1 clinical trial, we observed that OTX-TIC did not harm endothelial cells, so we were developing OTX-TIC for chronic or repeat dosing.

While this program seldom gets the attention of its sibling, OTX-TKI, we are equally enthusiastic about its prospects.

In the treatment of dry eye disease, we have two programs, OTX CSI, our cyclosporine-containing intracam molecular insert for the chronic treatment of dry eye disease.

and OTS-DED, our dexamethasone containing intracannolicular inserts for the short-term treatment of signs and symptoms of dry eye disease.

I would like to advance both programs.

Simultaneously, we are developing new formulations for OTIC-CFI designed to be retained longer in the county.

Finally, helping to pay for the development of our exciting pipeline is our commercial business with Xtenza.

For the second quarter, the extensor recorded net product revenue of $12.1 million, a 9% improvement over the same quarter of prior year and down slightly compared to the prior quarter.

We were seeing both in the market and also with our own field force.

is that staffing levels continue to be a drive on potential growth.

Despite the slowishness of the current market, we are optimistic about the final two quarters of the year and continue our guidance of between $55 million and $60 million of net product revenue for the full year.

Beyond this, we are also very happy that the recent Outpatient Perspective Payment System, or OPPS, proposed rule,

stated that the extensive should remain separately payable in the AFC through 2023.

As a result, we are optimistic that we can continue to grow our surgical business as we add to the future potential of the office environment.

In summary, we are making great progress at Ocular and are gearing up for a significant moment in our history with presentation of the results of our US-based OTX-TKI Phase 1 trial in late September .

To go into more detail on the pipeline, I'll hand over to our newly promoted Chief Medical Officer, Dr. Ravi Osman, our very own Dr. Oz.

Thanks, Anthony. Let me begin with an update on our Back of the Eye program, OT-XTKI. In February , we presented an update from the ongoing Australia-based Phase 1 trial of OT-XTKI for the treatment of VET-AMD at the angiogenesis, exudation, and the D O P While it was still Guys-T550. WeAngel

and preliminary biological activity. Our goal for the study was to answer the question, can a tyrosine kinase inhibitor administered intributarially as a monotherapy show biological activity in veti-MD?

We believe the best way to show this is to start with patients with active subretinal and or intra-lational fluids and follow them to see if TKI can eliminate that fluid.

This is the patient population that was enrolled in this Australian study.

The data we shared at angiogenesis was very encouraging, and we found a clinically meaningful decrease in intralatinal and or sub-latinal fluids in many subjects, and in some subjects, fluid was eliminated entirely. In addition, extended durational activity of six months or more was observed in over 60% of subjects across all cohorts.

and over 80% of subjects in Cohort 3a, 600 micrograms, which we believe could represent a compelling drug product profile. We are also currently running a U.S.-based Phase I clinical trial that is now fully enrolled. This is a multi-center prospective randomized control trial that is evaluating a 600 microgram OTXTKI dose in the U.S.

in a single implant containing alcetinib compared to alveolar bursa.

administered every eight weeks in subjects previously treated with anti-vigid therapy and without any intra-retinal or subretinal fluid. In other words, with already dry retinas.

Our goal in this trial is to answer the question of how long a single 600 microgram OTX-TKI implant containing abscess NF keeps subjects dry without the need for retreatment.

We look forward to reporting 28-week data at the upcoming AO meeting at the end of September . We believe achieving a similar response rate and durability to that seen in the Australia-based study would represent a compelling drug product profile.

Moving to our GloComa program, OTXTIC.

We believe the Phase 1 beta shows that OT-XT-IC caused a clinically meaningful decrease in interocular pressure or IOP.

With this data enhanced, we have initiated and are actively dosing subjects in a US-based Phase II clinical trial.

The trial will enroll approximately 105 subjects in three different arms.

about 35 subjects per arm, randomized one-to-one-to-one, in which the subjects will receive a single OTX-TIC implant containing a 5-microgram or 26-microgram dose of Triloprost compared with an implant of Durista. The 5-microgram arm is utilizing a fast degrading implant, while the 26-microgram arm is utilizing a standard...

of our two dry eye program.

OTX-DET, a low-dose intra-cannolic alert containing dexamethasone for the short-term treatment of the signs and symptoms of the RAI disease, and OTX-TSI, a cyclosporine intra-cannolic alert for the chronic treatment of patients with RAI disease. With regard to OTX-DET, we intend to conduct a small trial to evaluate the performance of OTX-DET versus short-duration biodegradable cholera jump labs.

Specifically, we intend for this trial to explain the magnitude of the placebo effects seen in both the OTX-DD and the OTX-CSI phase II trial, in which the vehicle hydrogel placebo insert or placebo comparator remain in the canaliculus longer than anticipated, performing more like an active comparator than a placebo.

We believe that the data from this small trial may inform the selection of a more appropriate placebo comparator for both the OTX-DET and the OTX-CSI programs moving forward. We currently expect this trial to begin in the first half of 2023.

Also, we continue with the formulation work to expand the durability of the OTX CSI insert.

Our goal is to select the most appropriate formulation for the OTX CSI program going forward.

I would now like to turn the call back over to Donald to review our second course of financial results.

Thanks, Rob. Net revenue, which includes both gross product revenue, net of discounts, rebates, and returns, which the company refers to as total net product revenues, and collaboration revenue, was $12.3 million for the second quarter and represented an approximately 5% increase over the same period in 2021. Net product revenue extends it in the second quarter of 2022.

with $12.1 million versus $11.1 million in a comparable quarter of 2021, reflecting a 9% increase.

Total net revenue for the second quarter of 2022 also included collaboration revenue of $0.1 million from our licensing agreement with AFIMET. Research and development expenses for the second quarter were $13.1 million versus $13.9 million for the comparable period in 2021, driven primarily by a reduction in clinical spending and pre-clinical spending.

offset by an increase in unallocated personnel costs and other expenses. Selling and marketing expenses in the quarter were $10.1 million as compared to $8.4 million for the comparable quarter of 2021, due primarily to an increase in professional fees related to trade shows, conferences, and advertising.

General and administrative expenses were $7.8 million for the second quarter versus $8.6 million in the comparable quarter of 2021, primarily reflecting a decrease in professional fees.

The company reported a net loss of $18.8 million, or a loss of 24 cents per share on a basic basis and a loss of 25 cents per share on a diluted basis for the second quarter ended June 30, 2022. This compares to a net loss of $8.5 million, or a loss of 11 cents per share on a basic basis, and a loss of 25 cents per share on a diluted basis for the same period in 2021.

Non-cash charges for stock face compensation and depreciation and amortization were $4.8 million in the second quarter versus $4.9 million for the same quarter in 2021.

As of August 5th, 2022, the company had 77 million shares outstanding.

As of June 30, 2022,

The company had $134.5 million in cash and cash equivalents versus $145.4 million at March 31, 2022. Based on current plans and related estimates of anticipated cash inflows from DEX ENDA and anticipated cash outflows from operating expenses, the company believes that existing cash and cash equivalents are sufficient to enable the company to fund planned operating expenses, debt service obligations, and other

and capital expenditure requirements through 2023. This guidance is subject to a number of assumptions, including the impacts from the ongoing COVID-19 pandemic, the revenues, expenses, and reimbursement associated with Xtenda, and the pace of research and clinical development programs, among other aspects of the business.

I would now like to turn the call back over to Anthony for some final thoughts.

Thanks Donald. So before opening the call after questions, let me do a quick summary.

All patients in the US-based Phase 1 trial evaluated OTX-TKI in patients' burst ilea in wet AMD have now been on study for at least 24 weeks.

We've been granted a late breaker slot at the AO, but we plan to present 28 week data.

OGX-T IC continues to enroll patients in a phase 2 trial for the treatment of open angle glaucoma or ocular hypertension.

On our commercial business, <expletive> tends to remain the source of tremendous opportunity.

The proposed OPPS rule providing for separate reimbursement in the ASC through at least 2023. Despite the market still being hampered by staffing issues, we have great confidence in our ability to grow our surgical business and expand the defense of franchise even further as we add on the future potential of the office environment.

Finally, the company ended the quarter with a strong balance sheet and $134.5 million in cash as of June 30th, which we believe is sufficient to fund multiple development milestones and provide cash runway through 2023. We look forward to a strong remain in 2022, and with that, I will turn the call over for questions.

At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad.

Your first question comes from the line of,

Your line is open.

Hey, good afternoon and thanks for taking the questions guys. Maybe starting with the extended and then I got a follow up on PKI. What gives you confidence that you'll see the staffing issues at ASC bounce back in the second half of the year to reiterate your guidance? Then you mentioned you're a little understaffed or anything. Can you provide a little more color on what's going on with your reps as well? Yeah, the confidence is just essentially the...

But yeah, it would look like 55 to 60 million was something we were highly, highly, highly confident of at one point. That was going to be a little bit of a stretch, but we still think we can get there and we think that the market is going to break in positive ways for us moving forward.

To TKI, just thinking about the translatability of the 3B cohort in Australia, I'm wondering if you could discuss the sequence of the anti-VEGF administration and TKI from that study and what you're doing in the US study. Then any differences in the logistics of the insert between the 600 microgram insert and the 200 microgram inserts as far as, besides just a dose of the drug, but any differences in the hydrogel there either we should think about.

Robby, you want to go ahead and answer that?

Sure. Thanks, Anthony. And thank you for the question, John . Maybe I'll just give a background about the Australia trial first. The Australia trial is designed to provide the safety and tolerability of OT-XTKI and to show prediminative biological activity in patients with the active subretinal and or...

And that was a dose escalation trial, and we started with a single implant of 200 micrograms. Then some subjects, the flute was completely eliminated, and we have seen durability of that, keeping the retina dry for, again, at least six months. Almost all the subjects, I should say all subjects, at least 50 percent.

and the group of three, it was, about 82% of the subjects were kept dry.

group of three, it was, core three was about 82% of the subjects were kept dry. The, at least six months.

That being said, coming to the Phase 1 in the U.S., we have a single implant, which is a 600-microgram loading dose, but that study is being done in subjects with already dry retinas. The subjects were enrolled in the trial with dry retinas, and we are actually

trying to answer the question, a single implant would keep the retina dry, how long it would keep the retina dry, and that's what we are looking.

The old question is, and the database that I present at AAL is going to be the 28-week follow-up data of the U.S. Phase 1 trial. The question you're asking is that the...

Those, of course, are different, and also 200 versus 600 in a single implant. And actually, we have a single implant in the eye. What we have observed in some patients, the patients, if we increase the number of the implants, patients were actually disturbed visually. They were seeing the implant sometimes from time to time.

in their visual access. That's the other difference compared to Australia tribe. That's helpful. Thanks for taking the questions and looking forward to AO. Your next question comes from the line of Dane Liam from Raven James.

That's the other difference compared to Australia's. That's helpful. Thanks for taking the questions and looking forward to the AIO. Your next question comes from the line of Dane Liam from Raven James. Your line is open.

Hi guys, this is Sean on for Dane. Thanks for taking the questions. Can I ask a question on OTX and DED for us? For the... To answer questions, please state your name and address again.

So the new trial, can you kind of put some bounds around what you mean by short-lived comparator for the collagen implant and kind of what you're expecting for, you know, the amount of time until degradation and then maybe give us a little bit of characterization of what you're thinking for in terms of material, whether or not that would be, you know, sufficiently similar to what you're looking at for the for the hydrogel or if you want it to be to be markedly different in how you're thinking about designing that trial.

Do you want to go ahead and answer that? Sure. The...

Maybe again, you know, like quick information on our phase two trial with DED. That trial was a double mast trial of 0.2 and 0.3 dexamethasone compared to our hydrogel vehicle.

We were able to hit the primary endpoint in that trial, primary endpoint of other conjunctival redness. We were able to just show a differentiation compared to hydrogel vehicles.

What we have seen though, the effect of the placebo comparator we used, which is a hydrogel vehicle, actually behaves like an active comparator. The placebo effect, the magnitude of the effect was larger than you would expect it from a real, true placebo.

the commercially available soft collagen plugs which is like two to five days.

staying in the canadiculus, and then it would just disappear. That would actually provide a true placebo in a way that the patients would then be inserted during the trial. They are active versus this placebo patient wouldn't feel the difference, and then ultimately, as this color jump flag is quickly...

three drives.

Okay, very helpful. Thank you.

Thank you. Thank you.

Your next question comes from the line of Stacy Q from Cowan. Your line is open. Hey, thanks so much for taking our questions and congratulations on the quarter. We have a few questions all on OTXTKI. As we await the Phase I results, just first, can you remind us the rescue criteria? Maybe you've set the expectations in the past, but can we discuss the safety considerations, what profile looking for?

This is the first question. And then the second question, just also discuss your early thoughts on the potential retreatment trial design. Or at the very least, could you discuss what a potential phase two or three might look like in more details? What steps are you taking and considering for the next study? And then our last question is, what are the other potential retinal indications where you think OT, XTKI could be competitive? Maybe discuss some potential opportunities you thought about where there might be additional on that need. Thank you so much.

Thanks Dave, that's quite a few questions. I'm going to go ahead and take a look at the slides and see if there are any questions.

Thank you so much, Stacy. Those are really great questions. I'm going to start with the rescue criteria.

In both our Australia trial and the Australia trial, again, the patient population were what we call more difficult because those patients came into trial with active retinal fluid and was referred to as claiming brochures until

And it was our first in-human study, and we had a risky criteria. It's us. We shared those criteria, and I can just comment that those criteria, not only, you know, like safety of the patient was really taught us for those criteria, but we did participate in the holes before theTI sex Protestant camping the communication in some ways

And what we try to do, just make sure that the disease state is answered when the investigators, the doctors are treating our study patients.

like more controlled patients because they came into trial with dry retina and we again kept our criteria strict. Again, we have...

by everyone is more strict and the, you know, like at least the... and also including the disease take consideration by the investigators.

We are looking at not only in our Australia trial, ultimately, that's exactly what we plan to do in our Phase 1 trial, just understanding how the rescue is done to inform our further study. That's for the first question, and I think that also answers the retreatment question for the Phase 2. How about you...

the treatment criteria.

in front of us. What we think is that, you know, our studies so far in TKI, not just one, but two phase one trials,

We believe that we are in a great position having the data in different populations in BET-AMD, having opportunities to study a different number of the implants with various doses. And also, Dr. Peter Kaiser, Peter, working more closely with us, we're going to do our first strategy in other regional diseases.

Hi, this is Yee. Thank you for taking my questions. First question is, within your net product revenue guidance of $55 to $60 million, how much of those would come from extensive for allergic conjunct providers? Yes, it does come from an extensive for allergic conjunct providers.

We've guided that it's predominantly or, you know.

It's predominantly from the surgical setting. We have not guided for a large number in the allergic-conductive itis because we are doing a beta test at the moment.

Okay. Can you comment on the potential sales in AC for 2023 at this point?

No, we haven't gotten to what those sales would be in 2023 at this point.

How many people are currently in the team dedicated to AC?

We have a team of four key account managers. We've staffed up now for about a little over a month. We have a field reimbursement specialist and manager for the team. Okay. And how large is the entire sales team right now? About 40 key account managers and we have about seven or eight field reimbursement specialists and then three regional got it.

In the current US TPI trial, what is the average anti-VEGF injections?

do these patients had before enrollment into the trial?

Robby, you want to add to that?

Sure. We are collecting that data, and that data is going to be shared with everyone in the upcoming AAO meeting. Okay. All right. For the TIC Phase II trial,

When do you expect to complete enrollment? We have not guided the completion date for TIC phase 2 trials. Again, just to maybe a quick background, that's a phase 2 double-masked, randomized trial with two formulations of OTXT-IC compared to DORISTA.

in patients with open-angle glaucoma and ocular hypertension. We're going to enroll 105 subjects in these three arms. And the enrollment is currently going well. And, again, we just would like to just continue as we go, and then, you know, just sometime later, when we expect the enrollment would be finished. Okay. Got it.

All right, thank you. Thank you. Your next question comes from the line of Joe Cantazzari from Piper Sandler. Your line is open.

Hi everyone, this is Albert on for Joe. Thanks for taking my question. Just a quick one from me. I was wondering if we can still expect to see an update from the Australia trial later this year.

Hi, Jo. Yes, we would like to do an update on Australia's trial in the upcoming AEO meeting, as well. For those who've beenSecretary of State, we wish you achy future and may all of you join in.

Okay, all right, great. Thanks. Thanks for the update.

All right, great. Thanks. Looking forward to the update. Thank you.

There are no further questions at this time. This concludes today's conference call. You may now disconnect.

Q2 2022 Ocular Therapeutix Inc Earnings Call

Request a DemoDemo

OCUL

Ocular Therapeutix

Earnings