Q4 2022 Ocular Therapeutix Inc Earnings Call
Speaker 2: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 11.
Speaker 3: Four.
Speaker 2: Good afternoon, ladies and gentlemen, thank you for standing by and welcome to the ocular therapeutics 4th quarter and year in 2022 earnings conference call at this time. All participants are in a listen only mode. We will conduct a question and answer session and instructions will follow at that time.
Speaker 2: It is now my pleasure to turn the call over to Donald Notman, Chief Financial Officer of Ocular Therapeutics. Please go ahead, sir. The question finished on a call to logs back home.
Speaker 4: Thank you, operator. Good afternoon, everyone, and thank you for joining us on our fourth quarter and year-end 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.
Speaker 4: and details of the company's financial results for the fourth quarter and year ended December 31, 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 Monasich, our President and Chief Executive Officer.
Speaker 4: who will provide an update on our pipeline developments and the commercial progress of the extent that. Also, speaking on the call that I will be Steve Myers, our Senior Vice President Commercial, and Dr. Ravia Odden, our Chief Medical Officer.
Speaker 4: Following their 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 questions.
Speaker 4: For Q&A, we will be joined by Chris White, our Chief Business Officer, and Dr. Peter Kaiser, our Chief Medical Advisor, Retina. 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.
Speaker 4: In particular, any statements regarding our regulatory and product development plans, as well as our research activities, are forward-looking statements.
Speaker 4: 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 annual report on Form 10-K filed this afternoon with the FCC. I will now turn the call over to Anthony.
Speaker 5: Thanks, all.
Speaker 5: The 4th quarter of 2022 was a tremendous success for Oculus Air Pidix and it set the stage for a very strong start to the year in 2023. First on the tail side we finished the quarter with the extended the net product revenue sales of 13.9 million compared to the same quarter of previous year sales of 12.2 million and sales over prior quarter of 11.9 million.
Speaker 5: That represents growth of approximately 14% and 17%, respectively.
Speaker 5: Total to extend the net product revenue was $50.5 million, representing growth over prior year of approximately 20%. Most importantly, in the fourth quarter, we regained in-market sales momentum, and I'm pleased to report that this momentum has continued in the first couple of months of this quarter.
Speaker 5: I will introduce you to our new Senior Vice President of Commercial in a few moments, who will go over the reasons for the return to growth and our go-to-market strategy.
Speaker 5: While we were very pleased to regain momentum with Xtenza, we are really seeing the potential value of our pipeline continue to emerge. Following the recent data we shared on OTX-TKI, our X-cytinib-containing hydrogel implant for the treatment of wet AMD and other VEGF-mediated retinal diseases.
Speaker 5: On February 11th, Dr. Andrew Moshvagge presented the interim 10-month results from our phase 1 study in the U.S. where we compared a single dose of OTX-TKI to ILEA given every eight weeks in patients with wet AMD.
Speaker 5: The results were spectacular as we saw no additional rescues up to month 10 of the 73% of patients who were rescue free up to month 7 demonstrating potential best-in-class durability.
Speaker 5: We believe the $15 billion global market for wet AMD and diabetic retinopathy is driven by durability.
Speaker 5: While these results mean a great deal to ocular therapeutics and its shareholders, more importantly, they suggest a better future for patients suffering from VEGF-mediated retinal diseases, such as wet AMD, diabetic retinopathy, and diabetic macular edema.
Speaker 5: In the case of wet AMD, it is well known that the vision gains seen when starting anti-veg treatments are not maintained over time in the real world.
Speaker 5: The primary reason for this is the lack of compliance caused by the injection burden of current antibody therapies like Lucinta and Ilea.
Speaker 5: In the real world, patients tend to miss necessary injections for a variety of reasons.
Speaker 5: wet AMD patients are elderly and can find it difficult to get to retina offices on a four to eight weekly basis so appointments are missed or delayed and permanent vision loss occurs because of the damage caused when the medication wears off and the disease process returns.
Speaker 5: In the case of diabetic retinopathy, where patients are generally of working age, a lack of urgency given that disease may not have yet manifested, and finding time to get treated on a frequent basis create real compliance challenges.
Speaker 5: In this population, the current standard of care is watchful waiting, and many patients frequently progress to more severe vision-destroying disease before seeking treatment.
Speaker 5: making the resulting diabetic macular edema a leading cause of blindness among the working age population.
Speaker 5: In short, we believe the promise of a drug like OTXTKI is not only about convenience, but also about saving vision.
Speaker 5: We can move durability from the current frequency of injections to at least nine months and beyond. We believe we can keep people on treatment and maintain vision. Lastly, it is important to understand that OTX-TKI is a different paradigm than typical antibody treatment.
Speaker 5: Existing treatments like Lucendis and Ilea are bolus injections where a large amount of antibodies
Speaker 5: well above the amount needed for immediate efficacy are injected into the vitreous that over time are eliminated from the vitreous until they drop below therapeutic levels, allowing the disease process to restart.
Speaker 5: You extend injection intervals by making the antibody larger and slower to eliminate, or just by jamming more antibodies into the eye with each injection.
Speaker 5: You extend injection intervals by making the antibody larger and slower to eliminate, or just by jamming more antibodies into the eye with each injection. Either way, you're still treating a chronic disease with pulsatile dosing.
Speaker 5: OT-XTKI is different. OT-XTKI is designed to deliver a continuous dose of excitinib, a potent inhibitor of edge F, keeping drug concentrations above therapeutic levels for extended periods without the drug peaks and troughs of pulsatile dosing. We believe the results. orange juice promises second dose of UT-XTKI rotary and
Speaker 5: We recently shared bear this out and demonstrate that our hydrogel technology could allow us to maintain therapeutic levels that exit and it that continuous levels into the dress for durations of at least 10 months.
Speaker 5: This new paradigm would allow physicians and patients the comfort of knowing the drug is always on board and can hopefully demonstrate that there is less variability in the retina over time and more importantly, that vision gains from anti-VEGS therapy are maintained in the real world.
Speaker 6: So what's next?
Speaker 5: We believe we have our proof of concept for OTX-TKI and wet AMD and by extension have gone a long way towards proof of concept in other VEGF-mediated retinal disease.
Speaker 5: Importantly, we also have a working formulation. We believe we will be ready to enter the first pivotal trial in wet AMD as soon as the third quarter of this year. We are in ongoing discussions with the FDA regarding pivotal study designs and are very encouraged by the potential path forward, both in wet AMD and diabetic retinopathy.
Speaker 5: We have also mentioned that commencing this trial is subject to financing, and we are considering a range of non-dilutive or minimally dilutive funding options, but we have strong preference and are seeking to go forward with a potential strategic alliance.
Speaker 5: We have also stated our intention to begin a Phase III program for diabetic retinopathy in the first quarter of 2024.
Speaker 5: Assuming positive top-line data results from our ongoing Phase 1 clinical trial in diabetic retinopathy.
Speaker 5: The Diabetic Retinopathy Program is a separate program with much more modest resource requirements than wet AMD and consequently, we believe we could secure funding on our own without necessarily having a strategic alliance in place for our wet AMD program. We do however recognize that a potential strategic interested in our wet AMD program would also likely be interested inAh you
Speaker 5: Let me turn the call over to Steve Myers, our new Senior Vice President commercial to discuss more on the extent of it and our 2023 guidance.
Speaker 7: Thank you, Anthony.
Speaker 5: I joined Ocular Therapeutics one year ago in March 2022. Prior to that, I served as Vice President Sales at Flexion Therapeutics.
Speaker 5: During my tenure at selection, I led a team of approximately 100 sales representatives.
Speaker 4: During that time, we launched the product with a very similar business model, like Dextenza, is cold chain, buy and bill, a similar price point, and with many of the same clinical characteristics.
Speaker 5: As many of you know, Oculo Therapeutics is poised to become a leader in the ophthalmology space and I'm excited about the opportunities in front of us.
Speaker 4: Over this past year, we established a rigorous hiring process to assemble an experienced sales team that has deep buy and build, ophthalmology, and surgical experience.
Speaker 4: We also adjusted our discounting strategy to meet the demands of the market. Finally, we've secured exceptional market access coverage for the extensive, including 100% coverage on Medicare Part D, over 90% coverage in Medicare Advantage, and over 100%
Speaker 4: and will be launching a new innovative program to accelerate the commercial book of business. Overall, we expect our market access coverage should allow more surgeons to treat more patients with the goal of supporting Dextenza to become a standard practice in ASCs and fuel growth of Dextenza product sales in 2023.
Speaker 4: As we begin 2023, we're seeing continued momentum in January and February with in-market billable units running more than 20% ahead of 2022 levels for the same period.
Speaker 4: We anticipate that with a full sales team and our strong market access, the expense of sales will continue to grow in 2023.
Speaker 4: Based on these dynamics, the company is guiding an initial that extends the net product revenue for the full year 2023 to be between $55 and $60 million, representing potential growth of approximately 10% to 20% over 2022.
Speaker 4: With that, let me turn the call over to Rabia to discuss our pipeline in more depth.
Speaker 8: Thanks, Steve. Let me begin with an update on our PEC of the eye program OTX-TKI. As many of you saw a few weeks ago at the angiogenesis, exudation, and degeneration to anti-to-antitry virtual meeting.
Speaker 8: We presented positive inter-ten-month data from our US-based Phase 1 trial of OT-XTKI being developed for the treatment of beta-AMD and other retinal indications.
Speaker 8: This trial is a multi-center prospective masked randomized controlled trial in 21 subjects evaluating a 600 microgram OT-XTKI dose in a single implant containing oxygenate compared to other receptors administered every 8 weeks.
Speaker 8: in control when they are these subjects previously treated with anti-VEGF therapy.
Speaker 8: 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.
Speaker 8: Overall, the Gnate have been more pleased with the result.
OTX-TGI was generally well tolerated with no drug-related oculin or systemic series adverse events.
Importantly, all OTX-TKI treated subjects who were rescue-free at the month 7 interim analysis remained rescue-free, expanding this 73% rescue-free rate up to month 10 and highlighting what we believe is best in cloth.
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Furthermore, we saw in the trial a 92% reduction in treatment burden for up to 10 months, while demonstrating stable and sustained best-corrected visual acuity and central subfield phovial thickness.
comparable with the upper-level stepped arms, those every eight weeks.
We believe the data highlights the potential of OT-XTKI to become a differentiated product capable of providing a durable anti-veget response that improves upon today's standards of care in the management of beta-AMD. As Anthony noted, the data highlights the potential of beta-AMD.
We are in active discussions with the FDA and believe that we will be in a position to initiate the pivotal trials in Q3 of 2023 for VET-AMD and Q1 of 2024 for diabetic retinopathy. We were pleased to have initiated a Phase 1 trial for the
in a mask fashion to either a 600 microgram OTXTKI single implant containing Turning
We believe the same attributes that make OT-X TKI a compelling product candidate for the treatment of BET-AMD, the ease of use of an office space injection and long-term durability, could establish this as the first standard of care in the treatment of diabetic retinopathy.
Moving to our Glaucoma program, OT-XT-IC.
We continue to actively enroll subjects in a US-based, phase-2 clinical trial.
This trial is a prospective, multi-center, mask-randomized control trial evaluating the safety, tolerability, and efficacy of ODX-TIC for the reduction of intraculricular pressure in subjects with primary open-angle glaucoma.
or ocular hypertension. In late 2022, due to observed elevations in intraocular pressure in the OT-XTIC 5 microgram treatment arm, we decided to terminate the enrollment in the 5 microgram treatment arm.
continue forward with the OTX TIC 26 microgram and Durista treatment arm.
The company expects that the PACE2 clinical trial will now consist of approximately 86 subjects, approximately 35 subjects in the OTXTIC to 26 microgram treatment and 35 subjects in the Restarm.
and 16 subjects that were previously enrolled in the OT-XTIC 5 microgram treatment arm.
The trial is designed to observe the changes in diurnal intraocular pressure from baseline at 2, 6 and 2 at weeks and pull off duration of intraocular pressure response over time.
We plan to release top-line data for this Phase 2 clinical trial in Q4 of 2023.
Regarding our ocular surface disease programs, we remain committed to the development of our two dry eye programs, OTX-DET, a low-dose intra-cannalicular insert containing dexamethasone, and an innovate acquisition of laboratory liposuction channels that track organ wrestle
for the short-term treatment of the signs and symptoms of the RIIDZ. And OTH, CSI, is type of sporing intra-canada-chlorine serves for the chronic treatment of patients with the RIIDZ.
The intent commenced a small trial in the first half of 2023 to evaluate the performance of OT-X-DED versus placebo inserts, namely fast-dissolving collagen blocks, and no inserts at all.
We plan to use the results of this trial to inform the selection of a more appropriate placebo comparator for both the OTX-DED and the OTX-CSI programs moving forward.
I would now like to turn the call back over to Donald to review our fourth quarter and year-end financial results.
Thank you, Rabia. Total net revenue, which includes both gross extends of product revenue, net of discounts, rebates and returns, which the company refers to as total net product revenue, and collaboration revenue was $14.1 million for the fourth quarter of 2022.
And represents 18% growth over the prior quarter. And 15% growth over the same period in 2021.
The extends in that product revenue was 13.9M dollars for the 4th quarter of 2022. An increase of approximately 17% sequentially. Over the prior quarter and up 14% over the comparable quarter of 2021.
net product revenue in the fourth quarter of 2021 included $0.1 million attributable to the sales of brochure sealant.
Total net revenue for the full year 2022 was $51.5 million versus $43.5 million, an 18% increase.
Research and development expenses for the fourth quarter of 2022 were $13.5 million versus $12.6 million for the comparable period in 2021, driven primarily by an increase in personnel offset by both aid reduction and overall clinical trial expenses.
and a delay in the timing of clinical trials. Overall, R&D expenses for the full year increased $3.4 million to $53.5 million from $50.1 million in 2021, reflecting the trends identified previously.
Selling and marketing expenses in the fourth quarter of 2022 were $10.5 million as compared to $9.1 million for the comparable quarter of 2021, reflecting primarily an increase in field force personnel.
Overall, selling and marketing expenses for the full year increased to $39.9 million from $35.2 million in 2021, driven primarily by increased personnel costs and increased spending on consulting, trade shows, and conferences.
General and administrative expenses were $8.3 million for the fourth quarter of 2022 versus $7.5 million in the comparable quarter of 2021, primarily due to an increase in personnel-related costs including stock-based compensation.
Overall, G&A expenses for the full year increased $0.3 million to $32.2 million from $31.9 million in 2021, again reflecting the trends identified previously.
The company reported a net loss for the fourth quarter of 2022 of $15.5 million, or a loss of 20 cents per share on a basic basis, and a loss of 24 cents per share on a diluted basis.
compared to net loss of $3.9 million, or a net loss of 5 cents per share on a basic basis, and a loss of 23 cents per share on a diluted basis for the same period in 2021. Net loss in the fourth quarter of 2022 included a $5.2 million non-cash item attributable to a decrease in the fair value.
of the derivative liability associated with the company's convertible notes. As the price of its common stock decreased during the quarter.
non-cash charges for stock-based compensation and depreciation and amortization were $4.7 million in the fourth quarter of 2022 versus $4.4 million for the same quarter in 2021.
Overall, the company reported a net loss of $71 million or a loss of 92 cents per share on a basic basis and a loss of 97 cents per share on a diluted basis for the full year ended December 31, 2022 versus a net loss of $6.6 million or a loss of 9 cents per share on a basic basis. The company reported a net loss of $6.6 million or a loss of 9 cents per share on a diluted basis for the full year ended December 31, 2022.
And a loss of 98 cents per share on a diluted basis in 2021.
As of March 1, 2023, the company had 77.5 million shares outstanding.
This concludes my comments on our fourth quarter 2022 year-end financial results. I would like to turn the call back to Anthony for some final thoughts.
Thanks Donald. So before opening the call up for questions, let me do a quick summary.
We were excited to be able to share with the world our 10-month interim results from the US-based Phase I trial for OTXTKI and wet AMD, building further evidence of a potential product profile that could set the standard of care for durability in the treatment of wet AMD and diabetic retinopathy.
We have initiated a Phase I trial of OTX TKI for Diabetic Retinopathy and believe we may be positioned to commence our first pivotal trial in Q1 of 2024 to be to obtaining financing and the completion of ongoing discussions with the FDA.
We should be positioned to initiate a pivotal trial of OTXTKI for wet AMD in Q3 of 2023, subject to obtaining additional funding for the trial, including potentially a strategic line.
Enrollment continues in the Phase II trial of OTXT IC in glaucoma, and we believe that we will be in a position to release top-line data in Q4 of 2023.
The Extensa has had a strong start to 2023, with in-market volumes running greater than 20% above prior years for the first two months of the year.
We have $102.3 million in cash as of December 31st and have guided cash runway to the middle of 2024. With that I will turn the call over to the operator for questions.
Thank you.
To ask a question, you'll need to press star 11 on your telephone. To withdraw your question, please press star 11 again. Please wait for your name to be announced.
Please stand by while we compile the Q&A roster. First question comes from the line of Dane Leon with Raymond James. Your line is now open.
Hi, thank you for taking the questions and congratulations on all the progress. I'll keep it to one on my end. Just obligatory since you brought it up. Where do you feel like you're in the process of evaluating potential partnership situations for OTX-TKI? And when do you feel on a time basis – Okay, great.
you're trying to move forward with a PIVotal program, and what could be some options if you were not to find a potential partner for that asset to go into PIVotal sites.
a PIVotal program and what could be some options if you were not to find a potential partner for that asset to go into PIVotal. Thank you.
Yeah, thanks, Dane. Well, we are in the middle of a process. We're talking to sort of all the people you would expect us to be speaking to.
Yeah, thanks, Dean. Well, we are in the middle of a process. We're talking to sort of all the people you expect us to be speaking to. Obviously it's premature to
to opine on our likelihood of getting to an agreement with any second partner. So we are happy with where we are in the process. Clearly we're going to have to make a call at some point moving forward before we lock and load on the first pivotal in wet AMD.
The other option that we talked about, if we are not able to get the financing in place that under the terms that we find agreeable or a strategic partnership when in terms that we find agreeable would be to go with diabetic retinopathy in the first quarter of 2024.
We mentioned before we think the resource requirements of that are much less onerous than they are for wet AMD, although wet AMD is still an open question. The guidance and some of the discussions we've had with the FDA really do open up possibilities for wet AMD programs that may not be as expensive as the classic non-inferiority versus standard of care.
non-dilutive or minimally dilutive solution to wet AMD in the third quarter of 2023.
Excellent. Thank you so much. Thank you. One moment for our next question.
Excellent. Thank you so much. Thank you. Thank you. One moment for our next question. Our next question comes from the line of John Wallenberg.
Then with JMP Securities, your line is now open. Hey, thanks for taking the questions. I was wondering if you could give us a little more color around the discussions you're having with FDA and what is constituting the back and forth and if the recent guidance has impacted your discussions or your design plans.
Just wondering, I think it's pretty clear, and Dr. Chambers has mentioned this publicly, that durability isn't sufficient to prove efficacy, but how do you demonstrate durability in your pivotal trial in the context of a non-inferiority study? Any comment there would be helpful.
Thank you, John . This is Rabi. As you mentioned, John , there is new draft guidance recently issued by the FTA on better and interactive development. And we have been in active and constructive discussions with the FTA and recently had our Type C meeting.
Therefore, this draft guidance was not new information to us, and we have been considering all the efficacy and the safety points made in the guidance. It was already in our terms with our discussions with the FDA. We have a few pivotal designs in line.
with the guidance, and we'll continue our discussions with the FDA to have the best design ready for the initiation of the pivotus. As Anthony mentioned, Q3 for the beta AMD and Q1, QnA, QnA4 for the diabetic left and alpha T.
Okay, and maybe one on the extended, wondering what swing factors play into either being at the lower high end of the guidance for the year.
Thanks. Repeat the question. With the guidance for 55 to 60 million for the year for DEX 10, just wondering what factors into your estimates to either be at the lower high end of the guidance, what needs to be done to it.
be at the top end of that range. Sure. Well, clearly our hopes to exceed that guidance and we believe that we have programs and people in place that give us great expectation that we can do just that. Right now at this point, our customers are still managing staff issues to return to full capacity. So we think right now 55 to 60 is prudent guidance.
Our hope is that we'll come back to the next earnings call with a run rate that makes us reconsider that. Okay, thanks for taking the questions.
One moment for our next question.
One moment for our next question. One moment.
And our next question comes from the line of Carolina.
And our next question comes from the line of Carolina Polo Q with Van Berg your line is open.
Hi, thanks for taking the question. Just a couple for me. So the first one would be on the extent of revenue. Just wondering if you plan to break those out between the two revenue streams from ocular pain and inflammation and then the allergic conductiveitis. And then the second question I have is just that if you do decide to...
So, to go with the alternative financing path, how much financing do you think you would need to progress the program for TKI in both WET-AMD and DR? Thanks. Are you going to get creative things?
Well, as we mentioned, it would be premature to talk about, I'll tell you the second part of the question first, it would be premature to speak about the amount that we would need until we actually have an approved protocol. We don't really know how to price up the, particularly the wet AMD. I think it's pretty clear diabetic retinopathy with that. That is likely to cost because I don't think there's too many variations on what the PIVotal program might look like.
not the case with wet AMD. And so the first part of your question related to Extensa, what was that again? Yeah, I was just wondering if you plan on breaking out revenues between the different therapeutic areas within Extensa. No, we won't plan to do that. What we've done essentially to consolidate around our higher or more reliable ROI was really to double down into the surgical setting.
to ensure that we have all hands on deck and that we maximize the investment that we have with our field force. We will plan on launching into the office space with the rigid conjunctivitis indication, but not in the very near future. So we won't be breaking that out.
Joe Cajanzaro with Piper Samuel. Your line is open.
Hey, guys. Thanks for taking my questions. Maybe just following up on some of the earlier questions. I was just wondering how much is the potential strategic partnership for TKI contingent on defining and coming to an agreement with the FDA on what that clinical trial requirements would be for the pivotal wet AMD study? And then...
relatedly appreciate that you're guiding to a potential study initiation in the third quarter of this year, but when do you think you would be in a position to be able to communicate what that study would look like? Thanks.
here guiding to a potential study initiation in the third quarter of this year, but when do you think you would be in a position to be able to communicate what that study would look like? It sounds like we're actually recording later this evening. Um episode.
We are very close, we believe, to coming to an understanding of what that pivotal program might look like. So we think that they'll dovetail nicely to discussions that we're having with the potential strategics and what the pivotal will look like. But you're absolutely right that it would really be hard to go into a true alliance unless people understood what that program would look like. So luckily we're pretty close.
Okay, got it. That's helpful. That's all for me. Thanks so much. Thank you. As a reminder, to ask a question, that's star 11. And this concludes today's conference call. Thank you for your participation. You may now disconnect.
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