Ocugen, Inc. (OCGN) Q4 2020 Earnings Report, Transcript and Summary

Good morning, and welcome to the Ocugen Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Lisa DeScenza, Vice President of Integrated Communications at LaVoie Health Science to introduce the Ocugen team. You may begin.

Thank you, operator. I’d like to welcome you to our conference call. With me today are Ocugen’s Chairman and CEO, Dr. Shankar Musunuri; and our CFO and Head of Corporate Development, Sanjay Subramanian. Earlier this morning, Ocugen issued a press release including a business update and full year 2020 financial results. We encourage listeners to review the press release, which is available on the Ocugen website at www.ocugen.com. This call is also being recorded and a replay will be available on the Investor Section of the Ocugen website for approximately 45 days. Before we begin our formal comments, I’ll remind you that various remarks we make today constitute 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 forward-looking statements include information about qualitative assessments of available data, potential benefits, expectations for clinical trials, and anticipated timing of clinical trial readouts, regulatory submissions and regulatory authorizations or approvals. This information involves risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Risks and uncertainties include, among other things, the uncertainties inherent in research and development, including the ability to meet anticipated clinical endpoints, commencement and/or completion dates for clinical trials, regulatory submission dates, regulatory approval dates and/or launch dates, as well as risks associated with preliminary and interim data including the possibility of unfavorable new clinical trial data and further analyses of existing clinical trial data; the risk that clinical trial data are subject to differing interpretations and assessments, including during the peer review/publication process, in the scientific community generally, and by regulatory authorities; whether and when data from Bharat Biotech’s clinical trials will be published in scientific journal publications and, if so, when and with what modifications; whether the U.S. Food and Drug Administration, the FDA will be satisfied with the design of and results from preclinical and clinical studies of COVAXIN, which have been conducted by Bharat Biotech in India; whether and when any biologics license and/or Emergency Use Authorization applications may be filed in the United States for COVAXIN; whether and when any such applications may be approved by the FDA; decisions by the FDA impacting labeling, manufacturing processes, safety and/or other matters that could affect the availability or commercial potential of COVAXIN in the United States, including development of products or therapies by other companies. 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 the quarterly and annual reports that we file with the SEC. Except as required by law, we assume no obligation to update forward-looking statements contained in this press release whether as a result of new information, future events or otherwise, after the date of this webcast. You should read carefully the risks and uncertainties described in today’s press release as well as the risk factors included in our filings with the SEC. Note that we intend to file our Form 10-K with the SEC tomorrow. Any information we provide on this conference call is provided only as of the date of this call, March 18, 2021, and we undertake no obligation to update any forward-looking statements as we may make on this call on account of new information, future events or otherwise. I will now turn the call over to Ocugen’s Chairman and CEO, Dr. Shankar Musunuri.

Thank you, Lisa. Good morning, everyone, and thank you for joining. Since this time last year, when we hadn’t grasped the full impact of the pandemic and what it would mean in our daily lives. We at Ocugen have made it our personal mission to be part of the solution to help and COVID-19. Through our partnership with Bharat Biotech, a leading vaccine developer based in India, we are working to potentially bring the COVID-19 vaccine COVAXIN with United States. COVAXIN was developed in partnership between the Government of India and Bharat Biotech, and was granted approval for Emergency Use Authorization by the Indian authorities. And it’s currently part of the largest vaccine distribution program in the world. Several million people have received this vaccine in India. It has an excellent safety track record to-date leading journals, such as Nature and Lancet have published the rigorous scientific research conducted on COVAXIN to-date, which includes preclinical and human Phase 1 and Phase 2. COVAXIN provides an excellent opportunity for Ocugen to enter the infectious disease market. It is different from other COVID-19 vaccine options currently authorized for emergency use in the United States. These vaccines rely on new mRNA, or adenovirus technology, well, COVAXIN utilizes a traditional approach as an advanced stage whole-virion inactivated vaccine using a Vero Cell manufacturing platform. This is the same technology that has been successful in producing the polio vaccine for infants globally for decades. Another key differentiator is that COVAXIN induces the immune system to target the whole wireless, which we believe reduces the possibility of mutant widest escape. The other currently available options in the United States target just a spike antigen to illicit an antibody response, but COVAXIN has been shown to induce immune responses against multiple protein antigens, including the spike protein, receptor binding domain and the nucleocapsid protein of the SARS-CoV-2 virus along with the strong cellular responses. In fact, data demonstrating COVAXIN’s ability to neutralize that UK variant of SARS-CoV-2 was published recently. On the data front, on March 3, we announced that the COVAXIN respond to the 81% effective in an interim analysis of the Phase 3 clinical trial of nearly 26,000 participants in India. Not only did COVAXIN demonstrate the high clinical efficacy trends against COVID-19, but also sure significant immunogenicity against the rapidly emerging UK variant and has potential to be effective against other emerging variants too. The interim analysis included a preliminary review of the safety database, which short that severe, serious and medically attended adverse events occur at low levels and were balanced between vaccine and placebo groups. The Phase 3 trial, which is being conducted by Bharat Biotech will result in the final efficacy analysis at the 130 confirmed cases. Currently three EUAs for the other COVID-19 vaccine products in the United States do not authorize use in children under age 16. COVAXIN’s Phase 2 results cover adolescents ages 12 plus. There are over 16 million children in the U.S. between ages of 12 and 16, and most of them must attend middle school or high school. We are planning to use our existing data to potentially cover this age group in our EUA, offering the potential significant immediate benefit to vaccinate children. We will consider initiating U.S. clinical trials of COVAXIN in addition of patient populations, including pediatric and high-risk studies. Ocugen is in active discussions with the FDA to continue to develop the regulatory pathway for COVAXIN, vaccine candidate, EUA application. Based on our discussions, we are planning to file the EUA application in April on additional efficacy and safety data from Phase 3 clinical trial. We’re also in discussions with BARDA, the Biomedical Advanced Research and Development Authority regarding their role in procuring medical counter measures of the strategic national stockpile. With regard to manufacturing, under our agreement with Bharat Biotech, they will supply the initial doses in the United States upon EUA approval. We’d already working with an FDA approved local CRO to establish release testing of the product for the U.S. market. Overall, we’re aiming to make up 200 million doses available this year to support the U.S. COVID-19 immunization program. We’re in discussions with potential U.S. manufacturers and planning to work with Bharat Biotech on technology transfer, once the initial doses are supplied. Importantly, COVAXIN offers additional benefits for stockpiling, storing and distribution, because it will be shipped in a ready to use liquid formulation. We’ll be able to use existing vaccine supply chain channels. COVAXIN had an expected shelf life of up to two years in a normal refrigerator temperature, and up to three months at room temperature. In summary, we are excited to collaborate with Bharat Biotech to develop the COVAXIN’s vaccine candidate for the U.S. market. Our management team, as well as the vaccine scientific advisory board and highly experienced vaccine advisers, we assembled at Ocugen have a strong relationship with the leadership at Bharat Biotech. This is collaboration leverages Ocugen’s vaccine expertise and R&D manufacturing, regulatory and commercialization capabilities in the United States. Under the terms of the agreement, Ocugen will have the U.S. rights to the vaccine candidate. And we will be responsible for clinical development, regulatory approval including EVA and commercialization in the United States and we’ll retain 45% of the net profits. Now we shift our discussion to ophthalmology pipeline. We are on track to enter the clinic that our first gene therapy candidate OCU400, based on our modified gene therapy platform, which provides the potential to address multiple diseases with one product. We are planning to file an IND to initiate two Phase 1/2 clinical trials later this year for gene mutation associated retinal diseases. In February, we announced that the European Commission granted orphan medicinal product designation for OCU400 for retinitis pigmentosa and leber congenital amaurosis, which we believe further, supports the potential of our modified gene therapy platform to treat many inherited diseases. Inherited retinal diseases associated with retinitis pigmentosa and leber congenital amaurosis diseases are caused by mutations in over 175 genes, and it is impractical to develop therapies that are specific to each gene. OCU400, a single product has potential to treat both RP and LCA, including all mutations associated with 175 genes. On the manufacturing side for OCU400, we have completed our 200 liter commercial scale-up process. Finally, the development of our novel biologic program OCU200 and gene therapy candidate OCU410 are both progressing well. And we are on track to be in the clinic for both programs next year. Since October 1, last year, we have raised gross proceeds of around $39 million through offerings of our common stock. And now we have a healthy balance sheet. We plan to continue to raise capital as needed to fund our COVAXIN development and ophthalmology pipeline development. We’re also seeking potential funding from the U.S. government for COVAXIN development and supply. We made strong progress during 2020 toward our goals of developing differentiated vaccine to save lives from COVID-19 and developing gene therapies for blindness diseases. We look forward to continuing our momentum in 2021 with the planned U.S. rollout of COVAXIN, as well as filing an IND for OCU400 to move our first gene therapy program into the clinic. I will now turn the call over to Sanjay to provide our year end 2020 financial update. Sanjay?

Thank you, Shankar, and good morning, everyone. As Shankar mentioned before, 2020 has been a very eventful year for Ocugen and broadens our mission to cure blindness diseases and save lives from COVID-19. During 2020, we also took the necessary steps to clean our capital structure and raise capital in a prudent and pragmatic manner. I will now provide an overview of key financial results for 2020. We ended the year with cash, cash equivalents, and restricted cash totaling $24.2 million on December 31, 2020, compared to $7.6 million as of the year end 2019. Since the beginning of this year, we have raised an additional $28 million in gross proceeds, and as of February 28, 2021, we had an estimated $46.6 million of cash, cash equivalents and restricted cash extending our runway to over 12 months. Our research and development expenses for the year ended December 31, 2020 were $6.4 million compared to $8.1 million for the year ended December 31, 2019. The decrease was primarily due to the discontinuation of the OCU310 in 2019 partially offset by an increase of severance related charges in 2020. General and administrative expenses for the year ended December 31, 2020 was $8 million compared to $6.1 million for the year ended December 31, 2019. The increase was primarily driven by an increase in insurance premiums and employee related expenses in 2020. Net loss attributable to common stockholders was $34.4 million or $0.31 net loss per share for the year ended December 31, 2020 compared to a net loss of $20.2 million or $1.46 net loss per share for the year ended December 31, 2019. As you all aware, we have the special meeting of stockholders scheduled to reconvene on April 14 at 11:00 AM Eastern Time. The meeting originally convened on March 15, with adjourn to this date, as we did not receive sufficient votes in favor of the proposal to approve and adopt an amendment to the certificate of incorporation, to increase the number of authorized shares of common stock from 200 million to 295 million. At the meeting held a few days ago, an overwhelming majority of holders who voted, voted in favor of this proposal, but it needs to see the approval of a majority of our outstanding shares as the record date, in order to be adopted. We need your continued support to get additional votes to approve the proposal. We would like to remind stockholders of the importance of this proposal and request all stockholders of record on the record date of February 11, 2021 to vote in favor. A decision not to vote has the same effect as the vote against the proposal. The increase in authorize shares is critical for the long-term success of the company. It is important to recruit and retain the key talent needed to advance our business. As we grew as a company, we need to have the ability to access the financial markets quickly and strategically and having available shares will enable us to do so. Without any increase in our number of authorized shares, we will be unable to execute strategic transactions that will accelerate our progress towards achieving our mission and potentially expanding our scope and influence. Thank you to those who have voted our plan to vote in favor of the proposal. We appreciate your continued support of Ocugen’s mission to serve patients. With that, we will open up the call for questions. Operator?

[Operator Instructions] Our first question comes from Keay Nakae with Chardan.

Yes. Thanks. Good morning. Wonder if you can tell us to what extent you can – the flavor, if you will, of the discussions with the FDA regarding EUA. Obviously, the Phase 3 data has been presented top line at least. What more is the agency telling you, you need to provide to them?

Yes. And so, good question, Keay. I think, yes, we are in discussions. We believe we have a regulatory pathway and we have to get additional data, just like other companies. One of them is the safety, additional safety after booster dose. And obviously, if you look at the Bharat Biotech, they got two interim analyses and one final analysis. So we believe when we go to the second interim, if safety data is available, adequate data that should be sufficient to submit EUA just as other companies have done. So that’s where we are, with that process. So we are anticipating, equal to get that required data by sometime in April. So that’s why we’re saying, we’re targeting EUA in April.

Okay, great. If required to do some additional clinical study evaluation in the U.S., or are you currently preparing at least in terms of a planning exercise of trying to line up an activity like that?

So Keay actually – yes, based on the need for this vaccine and under emergency use authorization, I mean our team and advisory board, everybody believes strongly. I think there’s a pretty good chance that we can apply for EUA. However, we always prepare for clinical trials as we outlined, and we are planning to conduct pediatric clinical trials and additional trials in the high-risk and so that we are already planning.

Okay, great. Let me ask you one more on the manufacturing side. In order to meet the volume goals that you laid out there, in your discussions with potential CDMOs, are you finding that beyond technical capabilities that they actually would have the open space to be able to engage with you and Bharat on the technology side? And then actually have the capacity to produce in your target volumes this year?

Yes, good question, Keay. Just as anybody else in the – all the vaccines suppliers, we’re working with the government and we are having discussions with CMOs in the U.S., and obviously, we are making progress on that. And then we lift the market now and we have this plan fine. And all the – in case of – correct, all initial doses, as I mentioned before, they’re going to come from Bharat Biotech upon EUA approval. And for the first leg of the phase transition, we have engaged U.S. CRO which is approved by FDA to do the release testing. So the initial doses will be released under Ocugen’s control. Testing done by U.S. FDA approved lab here in Pennsylvania. So that’s already ongoing.

Right. Okay. Let me get back in queue. But thank you.

Our next question comes from Zegbeh Jallah with ROTH Capital Partners.

Good morning, guys. Thanks for the update. Just had two very quick questions. So you’ve communicated back to back, it could have some advantages, like you said, EUA plan, it could maintained the vaccine at – as you said, safety profile, and then potentially [indiscernible]

Zegbeh, your line is not clear.

[Indiscernible] it’s already in beta patient population inclusive of orphan drug. Is that any turbine, I think that sounds exciting for Biden administration? That’s been very focus of getting kids back into the classroom. So we’re just curious how much data you actually have in children, specifically children age 12 and above? That they’re enrolled into the Phase 3 study and how important that number that would be for negotiations. And then the second part residing that is that we do know that the CDC is getting really worried about the variance, but you’re ongoing for negotiations, how thoroughly the FDA will consider a preclinical data to kind of guide potential efficacy in EUAs.

Yes. And so, Zegbeh, I think the line was not very clear, but I think I got it. One is, first question is, 12-plus age group, the second one is related to variance of discussions with the government and then what you’re hearing from outside. So we do have data from 12-plus, as I mentioned before, at least 16-plus million kids are mostly in middle school and high school. They would be really a target for this vaccine because there’s a significant unmet need currently. There is one vaccine which has 16 plus out of the three EUAs and other two are 18 plus. So this is very important. I think we really have to get the kids into the classroom, just like Biden administration is stating and upon approval, we’ll be able to deploy those doses again. We got tens of millions, as we mentioned from our contractual obligation with Bharat, they’re going to supply. And our goal is to at least get those kids and those vaccinations with the data we have, if we’re able to get the EUA. And the second step is on the variance. We did publish the data collaborator on the UK variant. The data looks very promising. No reduction in replacing antibodies, and based on that, we believe – based on the – how this vaccine is developed we believe it will be potentially effective again, other than variance too. So obviously, when you have a broad vaccine like this, even though there are other suppliers in the U.S., we believe this will have its advantages and it’s much needed in the arsenal. If we need to do additional studies as a booster dose to other vaccine is will be happy to do that to get this going, so that in our goal is, if this vaccine can protect and the slowdown or minimize or prevent wireless gate and control the pandemic, we’ll do everything we can to supply this vaccine.

Thanks, Shankar.

Our next question comes from Swayampakula Ramakanth with H.C. Wainwright.

Thank you. This is RK from H.C. Wainwright. Good morning, Shankar and Sanjay.

Hi, RK.

Quite a few of my questions have been answered already, but I have a couple of them. Regarding the Phase 3 data and the complete analysis of the Phase 3 data, do you have an idea of when Bharat Biotech would be able to release that?

Yes. RK, we are anticipating the – at the next interim to come out sometime in April and estimate it comes out as the release and we’re going to get all the information and get ready for a EUA submission. So we’re anticipating that in April.

Sorry. So in April, does the another interim not the final analysis? Did I get that right?

Yes. The final analysis will follow again in the second interim, you have to get certain number of cases and the final analysis when you get 130. And so they’re anticipating at some time in April the second interim, and then based on the infective due dates and how they’re getting, we’ll know more then they’re going to be able to hit the final 130 number, but we believe by the time they get the second interim, we should have adequate data on the efficacy as well as safety.

So does the FDA require final analysis data or what you get in April is sufficient for both the pediatric population, when I say pediatric 1200 or above as well as the adult population to file for the EUA.

Yes. So I think FDA has once again the efficacy end point is one we believe that with already the first interim look – it looks good. And so if it follows and we believe it will follow the similar trends, it looks, so that should be sufficient. But on the safety side, there is a requirement. You need to get certain data, specific data beyond booster dose for a certain number of participants in the clinical trial. So we believe by the time they get that, that safety data will be available. That’s important. And also this is getting mass immunizations in India. They already dosed millions of participants through the national immunization program. And any data we can get from that and we’re closely working with our partner and I think they said the government is supporting them and they will be happy to support that and submit that in our package.

Perfect. And then one last question from me is on the stockpiling part of the conversations. Have you initiated that or do you need to wait for the EUA to be completed and approved before getting into a discussion regarding stockpiling?

We are already having discussions with BARDA. And so we had an active discussions right now and then we’ll continue those.

Perfect. Thank you, gentlemen. Talk to you soon.

Thank you, RK.

Thank you, RK.

Our next question comes from Kristen Kluska with Cantor Fitzgerald.

Hi everybody, this is Rick on for Kristen. I have two questions for you guys. Recent surveys in the U.S. shown the more than 30% of Americans are choosing not to receive the vaccine once they become eligible for many reasons. Have you and your partner thought about different ways that you could educate the general population in the U.S. on ways that COVAXIN differentiates from the other vaccines that are currently on the market, particularly as it relates to safety and mechanism?

Yes. I mean we’d already educating and then a differentiating it’s a whole-virion vaccine. It gives it broad spectrum humeral as well as cellular responses. And this is made with a similar platform technology that for decades polio vaccine as being made. So we will definitely do whatever we can to educate the public, on the safety aspects, on the coverage aspects, variants aspects and also this could be an ideal vaccine for all children. That’s very important. So we as a company are willing to do any additional studies we need to do, because our goal is really focused on the children, make sure we can really get them back to school and whatever we can contribute to create like a close to normal life and that’s very important for us. And we’re going to work with FDA and work with the government, what are we can do to help out to control this pandemic we’re willing to do.

Okay. And one more quick one, if I may, I know we’ve talked a lot about the Phase 3 data and how they kind of interact with the new variants they’re kind of coming out. But if you have any other color to add on the COVAXIN in the context of these other variants and have you noticed or has your partner noticed any initial trends in the data having to do with circulating variants that maybe you haven’t mentioned? And also you mentioned kind of a round, kind of an approximate number of people who have currently been vaccinated with COVAXIN in India. Are you kind of able to give any more specifics on that total number of people that have been vaccinated at this point?

Yes. So coming to the variants, yes, we have data they published on the UK variant, the data looks good. There’s no reduction in utilizing antibody effect, again, the way they’re conducting these studies, they are conducting really appropriate study how it should be done. Not lab engineered virus actually taking the viral streams from the patients who are infected and then conducting the neutralizing antibody study. So that’s appropriate way to do it. And so with that respect, they got solid data on UK variant. We’re also anticipating data in a similar studies from other variants including Brazil. The Brazil one is important because if you look at the New York recently there is a mutation E484K that is very prevalent in Brazil too. And I think the cases in New York are spreading very rapidly and pretty significant percentage I think or 20% if I saw last week, which is – which has E484K variant. So we’re anticipating data by the time we get the data from our analysis from Bharat Biotech next month. And they’re also anticipating variant data as soon as we get that, we’re planning to submit all that information as a part of our EUA.

Okay. That’s really great. Thank you very much.

Thank you.

Thank you.

That concludes today’s question-and-answer session. I’d like to turn the call back to Lisa DeScenza for closing remarks.

Thanks to everyone for taking time to join this call this morning. We’re dedicated to fulfilling the unmet need of saving lives from COVID-19 and fulfilling patient needs by bringing to market transformative therapies for blindness diseases. We look forward to providing further updates in the coming months. Thank you.

Thank you. Ladies and gentlemen, this concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.