Ocugen, Inc. (OCGN) Q1 2021 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] I will now turn the conference over to Lisa DeScenza, Vice President of Integrated Communications at the 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 first quarter 2021 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, the SEC, including the risk factors described in the section entitled “Risk Factors” in the quarterly and annual reports that we file with the SEC. 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-Q with the SEC today. Any information we provide on this conference call is provided only as of the date of this call, May 7, 2021, and except as required by law we undertake no obligation to update any forward-looking statements 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. There is not a day that goes by without us witnessing the devastation caused by the Coronavirus pandemic. As you all know, India is currently experiencing one of the worst spikes seen by any country since the pandemic began. Over the last two weeks, COVID-19 has claimed about 120 lives, every hour an average in India, the second view of devastating COVID-19 infections. Our hearts go to the people of India and those working on frontlines to bring this terrible outbreak under control. We also sincerely appreciate the work done by caregivers, NGOs, governments, including the U.S. Government and everyone who is helping. Our co-development partner for COVAXIN, Bharat Biotech, has been ramping up production to meet the demand for the vaccines in India. They are navigating these extreme conditions to scale up production and increase supply. It is encouraging to note as Dr. Anthony Fauci, Director of NIAID and the Chief Medical Advisor to the President, mentioned last week, studies off convalescent sera of COVAXIN recipients have found that COVAXIN effectively neutralizes the B1617 variant or Indian double mutant strain of the Coronavirus. However, it is concerning that according to the World Health Organization, the variant has been detected in 17 countries, including the U.S. We continue to strongly believe that it is critical to add vaccine to our national arsenal to fight this pandemic. We are encouraged by our announcement earlier this week that COVAXIN demonstrated potential effectiveness against three key variants of SARS-CoV-2, the UK variant, which is B.1.1.7, the Indian double variant, B.1.617, and Brazilian P.2 variant B.1.1.282. By addressing the whole COVID-19 virus based on multi antigens, including the spike and nuclear capsid proteins, COVAXIN’s potential effectiveness against multiple variants reduces the possibility of mutant virus escape. This is an important differentiator from currently available in vaccines in the U.S., which only address the spike protein. COVAXIN elicits a broad-spectrum immune response of 98.3% seroconversion. By stimulating both humoral and cellular responses against multiple viral proteins, COVAXIN could be a more powerful weapon that is more likely to remain effective as the virus continues to mutate, making it a strong booster vaccine option even for those who have already taken one of those other vaccines. In the recently shared second interim results of the Phase 3 clinical trial, COVAXIN demonstrated 78% overall efficacy and 100% in severe COVID-19 disease, including hospitalizations. COVAXIN continues to show strong results in all the studies conducted to-date. The Ocugen team submitted a comprehensive drug Master File with the FDA and is preparing the EUA application. The current crisis in India is hampering some of the data collection efforts by our co-development partner, Bharat Biotech. As a result, finalizing our EUA application is taking longer than anticipated, despite the humanitarian crisis in India, Bharat Biotech and Ocugen are working tirelessly and diligently to complete the EUA application. And we hope to file it with the FDA as soon as practicable. Meanwhile, we are having collaborative discussions with the FDA. We have also signed up with an FDA approved lab for release testing of the vaccine upon authorization. And we are actively working on security contract manufacturing partners in the U.S. We're also in discussions that the Biomedical Advanced Research and Development Authority, BARDA, regarding the purchase commitment. Once authorized under EUA, we are planning for a pediatric study in kids six months and older, because we believe COVAXIN has a very strong safety profile as it is based on a traditional vaccine technology platform. We believe that COVAXIN can help change the course of this change the course of this pandemic by preventing severe COVID-19 disease including hospitalizations as well as significantly limit the spread of asymptomatic COVID-19 infections based on efficacy shown to date. Now to shift to an update on our ophthalmology pipeline. Yesterday, preclinical results of our novel biologic candidate OCU200 were presented at the Association for Research in Vision and Ophthalmology 2021 Annual Meeting. The purpose of this study was to evaluate efficacy of OCU200 in in-vitro and in-vivo models for ocular neovascular diseases. OCU200 reduced neovascularization and damage to retina and demonstrated comparable or slightly improved activity to aflibercept in an animal disease model. OCU200, a transferrin-tumstatin fusion protein, demonstrated potential to treat diabetic macular edema, diabetic retinopathy, and wet-age related macular degeneration. We are planning the initiation of Phase 1/2 clinical trial for OCU200 next year. We remain on track to initiate our first gene therapy Phase 1/2 clinical trial for OCU400 later this year. The toxicology studies are progressing well. We have completed manufacturing a 200-liter scale to support clinical studies. We're also planning to initiate a Phase 1/2 clinical trial for OCU410 for dry age-related macular degeneration next year. Late last month, we announced closing of the Registered Direct Offering, the healthcare focused institutional investors raised gross proceeds of $100 million dollars. We intend to use the net proceeds from the offering for general corporate purposes, capital expenditures and working capital expenses. The capital raises this year have significantly strengthened our balance sheet and position us well to develop our programs and build our team. In summary, we're working diligently to bring COVAXIN to the U.S. market, the planned filing of our EUA application, and eventually at BLA, biological licensing application. We are continuing to expand our team with highly talented individuals to support our growth. We're also planning to move our lead ophthalmology, gene therapy product candidate OCU400 into the clinic later this year. The ability to raise additional capital as needed, we have the resources to continue driving our vaccine and ophthalmology pipelines forward and anticipate strong momentum across our pipeline for the remainder of this year. I will now turn the call over to Sanjay to provide our first quarter 2021 financial update. Sanjay?

Thank you, Shankar, and good morning, everyone. We have made significant strides in the first quarter of this year, particularly in working to bring COVAXIN to the U.S. market with the submission of our comprehensive drug Master File with the FDA. I will now provide an overview of key financial results for the first quarter of this year. We ended the quarter with cash, cash equivalents and restricted cash totaling $44.9 million as of March 31, 2021, compared to $24.2 million as of December 31, 2020. In April, 2021, we raised an additional $100 million in gross proceeds with our registered direct offering. Our research and development expenses for the quarter ended March 31, 2021 were $2.9 million, compared to $1.7 million for the three months ended March 31 2020. The increase was primarily related to the toxicology studies for our OCU400 program and the development activities for COVAXIN. General and administrative expenses for the quarter ended March 31, 2021 were $4.2 million, compared to $2.3 million for the three months ended March 31, 2020. The increase was primarily driven by proxy solicitation costs incurred to obtain the increase in authorized shares of our common stock. Net loss was $7.1 million or $0.04 net loss per share for the quarter ended March 31 2021, compared to a net loss of $3.9 million or $0.07 net loss per share for the quarter ended March 31, 2020. We recently terminated the NeoCart asset purchase agreement with Medavate and are currently evaluating other options, including potentially developing the asset ourselves. As always, we continue to evaluate the market for potential assets to invest license or partner. We will update you with any developments on this front in the near future. With that, we will open up the call for questions. Operator?

[Operator Instructions] Your first question comes from the line of Keay Nakae with Chardan.

Good morning. So a couple of questions about the vaccine. Shankar, you mentioned...

Yes, go ahead, Keay. Good morning. Keay, can you hear us? We can't hear you, Keay.

Keay, please press star one.

Operator, we think Keay got disconnected. We will go to the next question. We can come back to Keay.

Keay, your line is open.

Hello?

Hello. Hey, Keay. You back.

I can hear you. Can you hear me?

Yes. Yes. Yes. Now, we can hear you. Thanks, Keay. Go ahead.

Good morning. Okay. Yes, I don't know what happened there, but thanks. Couple of questions about the vaccine, Shankar, you mentioned some delays due to the activity that's happening in India. Do you have a sense of when you might be able to complete the EUA filing application?

Yes. Keay as we stated, we're working very hard with our partners at Bharat Biotech and they'd taken longer than anticipated. We're planning to still complete the EUA application in the upcoming weeks.

Okay. And in your initial discussions with the FDA, what have they said, if anything about wanting to see vaccine data for U.S. patients before allowing that to move forward?

Not to date.

Okay. All right. Very good. That's all I have. Let me get back in queue. Thanks.

Thank you, Keay.

Thank you.

[Operator Instructions] Your next question comes from the line of Zegbeh Jallah with ROTH Capital.

Good morning, guys. Thanks for the update. Just have a couple quick ones for you. I think the first one is just additional info on what's really needed from the folks in India to kind of finalize the EUA application. Like what data sets are you missing? What information are you missing and you're waiting for?

Zegbeh, as you know, this is a very large clinical trial. And at the conclusion of the interim Phase 2, I mean the second interim results from the Phase 3 clinical trial. You have to put all the data together. It's an enormous amount of effort. And in the middle of the pandemic obviously this crisis in India has caused some delays. Also just as you know, everybody has submitted, there is large amount of safety database you have to pull together along with efficacy. That's what they're working on.

Okay. So you do need some safety and then some efficacy data that you're waiting on. And then the follow-up question is regarding the Master File. I know you've submitted it, but I was just wondering when you anticipate getting some feedback from the FDA and when you do get that feedback, are you going to communicate it publicly?

Again, it's – again, it’s the normal course of business and FDA communications depending on if it's a feedback concerning, there are some anticipatory questions or clarifications needed. That's the reason we are collaboratively working with FDA so we can incorporate anything else, any information, additional information in the EUA, that's the plan. And obviously we may not be going into all the details.

Understood. And then just the last one, really impressed with the continued execution on the ophthalmology pipeline. And so I was just wondering if you can provide just a little bit more granularity as to what needs to be completed, because it's nice that you do have capital to kind of support some of those efforts, but just any detail as to, what's needed for the next steps for OCU400 and OCU200, sorry about that?

Yes. So OCU400, as I stated we have successfully completed manufacturing, it’s a 200-liter scale, potentially commercial scale. And so the next step is for the preclinical toxicology studies are in progress. As soon as we complete those studies, we get the reports, we'll be ready to file the IND, which is – and we are anticipating to file that later part of this year.

Perfect. Thanks, Shankar, and congrats again on all the progress.

Thank you. Thank you, Zegbeh. Thanks for the questions.

Your next question comes from the line of Robert LeBoyer with Noble Capital.

Good morning. I was…

Good morning. How are you doing?

I'm doing well. Thanks. My question has to do with the emergency use application. And when you expect to hear an answer back from the FDA, if positive, what would that mean in terms of rollout and how would it fit with the current vaccination programs?

Yes, again, it'll be – we're anticipating it's going to be a similar process to other companies. After we filed the emergency use authorization application, typically agency takes three to four weeks to make a decision and have a meeting with the ACIP. And after that, we'd be ready to roll out the vaccine just as other companies are prepared.

Okay, great. Thank you very much.

Thank you.

Your next question comes from the line of Swayampakula Ramakanth with H.C. Wainwright.

Thank you. This is RK from H.C. Wainwright.

Hi, RK.

Good morning, Shankar and Sanjay.

Good morning.

Just for modification, if you could please help us try to distinguish between the filing of the Master File and what you'll need to do in terms of the emergency use application. What are the differences there, in terms of like data in terms of, what else you need to be providing?

Yes. So we are following FDA guidance on EUA for include vaccines. So based on the guidance, Master File is a first step to include all preclinical manufacturing and any other data prior to Phase 3. So that gives an opportunity for FDA to review and provide suggestions, comments prior to filing a EUA. So that's the process we have completed, and our file was quite extensive. And the second step is filing the emergency use authorization application just as other companies have done. So those are the two things. So that application will have primarily the second interim analysis up to that point, 127 patients, what we have announced before, safety, efficacy, including the new variant data, which is coming out, which will be part of that application.

Good, very good. So obviously going into the EUA, FDA has already reviewed quite a bit of your data. So do you still have to sit down with the FDA for a pre-EUA discussion and is that – and that discussion will happen before you also have another discussion with the BARDA these two are separate discussions and how should we think about timing of all this in the course of getting COVAXIN into the hands of BARDA.

Yes, the FDA process it's a similar process to other companies. We are collaboratively working with them we're continuously communicating with them. And so obviously we will be notifying them in communications when we are filing the UA. And that conversation, that communications, those are different from BARDA. BARDA is independent, and obviously we’re working with the BARDA administration. So those discussions are ongoing. So they are like in parallel, obviously they are not linked.

Okay. And last question from me with all the energies that are being spent on COVAXIN and trying to get COVAXIN across the finish line, how are you on your resources to not only get COVAXIN through, but also for Phase 1/2 clinical trials get started on OCU400 early next year?

Yes, so we are actually – we also announced we are also increasing our internal resources. We got also a good size external team of team of solid experts supporting COVAXIN development, including future clinical trial plans and everything else. In addition to that, internally, we're beefing up the team recently announced – we hired a Senior Vice President of Manufacturing and Supply Chain. There's tremendous experience from vaccines and gene therapy expertise, and a very highly regarded person in the industry. So, we are building a very strong manufacturing team under him. And similarly, we're going to beef up other functional areas in the organization as we continue to grow this year. And that's going to support, as you stated, starting with our OCU400 genes therapy program, which we are trying to file the IND latter part of the year and initiate clinical trials, plus all other ophthalmology programs, we are planning to initiate as you stated four Phase 1/2 clinical trials and composing OCU410 gene therapy, as well as OCU200. And we'll be supporting them. We are beefing up the resources every day.

Thank you Shankar and Sanjay I’ll talk to soon.

Thank you.

Thank you RK.

Our next question comes from the line of Kristen Kluska with Cantor Fitzgerald.

Good morning, every good morning. Thanks for taking the question. The first one I have is in regards to the potential usage of COVAXIN as a booster, have you considered what work or understanding would need to go into this to determine when somebody should receive this and the number of doses? And then how are you and your partners thinking about tracking the long-term durability of COVAXIN as all of the companies, generally speaking, are trying to determine how often these boosters will be needed?

Okay, so I’ll separate the two questions. The booster studies again we are still preparing the protocols. Typically, you have to wait for any booster for the required. In the COVAXIN case, we're getting the booster after 28 days after the hostels. Similarly, if you want to space them out for other vaccinations at least a month or more and that could be yet to be determined. Our clinical team headed by, Dr. Bruce Forrest, an expert in this field and we’re going to make those additions in the coming months before we file the protocol with FDA. And the second part is, are you going to monitor long-term durability? I think our partners have already published extensive data, I think in Lancet and others and they're continuing to monitor the long-term durability of this vaccine. And typically, what is important is, I think, the missing piece people have to understand it's not just the safety and efficacy, efficacy is at one time you're measuring as a part of the Phase 3 clinical trial, and it's really important to measure the responses, cellular responses and T cell responses. And that's what you're going to get durability on.

Thank you. And then just to go off of RK’s question, how should we be thinking about the near-term spending projections, including your comments about expanding the headcount, as well as planning a pediatric study and evaluating some of these booster dose studies?

Sanjay?

Yes, thank you, Shankar. So, Kristen, good question. So, we obviously raised some capital that we essentially both in first quarter, as well as end of last month with the $100 million RDO, so with that we have a very strong balance sheet. We have been hiring many people over the last few months and we have bolstered our team quite a bit, both on the vaccine side, as well as on the ophthalmology side. So, the activities are progressing well on that front. And with all of this capital that it's raised, it's more than sufficient for us to do kind of put in place any of the clinical plans for pediatric study, as well as continuing on with our original plans on the ocular program. So we feel this is, at this point in time, very confident that it is sufficient for all our program plans as well as hiring plans.

Thank you so much. And then my last question is whether you anticipate any issues related to the current travel ban to India as it relates to manufacturing, inspection or anything else regarding that partnership.

Yes, the travel ban, again, Kristen we're closely monitoring just as any other country, these breakouts are going to come up across the globe. And again, we cannot anticipate how long it's going to last. And as far as any potential inspections and all agencies are conducting these days digital inspections. So, they have some flexibility on that.

Great. Thanks so much, everybody.

Thank you.

You do have a follow-up question from the line of Zegbeh Jallah with ROTH Capital.

Hey guys just wanted to do a quick follow-up on something that I was triggered by Kristen’s question. I was just wondering for the doses that are going to be coming over the initial doses, particularly from BARDA is that still the plan or are you now considering having the initial doses this come from the U.S. manufacture?

That is still the plan Zegbeh. While we are in parallel working with the U.S. contract manufacturing.

This concludes the question session for today. I would now like to turn the conference back to Lisa for any additional or closing remarks,

Thanks to everyone for taking the time to join this call this morning. We are dedicated to help save lives from COVID-19 by bringing COVAXIN the U.S. market and develop gene therapies to cure blindness diseases. We look forward to providing further updates in the coming months. Thank you.

Thank you for participating in today's conference call. Ladies and gentlemen, this concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation. And have a wonderful day.