Ocugen, Inc. (OCGN) Q3 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] Please note this conference is being recorded. I will now turn the conference over to Ken Inchausti, Head of Investor Relations and Communications for Ocugen. You may begin.

Thank you, operator. I'd like to welcome you to our conference call. With me today are Ocugen's Chairman, CEO, and Co-Founder, Dr. Shankar Musunuri, who will provide a business update, and our Chief Financial Officer and Head of Corporate Development, Sanjay Subramanian, who will provide a financial update. Earlier this morning, we issued a press release including a business update and third quarter 2021 financial results. We encourage listeners to review the press release, which is available on our website at www.ocugen.com. This call is also being recorded and a replay along with accompanying slide presentation will be available on the Investor section of the Ocugen website for approximately 45 days. As always, we need to advise you that this call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual events or actual results to differ materially from expectations, including, among other things, the uncertainties inherent in research and development of our product candidates, risks to our business related to the ongoing COVID-19 pandemic, uncertainty regarding whether the FDA will grant us emergency use authorization for Covaxin in ages 2 to 18, and when we will be able to submit a Biologics License Application for Covaxin to the FDA, and whether and when we will receive regulatory approvals for authorizations for Covaxin and the U.S. or Canada. These and other risks and uncertainties are more fully described in our periodic filings with the Securities and Exchange Commission, 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 and accompanying slide presentation, as well the risk factors included in our filings with the SEC. Note that we intend to file our Form 10-Q with the SEC today. I will now turn the call over to Ocugen's Chairman and CEO, Dr. Shankar Musunuri.

Thank you, Ken. Good morning, everyone, and thank you for joining, and we hope you and your family are safe and well. Today, we're here to review a rapid succession of milestones from this Company I feel privileged to lead. It reminds me after a famous Margaret Mead quote, "Never doubt that a small group of thoughtful committed citizens can change the world." Indeed, it's the only thing that our has. These words remind me that just one year ago, Ocugen was less than 20 individuals. We all had a vision to bring new therapies that could tackle serious diseases and bring new options for people wanting a choice. We have completed three quarters of 2021 and our Ocugen family has grown significantly, committed to bringing Covaxin BBV152, our COVID-19 vaccine candidate to the United States and Canada. Along with our lead candidate for blindness diseases OCU400, which is a part of our modifier gene therapy platform. Today's update is a result of their hard work, along with the efforts of our global partners Bharat Biotech and CanSinoBio. Thank you all for your contributions. This slide outlines the major events that transpired over the recent months, including the third quarter of 2021. First, we want to congratulate our partners at Bharat Biotech for securing an emergency use [Indiscernible] for Covaxin by the World Health Organization. This is exciting news. That's a tremendous accomplishment and a critical validator for broadening the global portfolio of COVID-19 vaccines and is noticed by the regulatory authorities around the world. Closer to home, Ocugen took significant steps to progress Covaxin BBV152 with the U.S. Food and Drug Administration. Last week, we submitted Covaxin for emergency use authorization that the FDA for use among those aged 2 to 18 years. We believe there is a significant unmet need within this age group, knowing that there is a lack of choice for different vaccines within the U.S. market. Particularly, in ages 2 to 5, there is currently no approved option. We believe the data as we top-lined on our Friday call, November 5th press release, make it compelling efficacy and safety case to the agency, and we look forward to furthering our discussions with them. In late October, we filed an Investigational New Drug Application to support the initiation of the Phase 3 immuno-bridging study between the U.S. population and the results of Bharat Biotech's Phase 3 clinical trials, involving nearly 25,800 participants. This Phase 3 bridging trial is being conducted in support of an upcoming BLA. Our trial had designation OCU-002 and will involve a few hundred subjects. The primary objective will be to compare neutralizing titers between the US-based participants who get two doses of Covaxin to those who got two doses in the Phase 3 efficacy trial in India. Secondary objectives include measuring the immunogenicity of two doses of Covaxin over time in those who are of age between 18 and 65 and those over the age of 65, as well as determining its immuno-broadening effect, including in those who previously received an mRNA vaccine. Such a broadening effect could include antibody responses against multiple antigens, such as spike and nucleic acid proteins. We're also preparing for the possibility of conducting a safety bridging trial if required. Finally, we are hearing from many people about their interest in participating in this clinical trial if approved. We're very appreciative of their passion and after this is tuned for further development. To the market, our engagement with Health Canada continues and responses to deficiencies noted are being prepared. As a reminder, we applied for approval under the interim order and our application was automatically transported to a new drug submission process. I now want to update you on our progress with our modifier gene therapy program. I'm pleased to announce that yesterday, Ocugen filed an Investigational New Drug Application for OCU400, our lead candidate in the modifier gene therapy platform for the treatment of Retinitis Pigmentosa resulting from genetic mutations Nr2e3 [Indiscernible] . This is a proposed safety and dose finding Phase 1, 2 clinical trial involving a small number of patients. We have already successfully completed manufacturing at commercial scale at 200-liter scale to support clinical studies. As part of the clinical trial, patients will be observed closed doors by at least 12 months. From there, OCU400 could move into a Phase 3 clinical trial, evaluating its ability to address multiple inherited retinal disease mutation. This is the beginning of a new journey. One started by our partner, Dr. Neena Haider from Harvard Medical School, and we look forward to sharing the progress of our trial if approved throughout 2022. Following close behind OCU400 is our next candidate OCU410. IND-enabling pre-clinical studies have started to support a future Phase 1, 2 clinical trial. OCU410 is designed to address dry age-related macular degeneration. It's the most prevalent chronic form of AMD, accounting for approximately 90% of total AMD cases, and is characterized by slow progress to dysfunction of the retinal pigment bacterium, photoreceptor loss, and retinal degeneration. With about 150 million people suffering from dry AMD around the world, and no treatment options available, there is significant unmet medical need. Preclinical data recently presented at the Dry AMD Therapeutics Conference in October suggest that OCU410 plays a role in the genes associated with the whole dry AMD dial ups or time, and we will continue to explore this area throughout 2022. We are pleased to share that in order to support the manufacturing of OCU410, we have expanded our arrangement with CanSinoBIO to be our partner responsible for chemistry, manufacturing, and controls development and manufacturing. They will now support the CMC development and manufacturing for both the OCU400 and OCU410 programs. Our agreement with CanSinoBIO was amended in September to add this program. Rounding up our ocular portfolio, OCU200, our transfer in some stack infusion protein is still progressing well. We are on track with our preclinical activities to explore further how it can help those with diabetic macular edema, diabetic retinopathy, and wet age-related macular degeneration. With OCU400 moving into clinic and OCU410 and OCU200 continuing their IND-enabling studies, our focus on ocular therapies remains very strong. This indeed has been a busy quarter. There's much going on to advance Covaxin and to uplift portfolio, and there is much more ahead. I will now turn the call over to Sanjay to provide our third quarter 2021 financial update. Sanjay?

Thank you, Shankar, and good morning, everyone. I will now provide an overview of key results for the third quarter of this year. Our research and development expenses for the quarter ended September 30, 2021 were $6.3 million, compared to $1.5 million for the third quarter ended September 30, 2020. The increase is primarily driven by Covaxin development and regulatory activities, OCU400 preclinical activities, as well as employee-related expenses due to an increase in R&D headcount. General and administrative expenses for the quarter ended September 30, 2021 were $4.5 million, compared to $1.7 million for the third quarter ended September 30, 2020. Our increase in general and administrative expenses relates to increase infrastructure costs to support the growth of the organization. Net loss was $10.8 million or $0.05 net loss per share for the quarter ended September 30, 2021, compared to a net loss of $10.5 million or $0.07 net loss per share for the previous year's quarter ended September 30, 2020, which included a $7 million write-off of an asset held for sales. We ended the quarter with cash, cash equivalents, and restricted cash totaling $107.5 million as of September 30, 2021, compared to $24.2 million as of December 31, 2020. That concludes my update. Back to you, Ken.

Thank you, Sanjay. With that, we will open the call for questions. Operator?

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

Good morning. Four questions for you, Shankar.

Good morning, Keay.

The first question relates to timing for the adult population in the U.S. So as you convinced the bridging study, and hopefully that will set you up to file maybe the middle of next year so, should we think about possible approval in Q1 of '23? Is that an appropriate way to look at the timing?

Yeah. If you follow the path of regulatory path other companies have followed, we believe ANC will also consider our fast track for us. We were planning to initiate that at the right timing, and so based on that, we are planning to file the BLA in the second half of next year. So sometime in 2023, first half, if we do get to fast-track designation, that seems to be reasonable.

Okay, great, and then under your agreement with Bharat, under a scenario where the U.S. would like to purchase your vaccines to help distribute OUS, again because of its many attractive characteristics, is Bharat precluded from selling vaccine to the U.S. for that purpose and you exclusively have the right to sell the vaccine to the U.S. government for any purposes?

Yes. We have rights in US and Canada and any procurement from the U.S. government. Yes, they have to go through Ocugen.

Okay. Great, and then for the most recent EUA filing for the for the pediatric, given that you're running the bridging study for adults, how do we think about whether you'll need to run a bridging study for pediatrics as well before you could give any type of approval?

Again, we have filed an emergency use authorization as we outlined in the two to five age group. Currently, there are no operates vaccines are approved vaccines, and there is a significant unmet medical leader, and those things will be considered when you apply for emergency use authorization. So that's the reason, based on compelling data we have in the pediatric population. We decided that the American kids do need a choice and we thought in the 2 to 18 age group, that's the data we have from our pediatric population from our partners, we file EUA. It it is purely based on unmet medical need.

Okay, and then, just two more questions. One, for Canada, how should we think about the potential timing there to get potential approval? Having filed in Q3, at least anticipating a flow review again, as first half '22 or maybe mid '22, the appropriate timing for that potential approval?

Okay, I think the process for Canada, again, as we stated, there is no deployment of ermergency user authorization that's called intramotor, it expired, and the file got into NBS, which is new drug submission process, and typically, it does take some time and I cannot comment on actual regulatory time, exact date. However, we are closely working with Health Canada review process and addressing any questions come up on the way.

Okay, and then congrats on the filing for OCU400. Nice to see those programs will be entering the clinic around the end of the year. So that's great. That's all I have..

Thank you, Keay Nakae.

Your next question is from Zegbeh Jallah with Roth Capital.

Good morning. Thanks for taking my questions and congrats on all above regulatory updates. I think a couple of quick questions for me. The first is just on the pediatric EUA. I was just curious if you're going to hear any kind of update on an acceptance of the EUA before a decision is made? Or your next feedback from the FDA will be about whether or not it is approved? Or should you expect something within a week or two from now?

Good morning, Zegbeh. Again, the review process, they accept us for review. The process is ongoing. So when we get updates, we'll prorate updates to the market. At this time, I cannot comment anymore.

Okay. So you're not expecting to get a letter about an acceptance or anything like that prior to an update on whether or not the EUA is approved?

No, typically, the EUA goes through the process that's based on the process other three companies have done. Typically, it goes to the outcome before it gets any market, so that's a typical process. We're working with the agency on that.

Then the next one here. I know you said for Health Canada, you can't really comment on the timing or anything, but I think you also said that you haven't got any questions or comments from them, is that correct?

Can you repeat the questions, Zegbeh? Sorry.

For Health Canada, I was just saying that, so far after your submission, we haven't guidance back any questions or follow-up or you haven't had to submit additional information or anything like that, you just waiting to hear back from them.

Zegbeh, this is a normal course of business review process. Any [Indiscernible] or any submissions you do, any regulatory agencies, and the companies, as a part of the actual process, we respond back and forth, and so that's again normal course of business. That's what we are dealing with Canada too.

Thanks, Okay. So you have had some back-and-forth with them, and then the next one here is just about the potential to expand your agreement with Bharat. I know, I think you have the opportunity to do so for more territories, but I was just wondering what it is that you need to see before you make the decision to do so.

Yeah. So just to make sure I understood your question correctly, you're asking about our opportunity to expand our territories with Bharat for other regions, and then what would be the catalyst for that? Is that correct? Zegbeh, again, those options are always open, and again, we're really focusing on the U.S. and Canada at this stage, and again, we keep those options open with our partners.

Moving on to our OCU400 really excited to see that IND gets submitted. I was just curious as to any updates about the study design or what we might see, any kind of clinical updates or anything from that program.

Once IND gets accepted and goes through the process, Zegbeh, we will be launching the information into ClinicalTrials.gov and that will help all the stakeholders and potential patients and everybody else, and again, this is going to be a small trial just as other offline designation trials to the retinal space.

Okay, and I know you expanded the CanSino agreement to include 410. I was just wondering where you are in terms of development? Is CanSino doing anything right now for 410? Are you doing IND-enabling studies? Where in the process are you?

Yes. CanSino started working on the development, just as the need for 400, and so we do have a roadmap from the FDA on OCU40 and currently, the team is in the process of executing those plans.

Okay. Thanks for the update.

Thank you, Zegbeh.

Your next question is from Robert LeBoyer with Noble Capital.

Good morning.

Good morning.

Hi. Congratulations on the results and all the progress you've made in the last quarter. My question has to do with the booster shots and the durability of Covaxin and whether there is data that might show any need or lack of need to have a booster shot 6 months or 12 months after vaccination, and I also was wondering if there was any data to show or any discussion of the idea of using Covaxin following one of the messenger RNA vaccines to give broader protection or any benefits that one might have there?

So, Robert, first question is the longevity effect. Again, our partners are generating some data. When the data is available, it will be published. But however, the date-after-date clearly showed a one thing, scientifically people have to discuss more about cellular responses. The T-cell response, which creates a memory, and that's where you get the long protection with any vaccine. Our partners have shown and published articles in the clinical journals, medical journals, that Covaxin elicites very strong cellular responses. That means you have potential memory and you should get long protection. Again, when they generate more data, we're going to continue to share that with the markets. The second question is, people who are being vaccinated with mRNA vaccines, are we going to generate the data? The answer is yes, our clinical trial, which we did file the IND, the immuno-bridging trial does not exclude anybody who took mRNA vaccines. In fact, it does include people who have taken mRNA vaccines with the caveat that it has to be at least 6 months or earlier. So those people will be included in our clinical trial, and we are going to generate the data in those subjects.

Great. Thank you very much.

Thank you, Robert.

I'm sorry. Your next question is from Sean Lee with HC Wainwright.

Good morning, guys, and thanks for taking my questions.

Good morning.

My first question is on the supply agreement with Bharat. So does that cover potential commercial supply if your EUA for pediatric population is approved? How much supply would you have access to? Also in terms of the tech transfer to Jubilant, what's the progress on and expected timeline on that?

Yes. Upon the EUA, our supply agreement does include adequate doses, Sean, and our partner sales significantly increased that capacity this year, and also so they don't how many restrictions for export. So we'll get adequate supply whatever is needed post EUA in the U.S, and as far as technology transfer is concerned at Jubilant HollisterStier, the program is going well and we are anticipating completion of establishing that, including process validations in the first half of next year. So that we can switch the supply, and so initial part of the supply, we did see a product from Bharat Biotech, our partners, it will include U.S. packaging and the testing from US-released site which have been established.

Once the tech transfer is completed next year, would you need additional CMC validations from the FDA to show that the clinical batch and the commercial batch are the same?

Yeah, that's a normal part of the process. When you add additional sites, you always have to show the compatibility, and that will be the product process.

All right, and my next question is on the OCU410. So you showed some pretty good preclinical results from that program back in October, I was wondering what's the development timeline on that and when can we expect that to go into the clinic?

Is it related 410?

410, yes.

410, yes. That one, again, we have a roadmap from FDA. We have to follow the typical process as other gene therapy product like we did for 400. So the two steps which are really important to get to file IND for that. One is developing and manufacturing the product, and second part, is preclinical toxicology studies, as we agreed with FDA. Again, this is a big program. It goes to large populations, unlike 400, which targets rare diseases. Therefore, the workload of this is it'll take little longer from preclinical tox perspective, everything else, and therefore, we're simply working on it. Again, I would at least we have a roadmap from FDA, and we're going to execute it, and our goal is to abilities to put that in the clinic in next 12 to 18 months.

Great. That's all I have. Thanks for the additional clarity.

Thank you, Sean.

At this time, there are no additional questions. I would like to turn it back over to Ken for closing remarks.

All right. Thank you very much and thanks everybody for taking the time to join this call this morning. We look forward to providing further updates in the coming months, and we thank you for your time.

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