Ocugen, Inc. (OCGN) Q1 2022 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 and CEO and Co-Founder, Dr. Shankar Musunuri, who will provide a business update and our Chief Accounting Officer and Senior Vice President of Finance, Jessica Crespo, who will provide a financial update. Earlier this morning, we issued a press release, including a business update and first-quarter financial results for 2022. 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 slides will be available on the Investors' 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 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 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 Covaxin in the U.S., Canada, or Mexico. 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 as well as the risk factors included in our filings with the SEC. Finally, our 10-Q will be filed soon after today's call. I will now turn the call over to Ocugen's Chairman, CEO, and Co-Founder, Dr. Shankar Musunuri.

Thank you, Ken. Good morning everyone and thank you for joining. We hope you and your families are safe and well. We're here today to review for you the most recent activities and events that took place over the first quarter of 2022 along with providing the financial update. Ocugen's value proposition of courageous innovation comes from the diversity within our pipeline. It brings multitude of opportunities to develop new medicines in disease stages where options are either limited or non-existent. In the long run, Ocugen's success is connected to our ability to bring innovative and meaningful medicines that generate significant value for patients and society. We are being forward-looking in our approaches with Covaxin, using this particular time to enhance our clinical development program. At the World Vaccine Congress in late April, speakers all agree that public health strategies need to expand and more vaccine options are needed. And as typical as the pandemic, the science has changed the landscape again. All of this still needs demand that our nation needs vaccines that go beyond the spike protein and attack the other targets such as the m-protein with the long-term durability. Durability and a broader immune response may be important for realizing the bolster strategy for annual vaccinations. People want options for vaccinating themselves or their children, including vaccines built on a traditional platform. We clearly have a role to play, and we are pressing forward to fulfill our commitment. And our founding focus, blindness diseases is becoming clearer, especially with our vital network and Retinitis Pigmentosa, a disease for which there are no medicines to block disease progression, no cures and limited treatment to help manage someone's tragic journey that leads to blindness. The Ocugen team continues to charge ahead and over the course of the past quarter, we are seeing great progress mixed in with the challenges that are characteristic of the life sciences business. I'm especially confident that the team is well situated to advance our efforts. This slide contains important opportunities we see ahead of Covaxin. But before I get to those opportunities, I'm going to address how we are working through some obvious headwinds. The World Health Organization announced it wanted our partner, Bharat Biotech, to address deficiencies found in the manufacturing facility used for Covaxin, which led us to temporarily pause the dosing of subjects in our Phase 2/3 study, OCU-002. The FDA subsequently placed a study on clinical hold. Under the backdrop, there are some important facts to share. First, the WHO affirmed that the available data indicate Covaxin is effective and no safety concerns exist. Second, we have provided information to the FDA and are working toward resolving this issue so that we can resume the clinical trial. Even so, we have not stopped finding opportunities to commercialize Covaxin, and we recently added Mexico as a part of what is known as the Ocugen territory. This was made possible because of the strong relationship we have with Bharat Biotech, who shares our objectives with the Mexican government to fight COVID-19. With this contract amendment, we expanded our commercial footprint to now cover all of the North America. Covaxin already has Emergency Use Authorization in Mexico for adults and application for pediatric use, 2 to 18 age group is under review. We are currently working on commercializing the vaccine in Mexico. Now, let's turn to our modifier gene therapy program. Central to Ocugen's research and development are inherited retinal diseases for which there are no options and only one gene therapy modality exists. Our modifier gene therapy, unlike traditional gene therapy, as shown in preclinical models to effect the regulators of genes called nuclear hormone receptors, or NHRs. Activating these NHRs modulates gene activity and maintains homeostasis. When gene networks are not functioning properly, this unbalanced state can lead to disease. For Ocugen, that's a family of inherited retinal diseases that cause blindness. Modifier gene therapies when influencing NHRs can resolve disease progression, effect disease onset or how disease present in the body like blindness diseases associated with NR2E3, rhodopsin or mutations -- other mutations. Our Phase 1/2 safety and efficacy clinical trial for OCU400, targeting Retinitis Pigmentosa associated with gene mutations, NR2E3 and rhodopsin is ongoing. I'm very pleased to say, that we dosed our second patient this week. This is a significant accomplishment in an innovative therapeutic category because for the first time, we're evaluating this modifier gene therapy concept with Rhodopsin mutation in the ophthalmology disease space. By the end of the study, we will collect data from 18 patients, which will constitute three cohorts of three different doses before moving on to a Phase 3 clinical trial. If successful, this therapy has potential to treat many mutations under RP. Currently, RP has about 150 mutations, about 2 million people globally struggle with these binary diseases. Additionally, no therapies exist today to rescue them from disease progression. So our sense of urgency for rescuing one site is critical. Our next candidate, OCU410, has IND-enabling studies underway to support a future Phase 1/2 clinical trial, targeting dry age-related macular degeneration. Finally, our novel biologic, OCU200, a transferrin-tumstatin infusion protein that has the potential to help those with diabetic macular edema, diabetic retinopathy and wet age-related macular degeneration is progressing well with IND-enabling activities to support a future Phase 1/2 clinical trial. We hope to move both OCU410 and OCU200 to clinic next year. In summary, despite the headwinds, we have a plan to move quickly on our Covaxin clinical trials that are required for a BLA submission. We will continue to provide updates on these clinical trials. What's important to remember is that the strength of our pipeline is found in the diverse innovation we're exploring, especially in our modifier gene therapy platform and our novel biologic. Today, we are looking for new therapies such as OCU400, 410 and 200 against a multitude of blindness diseases, but we also have our sights set on other disease states that could benefit from this modality. Overall, we have made significant progress this quarter, and we remain confident in the long-term opportunities and growth that we believe our pipeline will unlock for our patients and shareholders. I'm very proud of our team that is so dedicated with the focus on patients. I will now turn the call over to Jess to provide our first quarter 2022 financial update. Jess?

Thank you, Shankar, and good morning, everyone. I will now provide an overview of our key financial results for the first quarter of 2022. Our research and development expenses for the three months ended March 31, 2022, were $7.9 million, compared to $2.9 million for the quarter ended March 31, 2021. The increase is attributed to the continued investment in our development activities for Covaxin and our ophthalmology portfolio, which includes the initiation of clinical trials as well as an increase in R&D headcount to support these programs. General and administrative expenses for the three months ended March 31, 2022, were $10.1 million, compared to $4.2 million for the three months ended March 31, 2021. The increase in general and administrative expenses related to increased infrastructure costs to support the growth of our organization. Net loss was approximately $18 million or $0.09 net loss per share for the quarter ended March 31, 2022, compared to a net loss of approximately $7 million or $0.04 net loss per share for the same quarter of 2021. Our cash, cash equivalents and restricted cash totaled $129.9 million as of March 31, 2022 compared to $95.1 million as of year-end December 31 2021. That concludes my update. Back to you Ken.

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

Thank you. [Operator instructions] Our first question comes from the line of Zegbeh Jallah from ROTH Capital Partners. Your line is open.

Good morning, and thanks for taking my questions and congrats on the progress. First question for me is just about Covaxin. Any updates on the conversation around access in Mexico? And then, have those conversations been affected by the WHO finding?

So your question Zegbeh, is there an impact on Mexico? The WHO findings our partners as they have announced, they're working on corrective actions and following up on efficiency upgrades whatever was acquired and they're going to certainly work on fixing them. And in the interim, obviously, we're in parallel discussions with Mexican government. We have just initiated and -- for commercializing the vaccine there. So, it's going to take some time, and we are hopeful by the time, we are done and we have some positive news on the Mexican side and commercialization, we believe that partners are going to come through and they're going to support us. And as WHO has stated, as I mentioned in my conversations before WHO still state this vaccine is safe and effective and there's no issues related to safety of the vaccine.

Thanks, Shankar. And then the next one is just about OCU400. You mentioned the second patient had been dosed. And so I just want to know, if the second patient is also being dosed as the same dose as the first patient, or are you moving up in dose?

Yeah. That's a great news this week. We dosed the second patient, and this is a process with the gene therapy clinical trial. I mean obviously we have to finish three patients per dose. They are low, mid and high. And once we have done with the third patient in the first cohort then as usual you have to have DSMB. Our safety board has to meet and they have to look at the data, and they have to do again in order to get to the next dose. So, we are getting a lot of interest in this clinical trial. As you know there are many patients that struggle with these diseases, and we're really pleased with the progress to date.

Thanks. And then, the last one here has about OCU410 and 200. Do you plan to have the R&D submitted next year and have the programs in the clinic, or are you anticipating just having INDs submitted next year? And then, I suppose potentially having all three programs in the clinic by 2024 do you really anticipate having three ophthalmology programs in the clinic by the end of 2023?

We are planning to have all three ophthalmology programs in the clinic next year.

Perfect. Thank you. Congrats on recycling.

Yeah. Thanks, Zegbeh. Thank you.

Our next question comes from the line of Daniel Kathalynas [ph] from Chardan. Your line is open.

Hi. Good morning. Thank you for taking the questions, and congrats on the progress. You mentioned for Covaxin that you're working on finalizing additional studies required for the BLA. So in addition to the immune bridging study, what are the ones do you think will be required?

So typically, even though, our partners have generated significant data set elsewhere US according to FDA requires safety data in US demographic. That's typical and so we anticipate, we have to conduct those studies. Currently, we're trying to finalize the protocols of FDA. In addition to that, as the market is going to shift toward – that's what everybody is anticipating the booster doses. So we are going to evaluate in the current study are there any gaps related to booster dose, and we're going to also introduce that evaluation in the upcoming studies as a safety trial, within that or separating that out. So our goal is, whatever is required safety is a must in the US demographic. We are committed to conducting that. So we're also evaluating booster strategy, because that's what it's going to be in the future, as we are anticipating annual boosters for the next few years to controlling COVID. So we will be conducting those studies too, after we get an agreement with FDA.

Okay. Got it. Thank you. And then a quick one on OCU400, you mentioned that, there's high interest in the study. So in terms of enrollment, do you have patients lined up already for the second and third cohorts and it's just a matter of waiting for DSMB reviews in between the cohorts?

Yeah. Daniel, yeah, there is a lot of interest. We have over five sites actually were lined up within the US in different geographies, so that it's convenient for patients. I mean, obviously, the process takes a little time, because after each cohort even in the second cohort too, after sentinel patient you have to wait. There is a certain period two to four weeks. And typically, all gene therapy companies go through this and they need to make sure everything is okay. You got the DSMB, then you go to second and third patients, and you have to follow the process. Even though, we have lot of interest many of these sites the investigators see these patients. We have to wait for the process to go through, but we are confident. As we announced before, we will complete our enrollment this year. That's the plan.

Okay. Thank you, and congrats, again.

Thank you. Operator?

[Operator Instructions] Our next question comes from the line of Swayampakula Ramakanth from H.C. Wainwright. Your line is open.

Yeah. This is RK from H.C. Wainwright. Good morning Shankar and Jessica. Thanks for taking the questions. On the OCU400, just to make sure I understand it correctly, so DSMB looks are done only after the first patient in each cohort. So, but not between the second and third correct? So you basically can recruit patient number two and patient number three within each cohort right away without waiting for any additional looks correct?

That's accurate, yes.

Okay.

And then after that cohort is done, again, you have to wait for the second sentinel then two three yes.

Okay. And then for the study to complete, what's the amount of time you'll be following up each cohort? So by the time the study is done, would you have close to a year's worth of data from each cohort?

That's right R.K. That's how the study is designed. It's on clinicaltrials.gov now. So we had to follow for one-year duration, each patient, and we'll be following up on the safety for the three months. In addition to that, we have multiple observation endpoints for efficacy, we will be following up on the patients, and we'll look probably an update to the market. It's one-year duration.

Okay. So -- yes, fantastic. So by the time the study is done, you will have a good package both on the safety and efficacy even though it's only a Phase 1 study.

Yes. It is actually Phase 1/2, because that's our gene therapy.

Yes. Okay. Then switching topics on to Covaxin. What's the situation in Canada? So where exactly is the application at this point? Do they also have questions on what WHO is talking about in terms of manufacturing? And is that causing any delays in their review?

So, R.K., the Canadian NDS, the New Drug Submission review is ongoing. And I mean as we get questions, we're addressing them, and I don't have a definitive timeline on that. I mean, obviously, this is a new drug submission process like BLA in the U.S. They don't have emergency observation process anymore any longer. So, currently, we are responding to them as we get questions. So, if there is any changes to that or anything else we'll be updating the market.

Very good. Thanks for taking my questions.

Thank you.

Thank you.

[Operator instructions] We have a question from Imran Khan [ph] from Health Net Solutions. Your line is open.

Good morning all. Shankar, you just mentioned that in Canada they no longer have an EUA process, but from my best of my understanding, the application was submitted in time to be considered under the EUA. Could you comment on that please?

No. Actually last year when we submitted the application, Canada was transitioning into new drug submission process. We actually submitted it at the edge of that timeline sometime, I think, at the end of summer and beginning of fall. And so what they did, they made us actually do the full filing and transition into NDS.

So it is correct to assume that it is not being considered for EUA in Canada.

Yes. It's not considered for EUA in Canada. You're right.

Thank you so much.

You’re welcome.

Thank you.

Thank you.

There are no further questions at this time. Now I'll turn the call back over to Ken Inchausti.

Thank you, and thank you to everyone who joined us for this call today. We look forward to providing further updates to you in the coming months and we hope you have a great day. Thank you.

Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.