Status update

Dec 5, 2023

Greetings. Welcome to Ocuphire Pharma, Inc. corporate update call with CEO Dr. George Magrath. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Michael Wood of LifeSci Advisors. Thank you. You may begin. Thank you. Before we begin, we want to draw your attention to the legal disclosures regarding forward-looking statements. During the course of this conference call or webcast, the company will make forward-looking statements regarding future events, including statements about financial, business, clinical milestones, potential future milestone payments, and commercialization and plans or strategies anticipated in the remainder of 2023 and beyond. We encourage you to review the company's past and future filings with the SEC, which identify specific factors that may cause the actual results or events to differ materially from those described in the forward-looking statements. You can find the SEC filings in the EDGAR Database at sec.gov or on the investor relations section of Ocuphire's corporate website at ocuphire.com. Please note that any comments made on today's call may speak only as of today's date, December fifth, 2023, and may not be accurate at the time of any replay or transcript rereading. I'll now turn this call over to Dr. Magrath. Please go ahead. Thank you, Michael, for the introduction. Good morning, everyone, and thank you for joining. I'm very pleased to address you today as the recently appointed CEO of Ocuphire. It's with great excitement and a deep sense of responsibility that I step into this role. Also on the call today are Charlie Hoffman, our Senior Vice President of Corporate Development, and Ronald Patel, our Chief Business Officer. Both will be available to answer questions during the Q&A session. I have experience as both an eye care professional and in senior leadership roles within the healthcare industry. Before I discuss our plans at Ocuphire, let me spend a few minutes on my background. I received my medical degree from the Medical University of South Carolina, where I also completed a residency in ophthalmology. I then completed a fellowship at the Wills Eye Hospital in Philadelphia. I also have an MBA from The Citadel in Charleston, South Carolina, and a Master of Science in Applied Economics from Johns Hopkins University. I've worked in numerous corporate roles within the healthcare industry, including as an equity analyst and in drug development and in pharmaceutical services. Most recently, I had the privilege to serve as CEO of Lexitas Pharma Services, an ophthalmology contract research organization that provided clinical trial and medical strategy services to both large pharma and biotechs in ophthalmology. At Lexitas, I led a team that was responsible for growing annual revenues fourfold in two years. I managed the growth of the company from 35 employees to almost 200, broadened the number of business lines, and tripled the number of trials we had under management. 75% of those were in the retina space. I was successful in negotiating a favorable exit through an acquisition with QHP Capital, a transaction that realized significant returns for investors. I gave a lot of thought to my next career move and took the time to carefully evaluate a number of options since the transaction was completed. When the opportunity at Ocuphire was presented to me, it immediately stood out as a company I saw as already on a path to becoming one of the leaders in the ophthalmology space. There aren't too many small biotech companies that have succeeded in achieving FDA approval for their first NDA and also executed clinical trials with the efficiency that I witnessed at Ocuphire. I was very impressed by how Ryzumvi had advanced through both clinical development and the FDA approval process in a relatively short timeframe. I saw this as a demonstration of the capabilities of a very competent organization. Furthermore, the company's lead ophthalmic asset, APX3330, represents an even more exciting commercial opportunity. If approved, this is a drug that could truly change the treatment paradigm for diabetic retinopathy, which is the leading cause of blindness in working-age Americans. The other key factor for my decision to join Ocuphire is the existing management team. As investors, you will understand that the fortunes of every biotech company are determined to a large extent by the people who are running the business. I'm very pleased to be working with a group of very capable individuals who have proven themselves in the ability to execute on drug development and strategic licensing efficiently and effectively. In all, I see a fantastic opportunity to leverage my business and medical backgrounds to help build out an already exceptional organization that is committed to helping patients and creating value through innovation. Ocuphire is now at an exciting stage, and my immediate priority as CEO is to develop and implement a strategy to take the company to the next logical phase of maturation in order to maximize value for shareholders. We have the good fortune of owning two important ophthalmic assets, but we intend to focus our resources on the retina program, APX3330, since Ryzumvi is now in the very capable hands of our partners at Viatris. The FDA approval of Ryzumvi this past September was an important milestone for Ocuphire. We see this product and other phentolamine programs as being valuable assets and a source of future cash flow. As you know, the phentolamine products were licensed to Viatris under a global agreement signed with Ocuphire in 2022, and these programs are now essentially in their hands. We have a very strong relationship with Viatris and continue to work with them as they direct the clinical development for treatment of presbyopia and DME disorder. Now moving on to APX3330, which is clearly the future of Ocuphire. No one would disagree there's a vast opportunity for a drug that could effectively and safely treat non-proliferative diabetic retinopathy with the convenience of an oral tablet. The positive outcome of our recent end-of-phase II meeting means that Ocuphire has a clear path to develop a truly game-changing drug, and I'm excited by the opportunity to lead this effort. I know from my own practice about the challenges of treating diabetic retinopathy and the devastating impact that it can have on patients. It's the number one cause of blindness in working age adults and frequently affects people in their working years, particularly the thirties and forties. Patients who progress to advanced disease are left with a disability for the rest of their lives. I also know all too well that there are currently no suitable treatments being used in the segment of the population that has been diagnosed with more moderate disease. APX3330 offers the promise of an oral agent that can slow the progression of non-proliferative diabetic retinopathy to proliferative diabetic retinopathy. It has a unique mechanism of action that reduces both abnormal angiogenesis and inflammation. It does not deplete the VEGF, but instead it reduces VEGF to normal physiologic levels. If we can confirm the results from the Zeta-01 phase II study in our phase III program, and if APX3330 is subsequently approved, it would provide physicians with a valuable new preventive therapeutic option. It would potentially be the first product that could be widely used in a large number of patients who are earlier in the course of disease and who are still asymptomatic. This would offer a completely new paradigm and potentially reduce the number of patients who eventually progress to devastating complications and vision loss. The analogy I like to use is in cardiovascular disease, where it's a lot more effective to treat patients who have high blood pressure or high cholesterol, rather than waiting for someone to have one of the devastating downstream effects, such as a heart attack or stroke. The commercial opportunity in diabetic retinopathy is compelling. There are an estimated 8 million patients in the U.S. who have progressive disease that are asymptomatic. The anti-VEGF agents are efficacious, but the majority of moderate to severe patients with DR are not treated with anti-VEGF due to the injection burden and the lack of benefit on immediate visual acuity. As a result, the standard of care is watch and wait. Physicians do not have a non-invasive option. Our game plan over the next 12 months is to prepare for and initiate registrational phase III trials to support an NDA for APX3330 in DR. The team here at Ocuphire recently has held a successful end-of-phase II meeting with the FDA, during which they reached agreement on the primary endpoint for the phase III, which will be a three-step worsening on a binocular diabetic retinopathy severity scale. As a next step, we plan to submit Special Protocol Assessment to formalize our agreement with the FDA on the clinical trial protocol and statistical analysis plan for the phase III program. This will ensure that we are in sync with the agency on the key elements of the trial, and we believe it will reduce uncertainty and de-risk the regulatory aspects of the program. We hope to have the SPA in place early next year, and we'll share specifics on the study design parameters and timing once agreed upon with the FDA. Our goal is to begin the clinical study in the second half of 2024. The other important area I intend to focus on in the near term is management. As I said, there's an existing team here that is very capable, but there are a few key positions that we need to fill. Very recently, we hired Joe Schachle as Chief Operating Officer, who is an industry veteran with extensive operational and transactional experience. We also plan to hire a Chief Medical Officer and a Chief Financial Officer to round out the skill set of our senior team. Ocuphire has a strong balance sheet. We had just over $42 million in cash on hand and no debt at September 30th and received a $10 million milestone payment from Viatris in October. Based on our current projections, we estimate that this will give us runway into 2025. We are continuing to look at all options to finance the next stage of development of 3330. We are very active on the business development front as well. We have ongoing dialogue with a number of large pharma companies who are interested in APX3330 for all the reasons I mentioned above. In conclusion, I'm excited about the future of Ocuphire and my new role here. We are dedicated to developing pharmaceutical products that are designed to improve standard of care in ophthalmology. The planned advancement of APX3330 into registrational trial marks an exciting new chapter. Our strategy is rooted in rigorous scientific research and deep understanding of patient needs. We are building a team with the capabilities to execute and create value. I look forward to meeting many of you in person as we continue to engage with the investment community over the coming weeks and months. At this point, I will open it up to questions. Operator. Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Kristin Kleczka with Cantor Fitzgerald. Please proceed. Hi, everyone. Thanks for taking my questions. Dr. Magrath, congrats on your appointment. Looking forward to working with you more closely now. The first question I had was around APX3330. It's interesting because we've seen a lot of examples in the ophthalmology space where, in some instances, patients are a lot more reluctant to get injections if they're not seeing a benefit right away. In some situations, particular dry AMD, we're seeing that that's not necessarily the case. Wanted to see if you could talk a little bit more about your market research there, and particularly how much the injection burden is the factor for patients not taking these therapies, and also openness to taking an oral therapy, assuming that the safety profile remains robust. Thank you. Thanks for the question. It's a great question. As you correctly pointed out, for people with advanced non-proliferative diabetic retinopathy, there is Eylea or Lucentis or others that may be used as intravitreal injections. However, the uptake has not been great because these patients are asymptomatic. It goes back to the analogy I gave about treating high blood pressure. People who typically don't know they have it until they go to their doctor and get treated, and that's much better than waiting until you have one of the side effects of it, like a heart attack or stroke. We think that oral will be well-tolerated for this. I think that the reason for that is because of the stage of these patients in life. In dry AMD, and in geographic atrophy in particular, where we've seen good uptake in what is a disease where you don't see an immediate sort of dramatic impact like you do in wet AMD or in diabetic macular edema. These patients are older. They do, at baseline, have geographic atrophy. They do have areas where their vision is blurred out. They understand, because they have started to have the side effects of the progressive vision loss. Those patients are honestly pretty terrified. They are patients that have already started to lose vision, and they don't want it to continue. They get these little spots of blurred. In that disease, what happens is the spots of blur are in the center vision gradually get bigger until it's the entire area. They actually see something. In diabetic retinopathy, you don't see anything. Those patients are walking around with typically very good vision. They don't realize they really have the disease, until they're told they have it. The reason why an oral is appropriate here and not an intravitreal injection like they do for geographic atrophy or for wet AMD or for DME or for PDR, is because when you are asymptomatic, it is a way bigger issue to convince someone to let you poke a needle in their eye every 1-2 months for the rest of their life. Like I said, at their stage of life, typically these are working-age people. They're typically 20s, 30s, 40s years old. They have families, they have jobs, and it's really a big ask for someone who's asymptomatic to go to the eye doctor every 1-2 months to get a needle poked in their eyes. Taking a pill every day is very acceptable for this patient population. Typically they are on multiple therapies for the other potential complications of diabetes. Our market research is showing that this should be well-received by the community, and that this is the correct indication for an oral. I would point you to a couple of things for this. Number 1 is look at the uptake of AREDS vitamins. AREDS vitamins are used for people who have intermediate dry AMD. These are patients who are asymptomatic as well, and this is an oral tablet that's given to these patients. It is the standard of care in all patients with intermediate dry AMD get put on AREDS. It's universally used for these patients, well-tolerated, and nobody even questions it. I can't imagine that in the future it's going to be, whether it's APX or something else, we're going to have something similar for diabetic retinopathy, where we can treat it with an oral that is generally accepted by the patient community. The second thing I'd point you to is, we were at the Ophthalmology Innovation Source meeting, the OIS meeting this past weekend, in San Diego, and they held their first section on oral therapies in ophthalmology, and they had a number of companies that presented. I can tell you, and it's available. You can see the summit through their website. There was a lot of excitement from the community about different oral therapies for DR in particular and other indications in ophthalmology for exactly the reasons that we mentioned. I hope that answers your question. Thank you. It's a really good question. Yeah, thanks. I appreciate that. Thinking about the commercial opportunity and the comments you just made, you mentioned 8 million patients with advanced disease. Wondering of that segment, if you think there's an initial patient profile that you think is most likely to be on this therapy initially, and how expansion might look after that? Yeah, it's a good question. The way I'm envisioning this happening, so all diabetics, it's part of the HHS and the CMS initiatives for quality in healthcare, in primary care, is that all diabetics should be, are recommended to get a yearly eye exam, right? It's just like you check your kidneys and stuff like that, too. These patients are getting eye exams, and so I think that it's pretty straightforward at an eye exam to diagnose mild, moderate, or severe NPDR. I envision that these patients are going to be identified. I think that it will become sort of the standard of care that when a patient has mild, moderate, or severe NPDR, that they are preventatively treated, once we have good products out there. I think that it's up in the air whether or not it will be prescribed by the ophthalmologist, the optometrist, the primary care doctors, the endocrinologist, or somewhere all of the above. I do think that the market uptake will be significant. Really one of the important aspects about an oral therapy for this is that truly you are treating the eyes, and that is the indication we're after. Is it possible that it might help with diabetic-mediated diseases elsewhere in the body at the same time? Is there a potential for a systemic benefit as well? We don't know that yet, right? We don't know that in our program. I think that that's an advantage of having an oral over an intravitreal injection or a topical. The other thing I would stress about the commercial uptake is really the tolerability and safety profile. That's going to be super important. So far, ours has been favorable. I think part of the reason that it's favorable is because, as you guys know, the Ref-1 modulation that APX does actually reduces VEGF levels back to a physiologic level. It doesn't completely deplete them like you would get with an Eylea or an Avastin or the others, Lucentis, the others. I think that that's part of the reason why we do have a favorable safety and tolerability profile is because we aren't completely decimating the systemic VEGF levels. We're actually reducing them to physiologic levels. There's a real mechanistic advantage to the APX modulation of angiogenesis that's quite elegant and quite favorable for patients. Thanks. If I could squeeze in just one last question. We've seen in this space there's obviously been a lot of excitement around GLP-1s and obesity and diabetes. I'm wondering, as you have these conversations with pharma and more companies are becoming engaged in that space, do you think it's more appropriate to target a partner, potentially, if you pursue that route, that has expertise in diabetes or ophthalmology? Or perhaps, you're open to speaking with both at this time. Thank you again. Boy, you're hitting on a key strategic point that we are very thoroughly evaluating right now. I think that's incredibly insightful, right? Because diabetes is a metabolic disease, and we are treating a systemic manifestation. We are treating the eye, but there are also systemic ramifications of Ref-1 in the body. We are very closely looking at that right now. We don't know yet, right? I think that's the answer. We're in those discussions, we're having those discussions, and hopefully we'll be able to guide you guys in the future on our appropriateness as a metabolic treatment. It's a very exciting time in metabolic disease right now, and great things are happening for patients. It's something we're evaluating very closely. Great. Thanks again. Our next question. Yeah. Sorry. This is from John Newman with Canaccord Genuity. Please proceed. Hi there. Good morning. Thanks for hosting this call, and thanks for taking my question. I just had a couple, mainly around the potential path forward and design for the phase III study for APX3330. What I'm curious about is, I know that the study design is still being debated and planned, but would you expect that you would be looking at the same endpoint at 24 weeks as you did in the phase II? I'm also curious. What are some of the key aspects that you're looking to clarify or finalize in the SPA? I'm just wondering, for example, will you be able to look at three-step worsening on a monocular basis in addition to binocular? Thanks. John, it's a great question. Thank you for that. I'll answer the first part, and then I'll let Ronald take the second part. I'll answer the part around the scales and the endpoint that we are proposing for the phase III, and that has been agreed with the FDA in the phase II meeting. I'll let Ronald talk about the SPA itself and some of the aspects of that we're working through. For the aspect of the endpoints that you mentioned. We will be looking at a 48-week endpoint. We're going to be looking at a 1-year endpoint, which is the appropriate thing to do in diabetic eye disease because the event rates will be at an appropriate size for a clinical trial at that point, right? What we've agreed upon with the FDA, and it's quite interesting. I mentioned the OIS summit this weekend, and it really was very interesting to hear the panelists talk there about how these endpoints are evolving in diabetic retinopathy because there is a move towards looking at patients who are truly worsening. If you look at some of the prior studies that were done with the intravitreal injections, they came at the approach of improving very advanced disease, right? They were looking at two-step improvement on a monocular DRSS. We're coming at it from the other angle, right? Where we're trying to prevent progression in patients that are still in the asymptomatic portion of their disease and haven't gotten to that level yet. When you do that, what you care about is not whether or not you improve what they have, but whether or not you prevent them from moving on to a three-step worsening, which gives you the logical step from that is if they're worsening about three steps, then they're going to have an event like PDR, and then they're going to have vision loss. Actually, what we saw in the phase II data when we looked at the binocular three-step worsening was exactly that. We were looking at trends towards three-step worsening being less in the APX arm. 14% in the placebo arm, 4% in the APX arm. We were looking at the PDR rates being lower, trending lower in the APX arm. We were looking at vision loss trending lower in the APX arm. It makes a real logical kind of walk towards something that the patients really care about, right? Which is, am I going to lose vision? I think that it's a great endpoint because it truly does identify patients that are at risk for the clinically meaningful endpoint, which is vision loss. It's a very objective endpoint that's done on photographs. The FDA is advantageous towards it at the end of phase II meetings. This is a great step forward for ophthalmology, in general, to really look at diabetic retinopathy in this manner. I think this is a wonderful thing. You can look at it in a monocular way, but when you're treating systemically, it makes a lot more sense to look at both eyes. That's what we're going to focus in on, is both eyes. To answer the last part of your question, which was about monocular. I think what we need to do is, the phase II study wasn't powered for a three-step worsening, or for PDR or for vision loss. In the phase III, when we power it for that, if we can replicate those, I think we have a very meaningful story for not just the FDA, but also for patients. Ronald, I'll turn it over to you to talk about the SPA little bit. Yeah. Sure. Thanks, John. I just want to remind that we'd already agreed on the primary endpoint for our pivotal phase III trials, which is a three-step worsening on the binocular DRSS scale. We will need the standard two pivotal placebo-controlled phase III trials, with a one-year efficacy endpoint. The SPA is really to solidify the exact language in the protocol and agree on the statistical analysis plan. We're collaborating with the FDA on how to handle certain aspects of the statistical analysis plan, in particular, the hierarchy of the secondary endpoints, the statistical powering, exact number of patients, with the ultimate goal of having the broadest and the best label possible. That's really the purpose of the SPA, John. Okay, great. Thank you. Yeah. No, thank you, John. As a reminder to star 1 on your telephone keypad if you would like to ask a question. We will pause for a brief moment for any final questions. There are no further questions at this time. I would like to turn the conference back over to management for closing comments. I would like to thank everybody for joining us today, and we look forward to interacting with you guys in the future and being able to provide more updates as we progress pretty rapidly through the development program here. Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.