I'm one of the senior analysts covering biotech at Baird, and I'm pleased to have with us the team from Oculis, including Dr. Riad Sherif, CEO.
Thank you. Thank you for inviting us.
Maybe if you could kick us off, Riad, with just a brief company overview of Oculis for those that are less familiar.
Yes. Oculis is a biopharma company focusing on ophthalmology and neuro-ophthalmology with three clinical-stage assets: OCS-01, which is in DME in a phase three; Licaminlimab (OCS-02), which is moving to phase two, three as well in inflammation in dry eye with a very unique approach in terms of developing it with the genotype-based development; and the third asset is OCS-05, Privosegtor, in neuroinflammation and in an indication which is called acute optic neuritis.
Wonderful. Let's start with OCS-01. An eye drop to treat DME would really, I think, be considered the holy grail, right? I mean, I think patients would love this, and that's really eluded the field perhaps until now. Talk a little bit about your Optireach technology and how that allows your eye drop, OCS-01, to get to the back of the eye.
Yeah. Optireach technology is a technology which was developed by the founders of Oculis. It's really what it allows. It allows a product to be delivered as an eye drop and to reach retina and to be a treatment. It's the first time ever, is the first and only product in phase three in DME. The product went into four clinical trials consistently showing positive results in terms of function with BCVA and in terms of anatomy structure with CST.
Your two Phase 3 studies are fully enrolled, Diamond 1, Diamond 2.
Let's start with the Diamond stage one results. Kind of walk us through what those data showed and what gives you confidence in the ongoing phase three.
Yes. Diamond 1 and 2 are fully enrolled. We have more than 800 patients in total, 400 each, and we expect readout in Q2 next year. What we saw in stage one Diamond is consistent with the past trials, positive result in BCVA where we had a 7.26 letter gain at week 12, which is actually similar to what we see at the same time point with anti-VEGF. We saw in terms of gainers, more than 27% of patients who gained more than 15 letters, which is also similar to what we see with anti-VEGF and actually materially more vis-à-vis what we see with steroid implant. We saw also a reduction of CST. In terms of safety, we didn't see anything which was unexpected for the safety. Extremely encouraged by the data.
The confidence also is coming from the fact that the same API is approved in DME in an implant. Therefore, this is in terms of biology, this biology works in DME. I would say the difference here is delivering the product as an eye drop and therefore really being able to reach a much bigger population in terms of early and treating patients early at the diagnostic where we will be literally the only player. Which represents, in fact, if you take U.S. data, 60% of the diagnosed patients in the U.S. are not treated yet. We can treat them like the day of the diagnostic, which is a material change vis-à-vis what we have today. The second segment we would like to address is the segment where patients received anti-VEGF and didn't respond appropriately to anti-VEGF, and we are speaking about 40% of the current pool.
When you do the total between the two pools, early plus inadequate response, we are talking about the population in the U.S. of 1.3 million patients who are diagnosed and not treated. It's material. It's actually more than the double. It's almost three times the pool of patients who are treated. This product can create a market which is bigger than the current market.
To go back to the stage one data, you touched on, you know, no unexpected safety came up, but kind of one known side effect of steroids is the increase in intraocular pressure. Can you comment on what you saw there and the outcomes for those patients?
Yes, absolutely. What we saw in stage one is around 22% of patients had an increase of IOP, which is expected. In fact, we've seen in general one-third. This is what is known, is well documented with steroid implant. It's one-third. In our trial, we saw 22%. In 22%, half of them, or 11% of the total in the total study, received an IOP lowering. No patients stopped the trial because of IOP. After the end of the treatment, the IOP went back to baseline. This is a very well-known side effect. We know how to measure it. We can even do it at home. We know how to treat it. The advantage, really, what our product brings vis-à-vis others is in the worst-case scenario, you can always stop, and it comes back to the baseline.
One of the differences between the stage one and the stage two that's ongoing now is just the longer endpoint in stage two.
Correct.
What gives you confidence that the effect you're seeing at stage one will be durable in the phase two, stage two?
Yeah, because we saw the two points. One, because we know with this biology in other diseases, if you continue to give the drug, then you are able to reduce inflammation and therefore treat retina. The second that we saw it with, for example, Ozurdex, which is a dexamethasone implant. Ozurdex was given 39 months, and actually, we saw the improvement didn't go down. Actually, it continued to improve marginally, but it continued to improve. This is what we see also with Ontivygef. We see that 70% of the gains are made the first three months. After it continued to increase, but it's marginal. This is what we expect.
Great. In the Diamond studies, when you talked to the FDA when designing the study, they agreed to a placebo control.
Yes.
Even though there are existing treatments for DME, can you talk about how those conversations went? Since you're comparing against placebo, what are the Diamond studies powered to show?
Basically, in fact, because we don't have a benchmark in terms of topical product, FDA wanted us to compare with placebo. In fact, FDA prefers superiority trials versus non-inferiority trials. In our case, we have very clear rescue criteria. Therefore, they really pushed us actually to compare with placebo. We even made the proposals to compare with Ozurdex like the same API, and they say no, because for masking also, it creates a challenge. For them, it's much better to have a full double-masked placebo-controlled trial and very clear rescue criteria and superiority trial. This is what we are doing. In terms of now powering, the study is well-powered. It's extremely well-powered, actually. The minimum is based on three letters. We showed more is based on three letters. We are confident.
Great. With patients needing to take eye drops, I think it's six times a day in the induction phase, and then it moves to three times a day after that. Has this been a problem for compliance in the trial? Would you foresee this being a problem in the real world?
Yeah. Basically, we measure compliance in a phase two, and we measure very seriously compliance in a phase two. It was 85%. Actually, compliance is pretty good, and the results were very good. Therefore, our expectation is this will be the same. We really kept exactly the same regimen, the same educational material, and so on. In terms of regimen, with six times a day for the induction phase for the beginning of the treatment, it's very simple because what we say, we say take the first eye drop in the morning, the last eye drop before going to bed, and then for the four others, just split them in the day. That's it. This is what happened, and this brought excellent results. We are very confident about it, and we continue to monitor. We continue to educate, and we don't see a challenge.
When we ask investigators, investigators are really not raising this as a challenge and saying, in fact, there are even investigators saying because they don't want to lose vision, we are worried that they are hyper-compliant.
You would love to avoid a needle in the eye, right?
Exactly. Therefore, yeah, it's not an issue in this case.
I know you talked about previously the two different patient segments that you might look at, the kind of earlier stage upon diagnosis and then those kind of poor responders. Where do you see this uptake initially, and where would you kind of focus the efforts initially?
Because our clinical trials are all commerce and we didn't stratify, we ended up with a population which is 60% naive and 40% already treated. This came naturally without us forcing. Therefore, it means that more or less we will end up in the same population in terms of clinical practice. Most probably, patients who were treated and not responding to anti-VEGF will be easier because they are at the retina office and losing vision. The rest will be naive patients coming step by step. I would say the effort will be really based on this is an efficacious, safe, versatile product. Use it to start the treatment as soon as you see the disease or for your patients who are not responding.
Will there be any issue? The study is only as a monotherapy, right? It's not in combination with anti-VEGF.
Would that be a commercial issue to get reimbursed, do you think?
It is not a commercial issue because in terms of label, what we expect as a label based on conversation with the FDA is DME treatment without any limitation. This is the first point. The second point, the retina community knows that DME, not AMD, but DME is really in terms of pathophysiology driven by neovascularization and driven by inflammation. They know that anti-VEGF will not address inflammation. Therefore, there is a real need. It's really based on the science of the disease and the pathophysiology of the disease.
Understandable. Is Ozurdex used at all in combination? Obviously, that would be two intravitreal injections of different.
There are studies on combination which really showed step-up improvement in terms of mean BCVA gains and gainers, like patients who gain more than 15 letters. It is not used a lot in clinical practice because it just creates more side effects because you are in the same eye having an implant.
In terms of the IOP elevations, what's the retina physician's level of comfort with managing that versus if this were to move into a general ophthalmologist, what's their level of comfort with managing that profile?
Actually, surprisingly, when you talk to them, they are very comfortable. They don't see this as a challenge. They say, yes, we know. We can measure it. They can do the measurement at home. They can do it at the optometrist. We know what to give. Like this is very well. Glaucoma is not complicated to treat. This is not the glaucoma. This is just IOP increase.
Maybe let's shift gears now to Privosegtor. You had some really exciting data at the beginning of this year. Maybe before we get into the data, just talk about the drug's unique mechanism of action and its neuroprotective abilities.
Yeah. This drug activity is well characterized. The product was assessed in three animal models. Each time following an injury, it can be mechanistic like glaucoma, or it can be inflammation like acute optic neuritis or MS. Consistently, what we measured, we measured cell survival. In our case, retinal ganglion cell survival, axonal survival. In MS, we measured function. Consistently, this product is able to protect the neuron or protect the survival of the neuron during an injury, inflammation, immunological, or mechanistic. How it works, it is an activator. It is a peptoid activator. It activates a protein which is expressed in the neuron, which is called SGK2, which activates FOXO3, which promotes survival of the neuron.
OK. The data that you showed at the beginning of this year from the Acuity Study in acute optic neuritis, walk us through what those data showed in terms of function and anatomy.
Yeah. So basically, we measured three types of data. First one, which is really important, which is, in fact, FDA regulatory endpoint, which is LCVA. LCVA at the primary endpoint, at the endpoint which was at month three, we gained 18 letters. 18 letters means 15 letters is the double. 18 letters is more than doubling the vision. Remember, we are talking about patients who are young patients. Average age was 32. It's really young patients. The second measurement we did is the thickness of the retina. Here is the reverse of what we try to have in DME or what AMD, where we try to reduce the thickness. Here, we want to keep the thickness because if we lose thickness, it means we are losing ganglion cells.
Here, we were able to show that there is a very significant preservation of GCIPL layer, which is the ganglion cell layer into the retina. The third in structure as well was RNFL, which is the axonal layer of the retina. The third measurement we did, which is a surrogate biomarker for functional improvement, is NFL, neurofilament, where we see that the product works extremely fast by protecting axons and neurons. Consistently, regardless of how you see it, everything is going toward the same direction. Everything is with a very strong drug effect. Extremely happy with the data. Of course, the product was safe, which is important. It was the first in patients, so it was really important as well. Now we are looking forward to meet with FDA, discuss their registration plan.
Great. You've also presented subsequent data on neurofilament concentration. What does a reduced neurofilament concentration say about Privosegtor?
It says that it's really back to its mode of action and its activity. It says that the Privosegtor is protecting neurons and axons from being damaged because neurofilaments are released in the blood and the CSF when axon is damaged.
I was having a conversation actually about this drug recently, and somebody kind of talked to me about the risk of cancer for this sort of mode of action. What's your thoughts on the safety risks of this mode of action?
We don't have a risk of cancer with this mode of action because it's very focused on the neuron. It's a short period of treatment. It's very focused on the neuron. We didn't see anything about this. Yeah.
OK. You're planning to have a discussion about the registrational trial and AON with the FDA this quarter, I believe.
Yes.
What do you hope to learn from that meeting?
It is really to clarify next steps in terms of what the FDA needs to see to be able for us to go to phase three. Therefore, we have a concept sheet in mind. We have a plan to propose to the FDA, and our aim, of course, is to go as fast as possible to a phase three with a clear dose, clear protocol, clear endpoint, timing for the endpoint, and so on.
OK. What’s your initial thinking on what that registrational trial could look like?
I mean, our aim is really to repeat what we did with the Acuity Trial, which is very close to this trial. Therefore, in this trial, we compared Privosegtor plus standard of care, which is steroids to reduce inflammation, versus placebo plus standard of care. We would like to have the same. We hope to have the same dose, 3 milligrams. We had five injections, daily injections. We really want to repeat, actually. We see a very low risk because the data are so good, and we want just to repeat what we did.
Acute optic neuritis might be a little unfamiliar to folks. Can you kind of talk about what the disease is and how many patients?
Yeah. The disease in 2/3 of acute optic neuritis are multiple sclerosis. Therefore, these are known patients followed by the neurologists. Acute optic neuritis is a relapse of multiple sclerosis. 1/3 are idiopathic. In fact, in the 1/3 idiopathic, around 60% to 75% of them will develop multiple sclerosis. Acute optic neuritis is just the first onset of multiple sclerosis. It is very multiple sclerosis-driven, multiple sclerosis-related. It is a relapse of multiple sclerosis, basically. This is one. In terms of prevalence, we have around in the U.S. between 30,000 to 35,000 patients every year. In terms of symptoms and profile of patients, we are talking about a young population. In fact, in our study, we had patients who were between 22 and 42 with a mean at 32. Young population because it's multiple sclerosis, 2/3 are women. In terms of symptoms, it's really painful.
It's very painful, and there is a very rapid loss of vision.
How is that treated today?
Steroids.
If the data continue to pan out and you do have a neuro-ophthalmic asset on your hands, that could open up a pretty broad number of diseases. Where else would you be planning to explore Privosegtor?
Yeah. What we talked, two new programs. One is really broadening a relapse of MS. We addressed the first relapse of MS in the eye, which is acute optic neuritis. The aim is to broaden this. The aim is not to replace immunomodulators. Really, the goal is not to replace them. I think they are good. These are immunomodulators or anti-inflammatory products which are able to reduce the number of relapses. They are not able to treat a relapse. We still give steroids when we have a relapse. We would like to repeat what we did in AON, in acute optic neuritis, in other relapses. This is the first indication. The second indication, which is neuro-ophthalmic, is NAON, which is also an optic neuritis. Different etiology, but optic neuritis. We would like also to open a program in NAON.
Therefore, we are talking about two types of optic neuritis with the total patient population of around 60,000 in the U.S. and a relapse of MS where we are talking about a population of almost 200,000 relapses per year in the U.S.
Would the multiple sclerosis relapses be a similar dosing? I guess across all three of those, would that be a similar short course of dosing?
We are working on it. We didn't communicate yet. It will be very similar.
OK. Are there any timelines for those other two programs?
I hope that AON will be cleared and we can do the trial, as we say, next year. NAON most probably will come second next year after meeting with the FDA and then after multiple sclerosis relapse.
Great. Now we'll jump to your third asset, Licaminlimab.
Yes.
Licaminlimab, also known as OCS-02, your drug in dry eye disease. You first said there are a lot of current dry eye treatments out there. What do you view as the unmet need in dry eye?
I think the unmet need in dry eye is still we don't have a solution which brings benefit to more than 14% of the patients. I'm using 14% of the patients because when you see the second prescription to the lead asset, it's 14%. It means that 86% of patients are not happy. When you see how many patients stay on drug, again, it's 14%. When you interview patients and you ask them how well they feel with the current therapies, you have, if I recall well, 87% of patients saying we are not happy. Therefore, it's huge, actually. When you speak with the KOLs, they really tell you the typical dry eye patient, he or she, comes with a bag with like 10 to 12 drugs. They say, I tested this. I tested this. Nothing works.
You really end up in a situation where you conclude that first, it's complex, complex to treat dry eye. In fact, we call it syndrome because it's not a disease. It's complex. It's multifactorial. It's a complex disease. It's multifactorial. The second, you make the conclusion that also for clinical development programs, it is a risky development because what you see in clinical practice, you see it in clinical development. Therefore, we thought a while ago, actually, when we acquired this product in 2018, so it's really not recent, we said we really need to find a way to select patients by knowing who will respond to this biology, which is a TNF inhibitor, which is well known, well validated in inflammation, and who will not respond.
Good news is we have been able to identify a SNP, which is binary, is genetic, where patients who have this SNP will be most likely to respond extremely well. In fact, it responds in terms of symptoms sevenfold better than all comers and fivefold in science. We said, OK, let's leverage this biomarker, which is very easy to implement. It's just like QPCR, it's COVID test, basically. Then let's do a development based on this genotype. We met with FDA. We shared our data. FDA was very supportive, actually. They said, yes, we agree with you. You can have your primary endpoint in this TNFR1, is the TNFR1 receptor positive, and then the secondary endpoint for all comers.
For the first time, this genotype will help us first to have a very efficient development program in terms of capital deployed and in terms of risk because we know these patients will respond. Therefore, it will be a smaller phase three and a much higher probability of success. This is in terms of development. It makes sense for the payer because they will be reimbursing something which will work instead of perhaps it's working 14%. It will be good for patients because for patients who are positive to the TNFR1, they will know that this product will work for them. It's a real win for all the players.
How prevalent is that genotype?
It's around 20% of the patients in the U.S. What it means is that if you take the whole dry eye population in the U.S., we are speaking about around 30 to 35 million patients. In the 30 to 35 million patients, 20 to 25 million are taking artificial tears and so on. These are not our patients. You remove them, and you end up with 10 million. In 10 million, you have 20%. So 2 million patients who are TNFR1 positive, moderate to severe, who need a drug prescription, not an artificial tear, and who might be a candidate to our product.
That's a lot of patients.
This is big.
Yeah.
This is big.
You're going to start the first of these four pivotal studies coming up soon here. Talk about the trial designs and the rationale to run two signs and two symptom studies separately.
Yeah. The design we are talking about, if you compare with the typical dry eye study, we are talking about small studies, 160 patients each. The typical dry eye study is 600. This is thanks to the biomarker. Why are we running symptoms separate from signs? Because they are discorrelated. They are truly discorrelated. I think it is a mistake, at least from our point of view. I think it is a mistake to run them combined. It's much better, it's much more efficient in terms of capital, much more efficient in terms of probability of success to run them separately.
Since you'll be including a biomarker, what are your expectations around enrollment for the first pivotal study?
It's very easy to do the screening with the biomarker. It's 24 hours. Therefore, yes, it will take slightly more time than if we don't have a biomarker, of course, because there is a screening. It's not a complicated screening. It's really very easy screening.
How long is that endpoint, and when might we see data from that first study?
Symptoms will be 29 days. It is very short, and 29 days because this is really what is expected from the patient. If I give you a drug and I say, wait six months, you say, no, actually, I want my pain to disappear faster.
We will have this first data readout. When can we expect the timelines for the next three studies?
Most probably, of course, after transparently. It will also depend on the feedback we will have from the FDA in terms of acute optic neuritis, in terms of NAON, because we need to be mindful in terms of how many trials we can run in parallel and not to do whatever. I mean, the focus is important.
Too small cap out.
Exactly. Therefore, we will prioritize accordingly. Today, at least, before knowing what the FDA will tell us, we are, of course, DME is full steam readout in Q2. We are initiating and planning for the dry eye and hoping that we'll be able to plan rapidly for AON.
Fantastic. I know we're quickly running out of time here. Maybe if you can touch, Riad, on the current cash and the cash runway.
Yeah. Basically, our cash in hand will bring us to the beginning of 2028. It will allow us to deliver till NDA the full DME. It will allow us to deliver the first phase three and the till NDA for acute optic neuritis. What is not financed, of course, is the launch of DME and the subsequent trials for dry eye and, of course, NAON and MS, which our position is to wait first feedback from FDA, and then we take it from there.
OK, great. That makes sense. Just in the last minute here, if you can just wrap up, Riad, obviously a lot going on at the company, three really interesting assets across ophtho and neuro-ophtho. Why should investors be interested in the Oculis story over the next 6 to 12 months?
I think for multiple reasons. One is a portfolio company which is de-risked, is advanced. At least one is full phase three, and potentially two will become a phase three very soon. Very unique and differentiated technologies, and each one is really thought from the patient point of view, from the unmet medical need point of view, and then developed with a very unique profile and very unique value proposition. If you go with OCS-01, we have the only product which is not topical in DME. Licaminlimab (OCS-02), in a market which is very complicated, which is dry eye, we are coming with something which is very unique, very different, where we have very high probability of success, very efficient capital deployment, and a product which will be in the market very different. The last one, which is OCS-05.
OCS-05 by itself is truly a startup, is a portfolio, and it brings something which has been a buzzword for 30 years. We spoke about neuroprotection. For the first time now, we have something in neuroprotection, and it works. Therefore, this is de-risked, advanced, sexy, and innovative company.
Great. Wonderful. I know we are out of time. Thank you so much, Riad, for being with us.
Thank you. Thank you very much.
Thank you.