Ocugen, Inc. (OCGN) Q1 2021 Earnings Call Transcript

Ocugen, Inc. (OCGN)
Q1 2021 Earnings Call
May 07, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning and welcome to the Ocugen conference call. At this time, all participants are in listen-only mode. [Operator instructions] Please note this conference is being recorded. I would now like to turn the conference over to Lisa DeScenza, vice president of integrated communications at LaVoie Health Science to introduce the Ocugen team.

You may begin.

Lisa DeScenza -- Vice President of Integrated Communications

Thank you, operator. I'd like to welcome you to our conference call. With me today are Ocugen's chairman and CEO, Dr. Shankar Musunuri, and our CFO and head of corporate development, Sanjay Subramanian.

Earlier this morning Ocugen issued a press release, including a business update and first-quarter 2021 financial results. We encourage listeners to review the press release, which is available on the Ocugen website at www.ocugen.com. This call is also being recorded and a replay will be available on the Investor section of the Ocugen website for approximately 45 days. Before we begin our formal comments, I'll remind you that various remarks we make today constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties.

We may in some cases use terms such as predicts, believes, potential, propose, continue, estimates, anticipates, expects, plans, intends, may, could, might, will, should or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Such forward looking statements include information about qualitative assessments of available data, potential benefits, expectations for clinical trials, and anticipated timing of clinical trial readouts, regulatory submissions and regulatory authorizations or approvals. This information involves risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements risks and uncertainties include, among other things, the uncertainties inherent in research and development, including the ability to meet anticipated clinical endpoints, commencement and/or completion dates or clip -- for clinical trials, regulatory submission dates, regulatory approval dates and/or launch dates, as well as risks associated with preliminary and the interim data, including the possibility of favorable -- unfavorable new clinical trial data and further analysis of existing clinical trial data, the risks that clinical trial data are subject to differing interpretations and assessments, including during the peer review/publication process in the scientific community generally and by regulatory authorities, whether and when data from broad biotechs clinical trials will be published in scientific journal publications. And if so, when and with what modifications, whether the US Food and Drug Administration, the FDA, will be satisfied with the design and results from preclinical and clinical studies of COVAXIN, which have been conducted by Bharat Biotech in India, whether and when any biologics license and/or emergency use authorization applications may be filed in the United States for COVAXIN; whether and when any such applications may be approved by the FDA; decisions by the FDA impacting labeling, manufacturing processes, safety, and/or other matters that could affect the availability or commercial potential of COVAXIN in the United States, including development of products or therapies by other companies.

These and other risks and uncertainties are more fully described in our periodic filings with the Securities and Exchange Commission, the SEC, including the risk factors described in the section entitled Risk Factors in the quarterly and annual reports that we filed with the SEC. You should read carefully the risks and uncertainties described in today's press release as well as the risk factors included in our filings with the SEC. Note that we intend to file a 10-Q With the SEC today. Any information we provide on this conference call is provided only as of the date of this call, May 7, 2021.

And accept as required by law, we undertake no obligation to update any forward-looking statements we make on this call on account of new information future events or otherwise. I will now turn the call over to oxygen's chairman and CEO Dr. Shankar Musunuri.

Shankar Musunuri -- Chairman and Chief Executive Officer

Thank you Lisa. Good morning, everyone, and thank you for joining. There is not a day that goes by without us witnessing the devastation caused by the corona virus pandemic. As you all know, India is currently experiencing one of the worst spikes seen by any country since the pandemic began.

Over the last two weeks, COVID-19 has claimed about 120 lives every hour on an average in India with the second wave of devastating COVID-19 infections. Our hearts go out to the people of India and those working on frontlines to bring this terrible outbreak under control. We also sincerely appreciate the work done by caregivers, NGOs, governments, including the U.S. government and everyone, who is helping.

Our co-development partner for vaccine, Bharat Biotech, has been ramping up production to meet the demand for the vaccines in India. They are navigating these extreme conditions to scale up production and increase supply. It is encouraging to note as Dr. Anthony Fauci, director of NIAID and the chief medical advisor to the president, mentioned last week studies of [Inaudible] of COVAXIN recipients have found that the COVAXIN effectively neutralizes the B1617 variant, or Indian double-mutant strain of the current awareness.

However, it is concerning that according to the World Health Organization, the variant had been detected in 17 countries, including the U.S. We continue to strongly believe that it is critical to add COVAXIN to our national arsenal to fight this pandemic. We are encouraged by our announcement earlier this week that COVAXIN demonstrated potential effectiveness against three key variants of SARS-CoV-2, the U.K. variant, which is B117; the Indian double variant B1617; and Brazilian P.2 variant, B11282.

By addressing the whole COVID-19 virus, based on multi-antigens, including the spike and nucleic acid proteins, COVAXIN's potential effectiveness against multiple variants reduces the possibility of mutant virus escape. This is an important differentiator from currently available vaccines in the U.S., which only address the spike protein. COVAXIN elicits a broad spectrum immune response of 98.3% conversion. By stimulating both [Inudible] human and cellular responses against multiple viral protein, COVAXIN could be a more powerful weapon that is more likely to remain effective as the virus continues to mutate, making it a strong booster vaccine option even for those who have already taken one of those other vaccines.

In the recently shared second interim results of the Phase III clinical trial, COVAXIN demonstrated 78% overall efficacy and 100% in severe COVID-19 disease, including hospitalizations. COVAXIN continues to show strong results in all the studies conducted to date. The Ocugen team submitted a comprehensive drug master file to the FDA and is preparing the EUA application. The current crisis in India is hampering some of the data collection efforts by our co-development partner, Bharat Biotech.

As a result, finalizing our EUA application is taking longer than anticipated. Despite the humanitarian crisis India, Bharat Biotech and Ocugen are working tirelessly and diligently to complete the EUA application, and we hope to file it with the FDA as soon as practicable. Meanwhile we are having collaborative discussions with the FDA. We have also signed up with an FDA approved lab for release testing of the vaccine upon authorization, and we are actively working on securing contract manufacturing partners in the U.S.

We are also in discussions that the Biomedical Advanced Research and Development Authority, BARDA, regarding the purchase commitment. Once authorized under EUA, we are planning for a pediatric study in kids six months and older because we believe COVAXIN has a very strong safety profile as it is based on a traditional vaccine technology platform. We believe that COVAXIN can help change the course of this pandemic by preventing severe COVID-19 disease, including hospitalizations, as well as significantly limit the spread of asymptomatic COVID-19 infections based on efficacy shown to date. Now to shift to an update on our ophthalmology pipeline.

Yesterday preclinical results of our novel biologic candidate, OCU200, were presented at the Association for Research in Vision and Ophthalmology 2021 annual meeting. The purpose of this study was to evaluate efficacy of OCU200 in in vitro and in vivo models for ocular neuromuscular diseases. OCU200 reduced neurovascularization and damage to retina and demonstrated compatible or slightly improved activity to [Inaudible] in an animal disease model. OCU200, a transferrin and tumstatin in fusion protein demonstrated potential to treat diabetic macular edema, diabetic retinopathy and wet age-related macular degeneration.

We are planning the initiation of Phase I/II clinical trial for OCU200 next year. We remain on track to initiate our first gene therapy Phase I/II clinical trial for OCU200 later this year. The toxicology studies are progressing well. We have completed manufacturing a 200 liter scale to support clinical studies.

We are also planning to initiate a Phase I/II clinical trial for OCU410 dry age-related macular degeneration next year. Late last month, we announced the closing of a registered direct offering to the healthcare-focused institutional investors, and raised gross proceeds of hundred million dollars. We intend to use the net proceeds from the offering for general corporate purposes, capital expenditures, and working capital expenses. The capital raises this year have significantly strengthened our balance sheet and position us well to develop our programs and build our team.

In summary we are working diligently to bring COVAXIN to the U.S. market with the planned filing of our EUA application and eventually BLA, bilogical licensing application. We are continuing to expand our team with highly talented individuals to support our growth. We're also planning to move our lead ophthalmology gene therapy product candidate, OCU400, into the clinic later this year.

With the ability to raise additional capital as needed, we have the resources to continue driving our vaccine and ophthalmology pipelines forward and anticipate strong momentum across our pipeline for the remainder of this year. I would now turn the call over to Sanjay to provide our first-quarter 2021 financial update. Sanjay?

Sanjay Subramanian -- Chief Financial Officer and Head of Corporate Development

Thank you, Shankar, and good morning, everyone. We have made significant strides in the first quarter of this year, particularly in working to bring COVAXIN to the U.S. market with the submission of our comprehensive drug master file with the FDA. I will now provide an overview of key financial results for the first quarter of this year.

We ended the quarter with cash, cash equivalents, and restricted cash totaling $44.9 million as of March 31, 2021, compared to $24.2 million as of December 31, 2020. In April 2021, we raised an additional $100 million in gross proceeds with our registered direct offering. Our research and development expenses for the quarter ended March 31, 2021 were $2.9 million, compared to $1.7 million for the three months ended March 31, 2020. The increase was primarily related to the toxicology studies for our OCU400 program and the development activities for COVAXIN.

General and administrative expenses for the quarter ended March 31, 2021 or $4.2 million, compared to $2.3 million for the three-month ended March 31, 2020. The increase was primarily driven by proxy solicitation costs incurred to obtain the increase in authorized shares of our common stock. Net loss was $7.1 million or $0.04 net loss per share for the quarter ended March 31, 2021, compared to a net loss of $3.9 million or $0.07 net loss per share for the quarter ended March 31, 2020. We recently terminated the NeoCartasset purchase agreement with Medavate and are currently evaluating other options, including potentially developing the asset ourselves.

As always, we continue to evaluate the market for potential assets to invest, license or partner. We will update you with any developments on this front in the near future. With that, we will open up the call for questions. Operator?

Questions & Answers:

Operator

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

Keay Nakae -- Chardan -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

Yeah. Go ahead, Keay. Good morning. Keay, can you hear us? We can't hear you, Keay.

Operator

[Operator instructions]

Shankar Musunuri -- Chairman and Chief Executive Officer

Operator, it looks like Keay got disconnected. Go to the next question. We can come back to Keay.

Operator

OK. His line is open.

Keay Nakae -- Chardan -- Analyst

Hello?

Shankar Musunuri -- Chairman and Chief Executive Officer

Hey, Keay, are you back?

Keay Nakae -- Chardan -- Analyst

I can hear you. Can you hear me?

Shankar Musunuri -- Chairman and Chief Executive Officer

Yeah, yeah, yeah. Now we can hear you. Thanks, Keay. Good morning.

Keay Nakae -- Chardan -- Analyst

OK. Yeah. I don't know what happened there but thanks. A couple of questions about the vaccine.

Shankar, you mentioned some delays due to the activity that's happening in India. Do you have a sense of when you might be able to complete the EUA filing -- application?

Shankar Musunuri -- Chairman and Chief Executive Officer

Keay, as I stated, we're working very hard with our partners at Bharat Biotech, and they it's taking longer than anticipated. We are planning to still complete the EUA application in the coming weeks.

Keay Nakae -- Chardan -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

Not to date.

Keay Nakae -- Chardan -- Analyst

OK. All right. Very good. That's all I have.

Let me get back in queue. Thanks.

Shankar Musunuri -- Chairman and Chief Executive Officer

Thank you, Keay.

Sanjay Subramanian -- Chief Financial Officer and Head of Corporate Development

Thank you.

Operator

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

Zegbeh Jallah -- ROTH Capital Partners -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

Zegbeh, as you know, this is a very large clinical trial. And at the conclusion of the interim Phase II -- I mean the second interim results from the Phase II clinical trial, we had to put all the data together. It's an enormous amount of effort. And in the middle of the pandemic, obviously, this crisis in India has caused some delays.

Also just as everybody has admitted, there is large amount of safety database you have to pull together along with efficacy. That's what they're working on.

Zegbeh Jallah -- ROTH Capital Partners -- Analyst

OK. So you do need some some safety and then some efficacy data that you're waiting on. And then the follow up question is regarding the master file. I know submitted it but I was just wondering when you anticipate getting some feedback from the FDA.

And when you do get that feedback, are you going to communicate it publicly?

Shankar Musunuri -- Chairman and Chief Executive Officer

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

Zegbeh Jallah -- ROTH Capital Partners -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

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

Zegbeh Jallah -- ROTH Capital Partners -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

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

Operator

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

Robert LeBoyer -- Noble Capital Markets -- Analyst

Good morning. I was --

Shankar Musunuri -- Chairman and Chief Executive Officer

Good morning. How are you doing?

Robert LeBoyer -- Noble Capital Markets -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

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

Robert LeBoyer -- Noble Capital Markets -- Analyst

OK. Great. Thank you very much.

Shankar Musunuri -- Chairman and Chief Executive Officer

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

Swayampakula Ramakanth -- H.C. Wainwright -- Analyst

Thank you. This is RK from H.C. Wainwright. Good morning, Shankar and Sanjay.

Shankar Musunuri -- Chairman and Chief Executive Officer

Good morning.

Sanjay Subramanian -- Chief Financial Officer and Head of Corporate Development

Good morning.

Swayampakula Ramakanth -- H.C. Wainwright -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

Yes, so we are following FDA guidance on EUA for COVID vaccines. So based on the guidance, master file is the step in to include all preclinical manufacturing and any other data prior to Phase III. So that gives an opportunity for FDA to review and provide additional comments prior to filing a EUA. And so that's the process we have completed and our file is quite extensive.

And the second step is filing the emergency use application just as all the other companies have done. So those are the two. So that application will help primarily the second interim analysis up to that point, 120-some patients, what we have announced before. Safety, efficacy, including the new variant data, which is coming out, which will be part of that application.

Swayampakula Ramakanth -- H.C. Wainwright -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

Yeah, the FDA process, it's a similar process to other companies. we are in -- collaboratively working with them. We're continuously communicating with them. And so obviously, we will be notifying them in communications when we are failing the EUA.

And that that conversation, that communication, those are different from BARDA. BARDA is independent. And obviously, working with the BARDA and the administration, so those discussions are ongoing. So they're like in parallel.

Obviously, they're not linked.

Swayampakula Ramakanth -- H.C. Wainwright -- Analyst

OK. Last question for me. With all the energies that are being spent on COVAXIN and trying to get COVAXIN across the finish line, how are you on your resources to not only get COVAXIN through but also to get for Phase I/IIs clinical trials get started on OCU400 early next year?

Shankar Musunuri -- Chairman and Chief Executive Officer

So we are -- actually, we also announced we are also increasing our internal resources. We got also good-sized excellent team of -- team of solid experts supporting COVAXIN development, including in our future clinical trial plans and everything else. In addition to that, internally we're beefing up the team. We recently announced we hired a senior vice president of manufacturing and supply chain.

He has tremendous experience from vaccines and gene therapy expertise, and very highly regarded person in the industry. And so we're building a very strong manufacturing team under him. And similarly, we're going to beef up other functional areas in the organization as we continue to grow this year. And that's going to support, as you stated, starting with our OCU400 gene therapy program, which we are trying to file the IND in the better part of the year and initiate clinical trials, plus our other ophthalmology programs we're planning to initiate, as you stated, four Phase I/II clinical trials and comprising OCU400, OCU410 gene therapy, as well as OCU200, and we'll be supporting them.

We are beefing up the resources every day.

Swayampakula Ramakanth -- H.C. Wainwright -- Analyst

Thank you. Thank you, Shankar, and Sanjay. Talk to you soon.

Sanjay Subramanian -- Chief Financial Officer and Head of Corporate Development

Thank you.

Shankar Musunuri -- Chairman and Chief Executive Officer

Thank you, RK.

Operator

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

Kristen Kluska -- Cantor Fitzgerald -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

OK. So I'll separate the two questions. The booster studies again, we are still preparing the protocols. Typically you have to wait for any boosters for the required.

In the COVAXIN case, we're doing the booster after 28 days after the first dose. Similarly, if -- you want to space them out. For other vaccinees, at least a month or more, and that could be determined. Our clinical teams are headed by Dr.

Bruce Forrest, an expert in this field, and over again to make those additions in the upcoming months before we file the protocol with the FDA. And the second part is are you going to monitor long-term durability? I think our partners have already published extensive data. I think in the Lancet and others and they're continuing to monitor the long-term durability of this vaccine. And typically what is important is I think the missing piece people have to understand it's not just the safety and efficacy.

Efficacy is a at one time if you're measuring as a part of the Phase III clinical trial and it's really important to measure the responses -- similar responses and decent responses. And that's where you're going to get the durability on.

Kristen Kluska -- Cantor Fitzgerald -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

Sanjay?

Sanjay Subramanian -- Chief Financial Officer and Head of Corporate Development

Yes. Thank you, Shankar. So, Kristen, good question. So we obviously raised some capital very recently both in the quarter as well as the end of last month with the $100 million RDO.

So with that, we have a very strong balance sheet. We have been hiring many people over the last few months and we have bolstered our team quite a bit both on the vaccine side as well as on the ophthalmology side, so the activities are progressing well on that front. And with all of this capital that it's raised, it's more than sufficient for us to do kind of -- put in place any of the clinical plans for a pediatric study as well as continuing on with our original clients on the RPO program. So we feel very well -- this is -- at this point in time very confident that it is sufficient for all our program plans as well as our hiring plans.

Kristen Kluska -- Cantor Fitzgerald -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

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

Kristen Kluska -- Cantor Fitzgerald -- Analyst

Great. Thanks so much, everybody.

Shankar Musunuri -- Chairman and Chief Executive Officer

Thank you.

Operator

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

Zegbeh Jallah -- ROTH Capital Partners -- Analyst

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

Shankar Musunuri -- Chairman and Chief Executive Officer

That is still the plan, Zegbeh, while we are in parallel working that the U.S. contract manufacturer.

Operator

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

Lisa DeScenza -- Vice President of Integrated Communications

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

Thank you.

Operator

[Operator signoff]

Duration: 33 minutes

Call participants:

Lisa DeScenza -- Vice President of Integrated Communications

Shankar Musunuri -- Chairman and Chief Executive Officer

Sanjay Subramanian -- Chief Financial Officer and Head of Corporate Development

Keay Nakae -- Chardan -- Analyst

Zegbeh Jallah -- ROTH Capital Partners -- Analyst

Robert LeBoyer -- Noble Capital Markets -- Analyst

Swayampakula Ramakanth -- H.C. Wainwright -- Analyst

Kristen Kluska -- Cantor Fitzgerald -- Analyst

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