Ocugen (OCGN) Q2 2023 Earnings Call Transcript

Ocugen (OCGN 8.47%)
Q2 2023 Earnings Call
Aug 22, 2023, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning and welcome to Ocugen s second-quarter 2023 financial results and business update. Please note that this call is being recorded at this time. All participants' lines are in listen-only mode. Following the speakers' commentary, there will be a question-and-answer session.

I will now turn the call over to Tiffany Hamilton, Ocugen's head of corporate communications. You may begin.

Tiffany Hamilton -- Head of Corporate Communications

Thank you, operator. Joining me today are Ocugen's Chairman, CEO, and Co-Founder Dr. Shankar Musunuri, who will provide a business and financial update; and Dr. Arun Upadhyay, our financial scientific officer, head of research development and medical, who is also on the call to answer questions during the Q&A.

Yesterday afternoon, we issued a press release detailing business and operational highlights for the second quarter of 2023. We encourage listeners to review the press release, which is available on our website at ocugen.com. This call is being recorded and a replay with the accompanying slide presentation will be available on the Investors section of the Ocugen website for approximately 45 days. This presentation contains 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, proposed, 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 statements include but are not limited to statements regarding our clinical development activities and related anticipated timelines. Such statements are subject to numerous important risk factors, and uncertainties, and may cause actual events or results to differ materially from our current expectations.

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 and the quarterly and annual reports that we filed with the SEC. Any forward-looking statements that we make in this presentation speak only as of the date of this presentation. Except as required by law, we assume no obligation to update forward-looking statements contained in this presentation whether as a result of new information, future events, or otherwise after the date of this presentation. Finally, Ocugen's quarterly report on Form 10-Q covering the second quarter of 2023 has been filed.

I will now turn the call to Dr. Musunuri.

Shankar Musunuri -- Co-Founder, Chairman, and Chief Executive Officer

Thank you, Tiffany. Good morning and thank you all for joining us today. The second quarter of 2023 marked a period of continued progress toward our regulatory and clinical milestones, which we are delight -- dedicated to advancing through the end of the year. With the strategic focus on our novel modifier gene therapy and biologic-based ophthalmic programs, we expect to begin dosing patients across these platforms by the end of this year. We're on track to initiate the OCU400 phase 3 adult trial near the end of 2023, early 2024, subject to outcome of the ongoing phase 1/2 trial and discussions with FDA on proposed phase 3 trial plan.

We also anticipate a clinical study results update for OCU400 this quarter. Investigational new drug applications were cleared by FDA for OCU410 and OCU410ST for geographic atrophy and Stargardt disease, respectively. We plan to initiate phase 1/2 trials by the end of 2023. We are also planning to initiate the phase 3 clinical trial for our regenerative cell therapy product candidate, NeoCart, in the second half of 2024. This would mean Ocugen would have late-stage programs in gene and cell therapies in 2024.

In an effort to conserve our working capital and advance our patient-centric agenda to develop a novel inhaled mucosal vaccine platform, we have submitted multiple proposals to obtain non-dilutive government funding and are having discussions with pertinent agencies to secure their support for our OCU500 vaccine series. Our first-in-class modifier gene therapy to treat multiple inherited retinal diseases remains unmatched industrywide. This unique gene-agnostic approach has the potential to address retinal diseases caused by mutations in multiple genes with one product. Our goal is to build on the innovation of gene therapy and expand its potential to treat a wider population of patients suffering from a host of rare retinal diseases that single gene replacement therapies are unable to address.

In the second quarter, we were honored to present in detail the mechanism of action and scientific basis for our modified gene therapy platform to preeminent researchers and medical professionals in attendance at the Association for Research in Vision and Ophthalmology and BIO International conferences. As we advance our clinical agenda, we will continue to identify and secure opportunities to educate stakeholders on the differentiation and potential benefits of this innovation -- innovative approach to gene therapy. In April, we announced encouraging and compelling positive preliminary safety and efficacy results from our OCU400 phase 1/2 multicenter, open-label, dose-ranging clinical trial in patients afflicted with RP. We believe the preliminary findings from the study support the potential for our modifier gene therapy to be a viable alternative to traditional treatments to the increasing population of patients suffering from these diseases. Enrollment is ongoing for all defined subjects in the study, adults with LCA and children between ages of six to 17.

Pending positive feedback from the FDA, we aim to initiate our phase 3 adult clinical trial in the end of this year or early 2024. We continue to execute our comprehensive strategy to develop OCU400 and bring it to market by 2026 with the goal of providing desperately needed treatment options for the estimated 125,000 patients estimated in the U.S. alone that suffer from RP and LCA. In parallel, we'll continue progressing or other modified gene therapy programs to address additional ophthalmic conditions. We believe that upon successful realization of these goals, Ocugen will have built a vast commercial footprint that may hold significant upside for our shareholders and, most importantly, meet a critical medical need for patients.

Dry age-related macular degeneration is one of the most prevalent neurodegenerative eye diseases affecting approximately 10 million people in the U.S. and nearly 266 million people worldwide. Dry AMD results in irreversible loss of sight among elderly populations, leading to a lack of functional independence that severely impacts quality of life. A variety of biotechnology companies, small and large, are working to develop therapies for Dry AMD. However, we believe our OCU410 candidate can offer a less burdensome option for our patients.

With OCU410, we are again investigating the potential for our novel modifier gene therapy to provide a one-time treatment option that targets all four hallmark conditions of Dry AMD, including lipid metabolism, inflammation, oxidative stress, and complement activation. The current standard of care only targets the complement factor requires multiple injections per year and has reported side effects. We're excited to initiate the phase 1/2 clinical trial this year because of the significant global unmet medical need. Moving on to OCU410ST. We're extremely pleased to receive orphan drug designation from the FDA to address ABCA4-associated retinal diseases such as Stargardt disease, RP19, and cone-rod dystrophy for which there are currently no treatment options.

OCU410ST is a novel modified gene therapy that leverages nuclear hormone receptors to modulate cell activity and utilizes an AAV delivery platform for retinal delivery of the RAR-related orphan receptor A. Nuclear hormone receptors are master gene regulators that help maintain homeostasis by regulating diverse physiological functions such as photoreceptor development and maintenance, metabolism, phototransduction, inflammation, and cell survival networks. We believe that by harnessing the power of nuclear hormone receptors, we can develop one-time treatments that can modulate cell activity disrupted by disease-causing gene mutations. Now, turning to our efforts to develop a series of next-generation inhalation vaccines for which the company intends to submit an IND application in 2024 pending government funding.

In multiple preclinical trials, mucosal vaccines have demonstrated vaccine-induced high neutralization titer and effector responses. Inhaled mucosal vaccines represent a distinct product candidate profile that could help remedy major global health challenges and maximize our opportunity to serve a broader cross-section of patients through a less invasive delivery mechanism with the potential for superior durability when compared with the current intramuscular administration. Clinical studies using a similar vector of inhaled administration have shown mucosal antibodies, systemic and antibodies, and durable immune response up to one year, with one-fifth of the dose compared to traditional intramuscular vaccines. Greater ease of administration presents the potential for improved vaccination compliance and wider adoption, particularly among traditionally underserved populations and throughout the developing world. Current COVID-19 vaccines are limited by a lack of durability and marginal ability to prevent transmission.

As part of our commitment to address barriers to widespread vaccination to protect against COVID-19, we are developing this inhaled vaccine platform that includes OCU500, a bivalent COVID-19 vaccine; OCU510, a seasonal quadrivalent flu inhaled vaccine; and OCU520, a combination of quadrivalent seasonal flu and bivalent COVID-19 inhaled vaccine. The OCU500 vaccine series is based on a novel ChAd platform designed to reduce transmission and protect against new variants with potential durability up to one year. To optimize resources across our diverse and critically needed development programs and maintain shareholder value, our team has been engaging with public health officials and federal government agencies to pursue non-dilutive funding to support the development of our OCU500 vaccine series. We maintain an ongoing dialogue with respective agencies and anticipate receiving further information on the status of our funding request later this year. Earlier this year, the FDA notified us that they were putting a hold on our OCU200 program and requested additional information related to chemistry, manufacturing, and controls. We are working with the FDA to release the hold and expect the phase 1 trial to be initiated in Q4 2023. We believe OCU200 works with a distinct mechanism of action compared to existing therapies for the treatment of diabetic macular edema and targets multiple causative pathways such as angiogenesis, oxidation, and inflammation as potential to offer better treatment to all patients. NeoCart is our phase 3-ready regenerative cell therapy technology that combines novel advancements in bioengineering and cell processing to enhance the autologous cartilage repair process.

Manufacturing facility construction for NeoCart is on target to be completed by the end of 2023 as planned. The company plans to initiate the phase 3 trial in subjects with articular cartilage defect in the second half of 2024. We are highly dedicated to completing our stated objectives with the strategies we believe will enable Ocugen to reach total value-enhancing milestones and are planning to file BLAs across all first-in-class platform technologies, gene therapies, cell therapies, and vaccines in the next three to five years. I will now provide an overview of the key financial results for second quarter 2023. Our research and development expenses for the quarter ended June 30, 2023 were 14.2 million, compared to 9 million for the second quarter of 2022.

This included a nonrecurring noncash expense of 4.4 million as a result of the impairment of the short-term asset for the advanced payment for the supply of Covaxin, as well as the associated loss on the disposal of related fixed assets. General administrative expenses for the quarter ended June 30, 2023 were 9.6 million, compared to 10.6 million for the second quarter of 2022. Net loss was approximately 22.9 million, or 0 point -- $0.10 -- $0.10 net loss per share for the quarter ended June 30, 2023, compared to a net loss of approximately 19.5 million or $0.09 net loss per share for the second quarter of 2022. Our cash, cash equivalents, and investments totaled 70.6 million as of June 30, 2023, compared to 90.9 million as of December 31, 2022. In May, we closed a public offering of 30 million shares of common stock for gross proceeds of 16.5 million.

Net proceeds from the offering are being used for general corporate purposes, capital expenditures, working capital, general and administrative expenses, and R&D. We're continuously exploring opportunities to increase our working capital and will be focused on seeking out corporate partnerships for gene therapies and non-dilutive funding for vaccines. That concludes my update for the quarter. Tiffany, back to you.

Tiffany Hamilton -- Head of Corporate Communications

Thank you, Shankar. We will now open the call for questions. Operator?

Questions & Answers:

Operator

The floor is now open for your questions. [Operator instructions] We'll now take a moment to compile our roster. Our first question comes from the line of Jennifer Kim from Cantor Fitzgerald. Please go ahead.

Jen Kim -- Cantor Fitzgerald -- Analyst

Hi, good morning. Thank you for taking my questions. I have two. The first is as you're thinking about cash burn going forward and you're seeking non-dilutive funding opportunities.

Excluding the one-time impairment expense -- expense, is this quarter a good basis as we think about quarterly burn? And then, my second question is on the OCU400 program. Can you remind us what you're looking for in that updated data this quarter as sort of the go/no-go for the phase 3 adult trial? Thanks.

Shankar Musunuri -- Co-Founder, Chairman, and Chief Executive Officer

Yeah, Jennifer, good morning. Let me address the first question, then Arun is going to take the second one. Yes, there is a one-time impairment charge. There's also a noncash stock comp charge of 2.6 million.

And if you add those two, the cash comes out to be 15.9 million total for quarter. So, that would be a good guidance for you for the future. I'll let Arun address the other question on OCU400 program.

Arun Upadhyay -- Chief Scientific Officer

Thank you, Shankar. Thanks, Jennifer. So, yeah, you are right, I think our -- this quarter update on OCU400 clinical phase1/2 data will guide us about our phase 3 study. Yeah, that's the data will be used as a basis for our decision for phase 3.

Jen Kim -- Cantor Fitzgerald -- Analyst

OK, and can you remind us what you're looking for in that data?

Arun Upadhyay -- Chief Scientific Officer

So, primarily, we are looking at the -- the functional improvement in the patients treated with OCU400. And the focus is going to be the RP patient.

Jen Kim -- Cantor Fitzgerald -- Analyst

OK. And then, in your discussions with the FDA later on for the phase 3 trial, is that going to focus on RP patients, or are you also considering the inclusion of LCA patients? Thank you.

Arun Upadhyay -- Chief Scientific Officer

So, to begin with, we'll start with the RP patient. And as we collect the data for LCA patients, then -- then later, we include LCA. But to begin with, we are planning to go with adult RP patient.

Jen Kim -- Cantor Fitzgerald -- Analyst

All right. Thanks for taking my questions. Bye.

Arun Upadhyay -- Chief Scientific Officer

Thank you.

Operator

Our next question comes from the line of William Ramakanth from H.C. Wainwright. Please go ahead.

Unknown speaker

Thank you. This is RK from H.C. Wainwright. So, a couple of quick -- quick questions on the 400 program and then maybe one on the NeoCart.

On the 400, so in terms of your discussions with the FDA, is that being planned once you see the data on the phase 1/2, or you have already initiated, you know, some initial conversations and started putting together a phase 3 plan?

Arun Upadhyay -- Chief Scientific Officer

Thanks, RK. So, we have not initiated our discussion with FDA yet. So, once we -- we, you know, complete the data analysis, only then we are going to reach out to FDA. But that is planned for this quarter, you know, related to data update and followed by reaching out to FDA.

Unknown speaker

Thank you for that. And then, on the 410 program, you know, in terms of now that you've already been cleared by the FDA, what else needs to get done before you can initiate the phase 1/2 studies?

Arun Upadhyay -- Chief Scientific Officer

Just we need to get the site ready and, you know, initiate the patient screening. And so -- so, that's why I think we are planning like, you know, to lodge -- lodge, you know, first subject in this study both, you know, GA as well as Stargardt this year. So, it is more like getting ready with, you know, with the clinical, you know, sites.

Unknown speaker

Got it. Got it. Then on the -- on the NeoCart program, if -- just trying to understand if the facility does -- gets completed by the end of '23, you know, what else needs to get done, you know, in terms of commissioning the plant and getting the clinical material ready to start your program on the -- on the phase 3 study by second half? You know, is it just that, or is it, you know, you still have to design the protocol? I'm just trying to understand what all because we've been talking about this program for almost a year and a half now.

Shankar Musunuri -- Co-Founder, Chairman, and Chief Executive Officer

Yeah, no, so, RK, the facility construction will be completed -- it's a GMP facility -- by the end of this year. It's on target. And then, as you know, as a GMP facility, it takes a few months for getting the qualification done, and then they'll be ready to produce NeoCart in that facility. In the interim, obviously, the team is going to prepare, you know, CMC and clinical sections.

And they'll continue to, you know, update those so that they're ready for submission next year before they start the clinical trial. And we do have RMAT designation, right, I just wanted to remind, Regenerative Medicine Advanced Therapy designation with FDA. So, when we have any questions in the interim, we can always reach out to them and get clarifications.

Unknown speaker

Perfect. Thanks. Thanks for taking the questions.

Operator

Our next question comes from the line of Robert LeBoyer from Noble Capital Markets. Please go ahead.

Robert LeBoyer -- Noble Capital Markets -- Analyst

Good morning, everyone. My question has to do with the upcoming data presentation. And I was wondering if you could disclose whether the data to be presented will update the previous data on all patients or whether it will just be in new patients that haven't been reported. And wondering if there are any endpoints that you could share with us at this point.

Arun Upadhyay -- Chief Scientific Officer

Thank you. So, yeah, definitely, we'll be providing detailed, you know, update when we kind, of you know, present this data to the market. But to address your first part of the question whether it is going to include the percent we presented in our previous, you know disclosure, yes. So, we will include those subjects as well as some new subjects which has, you know, completed additional follow-up visits.

So, it will be a combination of both, yeah.

Robert LeBoyer -- Noble Capital Markets -- Analyst

OK. Great. And you had mentioned corporate partnerships for the gene therapy. Can you discuss any type of arrangements whether they're going to be research and development, or just marketing, or any objectives to the business development activities?

Shankar Musunuri -- Co-Founder, Chairman, and Chief Executive Officer

I mean, Robert, this is a -- yeah, it's a loaded question. Obviously, we'll be open to -- when you seek partnerships at this stage as a biotech, you know, big pharma established with a infrastructure and everything else, obviously, your first target is going to be commercial. This has, as you know, complex sciences involved in these clinical trials. Obviously, when you're going into phase 3, once we have the data out, we'll obviously work very hard with any potential partners. And obviously, as you know, if they are interested in commercial development, they would be interested in phase 3 program too.

So, I think we'll keep our options open whatever can maximize our value for Ocugen as well as, you know, make sure we have ability to provide market access to patients who desperately need this product.

Robert LeBoyer -- Noble Capital Markets -- Analyst

OK, great. Thank you very much.

Operator

Our final question comes from the line of Daniil Gataulin from Chardan. Please go ahead.

Daniil Gataulin -- Chardan Capital Markets -- Analyst

Hey, good morning, guys. Thank you for taking that question. Got a couple. One for -- for OCU410 program.

Just wanted to ask, strategically, how do you see it positioned, long-term view, as a stand-alone approach or in combination with anything else and the patient population that you'll be targeting? And the second question is for the inhaled vaccine series. You know, can you comment on your interactions to date regarding the funding and, particularly, if you can comment on the interest in this program given that there are several other approved options? Thank you.

Arun Upadhyay -- Chief Scientific Officer

Thank you. So, I'll take the first question. So, yeah, we are thinking of, you know, taking it just stand-alone product. And to begin with, definitely, we'll be targeting the advanced form of AMD, that is geographic atrophy.

But subsequently, you know, based on the outcome, it -- it may be further developed for, you know, early and intermediate stage depending on the clinical benefit coming from the GA trial. And regarding, like, how we -- how we see this product, you know, against other what we see in the market, so as you all know that AMD is a multifactorial disease. And so, far we have been, you know, seeing in this space that most of the companies are focused on targeting only one pathway. And by, like, very nature of this disease, you know, being multifactorial in nature, there are various causes which lead to this disease. So, our product has potential to target all those -- those pathways which are linked to the AMD pathogenesis. So, we believe that this could be a differentiated product and -- and has potential to -- to offer a better, you know, clinical benefit compared to what -- what we have right now.

Shankar Musunuri -- Co-Founder, Chairman, and Chief Executive Officer

And, Daniil, good morning. The second question related to government funding, again, we have been working with, you know, various agencies and will provide an update. Obviously, the current products, as you know, the vaccines we have, especially for COVID, they lack a couple of things. One, they're struggling to control the transmission. There's a lot of data available so -- right now.

And also, they lack durability. So, what would be ideal option going into the future? I think there is definitely a need for mucosal vaccines. The scientific community agrees on that. And also, that will provide systemic as well as mucosal immunity.

So, you can actually potentially prevent at the target of viral entry into mucosal system. The second thing is durability. I mean, we believe, and the scientific community believes, that COVID vaccinations, in order to gain the compliance with public, you cannot keep on vaccinating every three months. That's why, you know, people get vaccine fatigue. So, you need to move into like annual vaccinations such as flu so compliance rate will go up.

So, that's the intent. I think as, you know, we stated, there are ex-U.S. trials with inhalation vaccine using a similar technology showed durability up to one year. That's really important.

So, there are two things: controlling transmission and durability are very important for next-gen vaccines. And we believe our platform-technology inhalation vaccines for COVID and flu, they can provide that.

Daniil Gataulin -- Chardan Capital Markets -- Analyst

Thank you so much.

Operator

This concludes the Q&A portion. I will now turn the call back over to chairman and CEO, Dr. Shankar Musunuri.

Shankar Musunuri -- Co-Founder, Chairman, and Chief Executive Officer

Thank you, operator. In closing, I'd like to recognize the entire team for their resilient efforts to advance our patient-centric mission. To our shareholders and partners, thank you for your ongoing trust and support. We're already well into the second half of 2023 and are steadfast in our commitment to transparency, informed decision-making based on sound scientific principles, and a tireless work ethic dedicated to excellence in all phases of research, development, and clinical testing. We remain confident that we will be able to fulfill our mission of developing novel therapies with innovative discovery to bring to market effective treatments for patients suffering from a range of conditions that currently lack treatment options.

We look forward to sharing more details on our progress in the coming months.

Tiffany Hamilton -- Head of Corporate Communications

Thanks, everyone. Have a great day.

Duration: 0 minutes

Call participants:

Tiffany Hamilton -- Head of Corporate Communications

Shankar Musunuri -- Co-Founder, Chairman, and Chief Executive Officer

Jen Kim -- Cantor Fitzgerald -- Analyst

Arun Upadhyay -- Chief Scientific Officer

Unknown speaker

Robert LeBoyer -- Noble Capital Markets -- Analyst

Daniil Gataulin -- Chardan Capital Markets -- Analyst

More OCGN analysis

All earnings call transcripts