ISEE (2019 - Q1)

Good day, and welcome to the IVERIC bio's First Quarter 2019 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kathy Galante, Vice President, Investor Relations and Corporate Communications. Please go ahead. Kathy Ga

Good morning, and welcome to IVERIC bio's First Quarter 2019 Earnings Call. Representing IVERIC bio today is Mr. Glenn Sblendorio, Chief Executive Officer and President; Dr. David Guyer, Executive Chairman; Dr. Kourous Rezaei, Chief Medical Officer; Mr. Dave Carroll, Chief Financial Officer; Mr. Keith Westby, Chief Operating Officer; and Mr. Vishal Kapoor, Chief Business Officer. I would like to remind you that today, we will be making statements relating to IVERIC bio's future expectations regarding operational, financial and research and development matters, including statements regarding the implementation of our strategic plan, including our transition to a gene therapy-focused company; our projected use of cash and cash balances; the timing, progress and results of clinical trials and other research and development activities; the potential utility of our product candidates; and the potential for our business development strategy, including our collaborative gene therapy sponsored research programs; and any potential in-license or acquisition opportunities. These statements constitute forward-looking statements for the purpose of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. These statements cover many events and matters that are subject to various risks of that could cause actual results to differ materially from those expressed in any forward-looking statement, including risks relating to the initiation and the conduct and design of research and development programs and clinical trial; availability of data from these programs; reliance on university collaborators and other third parties; expectations for regulatory matters; need for additional financing and negotiation; and consummation of in-license and/or acquisition transactions. I refer you to our SEC filings and in particular to the Risk Factors section in our Annual Report on Form 10-K filed on February 28, 2019, for a detailed description of the risk factors affecting our business. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we disclaim any obligation to do so except as required by law. I would now like to turn the call over to Glenn.

Thanks, Kathy. Good morning, everybody. We appreciate you joining our call this morning. 2019 has been a significant turning point for the company and we are most excited about our transformation to a company focused principally on the discovery and development of novel gene therapy solutions to treat orphan inherited retinal diseases with unmet medical need. As part of our strategy, we rebranded the company to IVERIC bio to better represent our new focus on gene therapy for treatment of orphan inherited retinal diseases, or IRDs. In conjunction with the new name, on April 17, 2019, the company began trading on the NASDAQ Global select market under the new ticker symbol I-S-E-E, or ISEE. We believe that advances in gene therapy technologies have been promising and they provide transform-inal next-generation therapy for patients. We are particularly interested in developing adeno-associated virus, or AAV, gene therapy product candidates to treat orphan IRDs. We believe our portfolio is based on compelling science, significant unmet medical need and commercially viable targets which should create value. Like to give you a brief update on our programs. First, we continue IND-enabling activities for our product candidate for the treatment of rhodopsin-mediated autosomal-dominant retinitis pigmentosa, or RHO-adRP, now known as IC-100. The University of Pennsylvania, or Penn, is conducting natural history and other preclinical studies of IC-100. And based on the current time lines and subject to regulatory review, we expect to initiate a Phase I/II clinical trial for IC-100 next year in 2020. On April 11, we entered into an exclusive global license with Penn and the University of Florida Research Foundation with rights to develop and commercialize novel AAV gene therapy product candidates for the treatment of BEST1-related retinal diseases, including Best vitelliform macular dystrophy, also known as Best disease, which we now refer to as IC-200. We're developing IC-200 for Best and other BEST1-related retinal disease and have initiated IND-enabling activities. Penn, including researchers at the Perelman School of Medicine at the University of Pennsylvania, and the University of Pennsylvania School of Veterinary, are continuing natural history and other preclinical studies of IC-200. Based on the current time lines and subject to regulatory review, we expect to initiate a Phase I/II clinical trial for IC-200 in the first half of 2021. We fully understand the importance of securing world-class manufacturing capabilities early on for long-term success of our gene therapy product candidates. For both IC-100 and IC-200, we've engaged a leading gene therapy contract development and manufacturing organization to manufacture preclinical and Phase I/II clinical supplies as part of our IND-enabling activities. We're also sponsoring research to evaluate a minigene strategy for Leber's Congenital Amaurosis type 10, or LCA10; and autosomal recessive Stargardt disease. Later this year, we expect results from our LCA10 program, and at that time, we'll provide an update on plans for this program. Although at the very early stages of its development, we expect to receive research results from our Stargardt disease program in 2020. As it relates to our therapeutic programs, we are on track as we look forward to receiving and reporting initial top line data from our ongoing randomized, double-masked, sham-controlled Phase IIb trial assessing the safety and efficacy of Zimura monotherapy in patients with geographic atrophy second to dry AMD in the fourth quarter of this year, 2019. In February, we completed patient recruitment for our Phase IIb randomized, double-masked, sham-controlled clinical trial assessing the safety and efficacy of Zimura monotherapy in patients with autosomal recessive Stargardt disease and expect to receive and report initial top line data from this trial in the second half of 2020. Importantly, if the data is positive from either of these trials, we intend to seek partnership opportunities for any future clinical development of Zimura. And finally, we are continuing formulation development studies for our HtrA1 inhibitor program. And subject to successful preclinical development, we expect to file an IND for a product candidate for this program in late 2020. Before I turn the call over to Kourus, I'd like to add that we are pleased to have Dr. Cal Roberts, Senior Vice President, Chief Medical Officer at Eye Care, Bausch Health Companies, and also clinical Professor of Ophthalmology at the Weill Medical College of Cornell, who joined our board in January. The magnitude of relevant ophthalmic experience and industry expertise that Cal brings to IVERIC bio is extremely valuable. We're thrilled to welcome Cal to our board and look forward to his contributions. I'd now like to turn the call over to Kourous.

Thank you, Glenn, and good morning, everyone. I would like to take this opportunity to inform you that we are planning to host a gene therapy R&D Investor Day on Friday, September 13, in New York. We will discuss our gene therapy pipeline in a greater detail and we'll be joined by highly respected gene therapy scientists and leading retina specialist who will provide the insight and expertise in gene therapy as potential treatment for orphan inherited retinal diseases. As Glenn stated, we recently entered into an exclusive license agreement for AAV gene therapies for BEST1-related retinal diseases. I would like to provide a few details on BEST1-related retinal diseases. The BEST1 gene encodes bestrophin, a multifunctional protein that regulates ion channels and homeostasis in the retinal pigment epithelial, or RPE cells, which are important for the survival of the photoreceptors, the cells that perceive light and are necessary for our vision. Mutations in the BEST1 gene are known to alter intracellular calcium signaling and disrupt ion and fluid transport across RPE cells, leading to subretinal lesions and microdetachment in the space between RPE and photoreceptor cells. In humans, over time, this can lead to development of egg yolk-like vitelliform lesions in the macula which may progress to atrophy and loss of central vision in both eyes. IC-200, our BEST1 AAV product candidate, demonstrated impressive anatomical proof of concept when it was tested in a naturally occurring canine bestrophinopathy disease model with 3 different BEST1 mutations, reversing subretinal lesions and microdetachments in all of them. The results of this work were published in February 2018 in the proceedings of the National Academy of Sciences. In a recent paper published in ophthalmic genetics, researchers in the Mayo Clinic indicated that between approximately 1 in 16,500 to 1 in 21,000 individuals in the United States may have BEST disease, suggesting that there are approximately 30,000 to 40,000 patients in the U.S. and the 5 major EU market on a combined basis with BEST disease. We have commenced IND-enabling activities for IC-200, and Penn is conducting natural history and additional preclinical studies for IC-200. Based on current clinical time lines and subject to regulatory review, we plan to initiate a Phase I/II clinical trial for IC-200 in the first half of 2021. I would like to point out that currently, there are no FDA- or EMA-approved treatment options available for treatment of patients suffering from either rhodopsin-mediated adRP or BEST1-related retinal diseases. As Glenn mentioned earlier, in addition to rhodopsin-mediated adRP and BEST1-related retinal diseases, our current AAV gene therapy portfolio also includes many gene research programs for LCA10 and autosomal recessive Stargardt disease, for which we expect to have the proof-of-concept research results in 2019 and 2020, respectively. We are delighted with the progress of our gene therapy research and development programs and the privilege of collaborating with leading scientists who are pioneers in gene therapy for retinal diseases. We continue to cultivate and expand our strong scientific relationships with investigators at the University of Massachusetts Medical School and its Horae Gene Therapy Center, the University of Florida and the University of Pennsylvania. Thank you for your time. And I will now turn the call over to Dave Carroll, please.

Thank you, Kourous, and good morning, everyone. I'd like to highlight a few items from our press release of this morning and also reaffirm our year-end cash guidance. For the quarter, our net loss totaled $12.5 million or $0.30 per share compared to a net loss of $13.1 million or $0.36 per share for Q1 2018. This decrease in net loss was driven primarily by a slight decrease in G&A expenses and an increase in interest income. Turning to our expected year-end cash balance. Our cash balance at March 31 was approximately $117 million, a $14 million decrease from year-end 2018. We reaffirm our cash guidance and expect our year-end cash balance will range between $80 million in $85 million based on our current 2019 business plan, which includes: The expansion of our gene therapy programs, the expansion of our HtrA1 development program and the continuation of our clinical development programs for Zimura. Of course, these estimates do not reflect any additional expenditures resulting from the potential in-licensing or acquisition of additional product candidates or technologies or any associated development that the company will pursue. I now turn the call back over to Glenn. Thank you for your time.

Thanks, Dave. As Kourous mentioned earlier, please save the date for our gene therapy R&D Investor Day which will be held on September 13 from New York. We'll send out more details as we get a little closer to that date. In summary, we're executing a strategy that leverages our retinal expertise and provides a clear path forward with multiple orphan IRD gene therapy programs. We believe this is an important time for the company as we advance our diversified pipeline of scientifically compelling gene therapy programs. In addition to our business development efforts, we'll continue to be aggressive but selective as we seek additional opportunities that are in sync with our gene therapy, retina-focused strategy. We are committed to effectively managing our cash position and creating value for our shareholders. We look forward to providing you with updates as our programs progress. I'd now like to turn the call back to the operator and open the line for questions.

[Operator Instructions]. We'll now take our first question from Anupam Rama from JPMorgan.

This is Matt on for Anupam. So you guys are in a pretty solid capital position now, and you mentioned that guidance for the end of year isn't going to take into account any BD. Just wondering if you've earmarked any of that cash for business development. And just as a follow-up, just for some quick housekeeping, can you remind us of the current headcount?

Sure. It's Glenn and I'll also ask Dave to add. So the current cash projection does include some very minor money for additional BD. Obviously, if it's a larger transaction, that could potentially change our guidance. But we do have some money earmarked in there for smaller transactions. If you look at some of the things we've done on the early stage, these are relatively small upfronts. Now on the HR side, we have currently 35 people on board. Dave, anything to add?

You've hit it right there.

[Operator Instructions]. We'll now take our next question from Yigal.

This is Samantha on for Yigal. Congrats on all the progress.

Thank you.

In addition -- with the corporate rebranding, in addition to making it very clear that you're going to focus on gene therapy and rare genetic ocular diseases going forward, are there any other changes that we can expect in the corporate strategy?

I think we laid it out this morning. So continued focus on gene therapy opportunities obviously first and foremost, and getting our existing programs into the clinic as we covered today. We got some real exciting research being done with University of Massachusetts Medical School around the minigene. And the therapeutic programs, we also talked about our strategy there. It's in no way less of a commitment there, but I think we have realized that these programs are very valuable. If the data is positive, those are partnering opportunities that would require large capital to complete the Phase III trials. Incidentally, not only large capital, these are very large markets, as you could see what's going on with some of our competitors that are studying the same diseases. So that is the strategy going forward. I'll just add one last piece which I mentioned in my summary, and that is continued business development. And what we've learned over the last couple of years is the landscape out there in ophthalmic research not only here in the United States but globally. So we'll continue to very selectively look for new gene therapy opportunities to bring into the portfolio in the area of IRD. So that's the strategy in a nutshell. There's a lot more involved. And I think Dave also talked about capital conservation, being sure that we're spending these dollars wisely to get as much runway as we can. So I hope that answers your question.

Yes. And for the BD, can we expect more academic collaboration? Or will it be a mix from now on between that and maybe some other industry option?

Well, I think we'll select the candidates or the partners that have the most interesting assets. What we like about the three organizations we're working with today, UPenn, UFlorida and UMass, they're leaders in this -- in the field of gene therapy. So we'll continue to look at academic. If we can find a partnership with a commercial venture or another biotech or something else of that nature, absolutely. But it's going to be based on our three criteria that: There is unmet medical need, the science is very compelling and that there is commercial viability to the option. So that's the top level criteria that we provided to all the acquisitions we've made.

Great. And one last one from us. When we get the update later on this year for LCA10, is that going to include animal data? And do you have any -- can you say right now which types of models, any models, we should be expecting? And will you also be presenting data, press release, publication, medical meeting? Or do you think it'll come when you have your upcoming Analyst Day?

Thank you for the question. As you may recall, there's already been a proof-of-concept data regarding minigene for LCA10 in a mouse model. We are currently working on optimizing that data. And then once we have the collection of all the data, then we would announce how we would proceed regarding clinical trials and IND-enabling studies. And at that point, at the due time then, we will also announce how it will be provided to you.

So we think the outcomes could be relevant. So if it happened sooner than the R&D day, obviously, we'll use a press release or a call if it aligns with our quarterly call. If not, we're also hoping to have updates at the R&D day. So very much aware that this is great science, and any progress there that's relevant, we'll share with the community.

It appears there are no further questions at this time. Mr. Sblendorio, I'd like to turn the conference back to you.

Yes, I'd like to thank everybody for listening today. We are very excited with our rebranding to IVERIC bio, and would like to continue a very robust dialogue. Thank you and have a nice day.

This concludes today's call. Thank you for your participation. You may now disconnect.