Princeton Aug 6, 2020 (Thomson StreetEvents) -- Edited Transcript of Iveric Bio Inc earnings conference call or presentation Wednesday, August 5, 2020 at 12:00:00pm GMT

* David F. Carroll

IVERIC bio, Inc. - Senior VP, CFO & Treasurer

* Glenn P. Sblendorio

IVERIC bio, Inc. - CEO, President & Director

IVERIC bio, Inc. - VP of IR & Corporate Communications

* Kourous A. Rezaei

IVERIC bio, Inc. - Senior VP & Chief Medical Officer

* Pravin U. Dugel

IVERIC bio, Inc. - Executive VP and Chief Strategy & Business Officer

Wedbush Securities Inc., Research Division - MD & Head of Healthcare of Equity Research

Good day, and welcome to the IVERIC bio Second Quarter 2020 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kathy Galante. Please go ahead.

Kathy Galante, IVERIC bio, Inc. - VP of IR & Corporate Communications [2]

Good morning, and welcome to IVERIC bio's conference call. Representing IVERIC bio today are Mr. Glenn Sblendorio, Chief Executive Officer and President; Dr. David Guyer, Executive Chairman; Mr. Dave Carroll, Chief Financial Officer; Dr. Pravin Dugel, Chief Strategy and Business Officer; Dr. Kourous Rezaei, Chief Medical Officer; Dr. Abraham Scaria, Chief Scientific Officer; and Mr. Keith Westby, Chief Operating 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 impact of the COVID-19 pandemic on our research and development programs, operations and financial position and on the practices of retinal physicians and the conduct of clinical trials, our expectations to use GATHER1, our previously announced clinical trial for Zimura for the treatment of geographic atrophy as a Phase III clinical trial, our development and regulatory strategy for Zimura and our other product candidates, including our expectations for a second Phase III clinical trial, GATHER2, evaluating Zimura for the treatment of geographic atrophy and our expectations of our Phase IIb screening trial evaluating Zimura for the treatment of autosomal recessive Stargardt disease, our hypothesis regarding complement and the HtrA1 inhibition as a mechanism of action for the treatment of geographic atrophy and potentially other retinal diseases.

Our projected use of cash and cash balances, the timing, progress and results of clinical trials and other research and development activities and regulatory submissions, the potentiality and development potential of our product candidates, the size of the potential market for indications our product candidates are intended to treat and the potential of our business development strategy.

These statements constitute forward-looking statements for the purposes 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 that could cause actual results to differ materially from those expressed in any forward-looking statements, including risks relating to the future progression of the COVID-19 pandemic and its impact on our research and development program, operations and financial position, initiation of the progress of research and development programs and clinical trials; availability of data from these programs; reliance on contract development and manufacturing organization, university collaborators and other third parties; establishment of manufacturing capabilities; expectations for regulatory matters; need for additional financing and negotiation and consummation of business development transactions and other risks.

I refer you to our SEC filings and in particular to the risk factors included in our current report on Form 8-K filed on June 17, 2020, 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 will now turn the call over to Glenn.

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Glenn P. Sblendorio, IVERIC bio, Inc. - CEO, President & Director [3]

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Thanks, Kathy, and good morning, everyone. We appreciate and thank you for joining our call this morning. First, I hope you and your families are safe and healthy as we continue to navigate through these very challenging times. Here at IVERIC, we are very pleased with the level of execution we have achieved during the second quarter. We are thrilled to have reached another major milestone with Zimura.

In June, we announced positive 18-month results from GATHER1. Our first Phase III clinical trial for Zimura, a novel complement C5 inhibitor for the treatment of geographic atrophy, or GA, secondary to age-related macular degeneration or AMD. The GATHER acronym for Zimura Phase III clinical trials represents GA therapy. The 18-month results from GATHER1 indicated continuous Zimura treatment benefit with a favorable safety profile in patients with GA secondary to AMD. We think this is an impressive achievement since we believe GATHER1 is currently the only Phase III clinical trial showing suppression of GA growth with continuous treatment for 18 months.

Shortly following the positive results from GATHER1, we initiated patient enrollment in GATHER2, our second Phase III clinical trial for Zimura for the treatment of GA secondary to AMD. Our main priority is to aggressively drive patient recruitment and retention in the GATHER2 clinical trial. If the primary endpoint is achieved at month 12, we intend to file for approval of Zimura with the U.S. Food and Drug Administration and the European Medicines Agency.

The initiation of patient enrollment in GATHER2 brings us another step closer to potentially delivering a clinical meaningful therapy safely to patients with GA, where there is currently no treatment. We continue to work closely with the FDA, and we are pleased to receive FDA fast-track designation for Zimura for the treatment of GA secondary to AMD. In addition to the complement systems' potential role in GA and Stargardt disease, we believe, based on scientific data, that Zimura may have potentially -- may have a potentially impactful role in treating intermediate AMD as well as wet AMD. We believe there is strong scientific rationale to support the development of Zimura in multiple forms of AMD early and advanced, dry and wet.

We believe HtrA1, or high-temperature requirement A serine peptidase protein 1, could be another important target in the treatment of AMD. We called this program IC-500. HtrA1 is a small molecule inhibitor that is a promising compound in our pipeline. HtrA1 up-regulation has been implicated as a strong risk factor in the development of dry AMD. We are particularly encouraged by IC-500's ability to engage the target, both extra and intracellularly in early preclinical work.

Based on current time lines, we are planning to submit an IND to the U.S. FDA for IC-500 in GA secondary to AMD in 2021. Although bringing to more, to patients is our top priority, we continue to focus on our gene therapy program in orphan inherited retinal diseases. Kourous will review the details of our gene therapy pipeline in a few moments.

Following the positive GATHER1 18-month data, we strengthened our balance sheet with an underwritten public offering and a concurrent private placement with Vivo Capital and Samsara BioCapital, raising approximately $160 million in gross proceeds. Dave will cover our cash runway later in this call. We believe this fundraising enables us to further execute on our strategy to develop and deliver retinal treatments through our Zimura -- through Zimura, our gene therapy programs and IC-500 with potential to create long-term shareholder value.

At the beginning of the second quarter, we welcomed Dr. Pravin Dugel, who many of you know, to IVERIC bio. Pravin is a globally recognized retinal specialist, who has an extensive network and long-standing relationships with the bio and pharma ophthalmic industry. As our Executive Vice President and Chief Strategy and Business Officer, Pravin's experience and network will be instrumental in helping us build alliances with potential future collaborators, investors and other stakeholders. Pravin is helping to lead the company's strategy as we advance our portfolio of therapeutics and gene therapy R&D programs targeting multiple retinal diseases.

In July, we had the privilege of announcing the addition of Dr. Mark Blumenkranz to our Board of Directors. Mark is a biotech industry leader and internationally known vitreoretinal specialist, with a notable expertise in pharmaceuticals for age-related macular degeneration and ocular gene therapy. Mark has cofounded multiple biotech and medical technology companies. His experience and expertise in leading and building biotech companies, this further strengthens our Board. I'd now like to turn the call over to Pravin.

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Pravin U. Dugel, IVERIC bio, Inc. - Executive VP and Chief Strategy & Business Officer [4]

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Good morning, everyone. I hope you're all well. Thank you, Glenn, for the kind introduction. And this is an exciting time at the company. And it is my great pleasure to work closely with Glenn, David, Kourous and all my new colleagues. We are very excited by these 18-month GATHER1 results. This is a significant milestone for Zimura and potentially a significant advancement for patients with GA secondary to AMD.

We believe the 18-month data that we reported this past June further validates our 12-month results regarding Zimura's continuous positive treatment effect with a favorable safety profile in GA secondary to AMD and highlights the potential role of complement C5 inhibition in this disease. In the GATHER1 clinical trial, Zimura met its prespecified primary efficacy endpoint at 12 months and reached statistical significance in the international multicenter randomized, double-masked, sham-controlled Phase III clinical trial in GA secondary to AMD.

The reduction in the mean rate of GA growth over 12 months was 27.38% with a p-value of 0.0072 for the Zimura 2-milligram group as compared to the corresponding sham control group and 27.81% with a p-value of 0.0051 for the Zimura 4-milligram group as compared to the corresponding sham control group. These data for both dose groups were statistically significant. These positive 12-month data are further supported by the 18-month results, which we reported in June.

Over 18 months, the reduction in the mean rate of GA growth was 28.11% for the Zimura 2-milligram group as compared to its corresponding sham group and 29.97% for the Zimura 4-milligram group as compared to its corresponding sham control group. The primary efficacy endpoint was prespecified at 12 months using all of the power to detect a statistically significant difference. Therefore, the p-values at the 12-month statistical analyses are descriptive in nature. The descriptive p-value for the treatment effects at month 12 were a p-value of 0.0014 for the Zimura 2-milligram group and a p-value of 0.0021 for the Zimura 4-milligram group.

We believe having 18-month positive data with continuous treatment is a key differentiating factor for us when compared to other product candidates being developed for GA. Another key differentiating factor for this trial is that the treatment effect was observed in the very first measurement at 6 months with an increasing absolute difference between the treated group and the sham at each subsequent measurement time point. In other words, if these results are replicated in GATHER2 trials, we believe a doctor would be able to tell his or her patient that this drug has been -- has shown an effect as early as 6 months and then may have an increasing effect with every subsequent injection thereafter.

We do not believe this impactful efficacy profile has been observed in any other GA clinical trial to date. Zimura's favorable safety profile, another potential differentiating factor was maintained throughout the 18-month trial with no investigator-reported Zimura-related adverse events, no cases of endophthalmitis and no Zimura-related inflammation. The reported incidence of CNV in the untreated fellow eye was 11 patients, 3.8%; and in the study eye was 3 patients, 2.7% in the sham control group; 2 patients, 7.7% in the Zimura 1 milligram group; 8 patients, 11.9% in the Zimura 2-milligram group; and 13 patients, 15.7% in the Zimura 4-milligram group.

Note, we believe these rates of CNV were lower than what has been published for C3 inhibition, despite the fact that there were more Zimura injections administered over a longer period of time in a patient population with faster progressing disease. This is particularly the case when you look at the ratios of the incidents in the treated arms versus sham. The most frequently reported ocular adverse events in GATHER1 were related to the injection procedure and not the drug.

These GATHER1 reports are from the pre-COVID era, making the trial what we believe is the only pure pre-COVID positive Phase III clinical trial in GA. We believe there is a new environment for clinical trial execution and that the robust data from GATHER1 may help drive recruitment and retention of patients in GATHER2 and any future trials we may conduct for Zimura.

In the challenging COVID-19 pandemic era, we believe that investigators will be more enthusiastic and comfortable recruiting and retaining patients in a clinical trial with a drug that already has high-quality positive Phase III data. We recognize the challenges that retinal physicians face with their practices and conducting clinical trials in the COVID era, and we're working closely to support collaborating physicians. Kourous will discuss how we plan to leverage the quality of the GATHER1 results to maximize patient recruitment and retention for GATHER2 Phase III clinical trial.

Turning to our business development. We plan to continue our aggressive, but selective efforts as we continue to explore our options for future development and potential commercialization of Zimura, including potential out-license and collaboration opportunities.

Thank you for your time. I will now turn the call over to Kourous.

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Kourous A. Rezaei, IVERIC bio, Inc. - Senior VP & Chief Medical Officer [5]

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Thank you, Pravin, and good morning, everyone. We are excited to have the robust Zimura GATHER1 results presented at the association for Research in Vision and Ophthalmology, Arvo Annual Meeting by Dr. Karl Csaky, T. Boone Pickens' Senior Scientist and Director of the Molecular Ophthalmology Laboratory at the Retina Foundation of the Southwest and also presented at the American Society of Retina Specialists, ASRS Annual Meeting run 2 weeks ago by Dr. Baruch Kuppermann, Chairman of the Department of Ophthalmology at the University of California Irvine.

In the coming months, we are planning for our data to be presented by key opinion leaders at the major retina meeting in the U.S. and around the world. The positive GATHER1 clinical trial data has ignited a significant enthusiasm in our investigators to participate and enroll patients in the GATHER2 clinical trial. Further, we believe that the early onset and continuous treatment effect demonstrated in the GATHER1 clinical trial will be a key motivator for retention in the GATHER2 trial.

Our experienced clinical trial team has worked tirelessly in the past few months to support the smooth and expeditious initiation of the GATHER2 clinical trial. Some of these efforts include hosting multiple virtual websites with investigators and study coordinators in the U.S. and around the world. Frequent communications with the clinical trial site coordinators to assess and support their preparedness for COVID-19 and minimizing any potential disruption.

Making arrangements for patients to remotely perform certain trial-related tasks to minimize the time spent by the patients at the clinical trial sites and to reduce their exposure risk and ensure a safe environment for our patients. We thank all our principal investigators and their staff for their enthusiasm and support for the GATHER2 clinical trial.

Now I would like to provide some details regarding the design of the GATHER2 trial. GATHER2 is an international randomized, double-masked, sham-controlled, multicenter Phase III clinical trial, evaluating the safety and efficacy of Zimura 2-milligram in patients with geographic atrophy secondary to age-related macular degeneration. We are planning to enroll approximately 400 patients in this clinical trial.

Patients will be randomized 1:1 into 2 cohorts. The first cohort receiving monthly administration of Zimura 2-milligram for 12 months and the second cohort receiving monthly administration of sham. The prespecified primary efficacy endpoint is the mean rate of change in geographic atrophy growth over 12 months, measured by fundus autofluorescence at 3 time points; baseline, month 6 and month 12, very similar to the GATHER1 clinical trial.

If the primary efficacy endpoint is met at month 12, we are planning to file for marketing approval of Zimura for the treatment of geographic atrophy, secondary to age-related macular degeneration with the FDA and EMA. At month 12, we plan to re-randomize patients in the Zimura 2-milligram arm to receive either monthly or every-other-month administrations of Zimura 2-milligram. The final safety evaluation will be performed at month 24 for all patients.

Turning now to Stargardt disease. We currently have an ongoing Phase IIb screening clinical trial assessing the safety and efficacy of Zimura in patients with autosomal recessive Stargardt disease. Initially, we enrolled 95 patients in this trial. We have reopened the enrollment in this trial to add approximately 25 patients with the goal of enrolling a total of 120 patients as was initially intended in the protocol for this trial. We remain masked for this trial and plan to perform data analysis when all the patients have reached the month-18 time points.

Regarding our gene therapy programs, we continue with our IND-enabling activities and natural history studies for IC-100, our product candidate for rhodopsin-mediated autosomal-dominant retinitis pigmentosa and are planning to initiate the Phase I/II clinical trial for the first half of 2021. We also continue with the IND-enabling activity and natural history studies for IC-200, our product candidate for BEST1-related retinal diseases and are planning to initiate the Phase I/II clinical trial next year in 2021.

Our minigene programs continue to move forward. We are currently optimizing the minigene construct for our miniCEP290 program and plan to select the leads construct later this year. Thank you for your time. And please stay safe. I will now turn the call over to Dave. Dave?

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David F. Carroll, IVERIC bio, Inc. - Senior VP, CFO & Treasurer [6]

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Thank you, Kourous, and good morning, everyone. I'd like to highlight a few items from our press release this morning and also update our year-end cash guidance and our expected cash runway.

For the quarter, our net loss totaled $18.6 million or $0.32 per share compared to a net loss of $14.4 million or $0.35 per share for Q2 2019. This increase in net loss was driven primarily by an increase in R&D expenses, offset by a favorable settlement of a state income tax audit. Year-to-date, our net loss totaled $33.7 million or $0.61 per share compared to a net loss of $26.9 million or $0.65 per share for the same period in 2019, again, due to an increase in R&D expenses offset by a favorable settlement of the state tax audits.

Turning to our expected year-end cash balance and cash runway. We raised approximately $150 million in our June 2020 public offering and concurrent private placement. We now expect our year-end cash balance will range between $215 million and $220 million. We estimate that our cash will be sufficient to fund our capital expenditures and operating expenses as currently planned for at least mid-2024, excluding any potential approval or sales milestones payable to the Archimex Corp. or any potential commercialization expenses towards Zimura.

These estimates are based on our current business plan, which includes the continuation of our clinical development programs for Zimura, the progression of IC-100 and 200 gene therapy programs into the clinic and the advancement of our IC-500 development program. Our estimates assume that we will enroll approximately 400 patients for the GATHER2 trial. If facts and circumstances change, we'll adjust our guidance accordingly. 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 may pursue.

I'll now turn the call back over to Glenn. Thank you for your time.

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Glenn P. Sblendorio, IVERIC bio, Inc. - CEO, President & Director [7]

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Thanks, Dave, and I appreciate that. So just to recap the second quarter, despite these very challenging times, it was a good quarter for IVERIC bio.

There's a number of key takeaways: we completed our 18-month results for GATHER1. And as you've seen and we discussed today, with continuous effect and a good safety profile; second, we raised $160 million in gross proceeds, further strengthening our balance sheet and adding to our cash run normally; and third, although it was a difficult discussion back in March when we decided to pause the GATHER2 trial, we have now begun that trial and are recruiting patients.

So a good quarter for us. So I'd like to thank all of you for listening today to our call and for your continued support. And now I'll turn the call over to the operator so that we can open up the line for any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

We will now take our first question from Stacy Ku of Cowen.

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Stacy Ku, Cowen and Company, LLC, Research Division - Equity Research Associate [2]

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Congratulations on the progress. So first question, given the time spent for sites in GATHER2 for Phase III and the recent trial initiation, how should we be thinking about the pace of enrollment? Would you be willing to give us some guidance on timing?

And my second question is around something that was briefly touched upon during your prepared remarks, but curious if you could elaborate what the team is thinking in terms of potential ex-U. S. partnerships. When would you ramp up these conversations?

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Glenn P. Sblendorio, IVERIC bio, Inc. - CEO, President & Director [3]

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Thank you, Stacy. It's Glenn, and thanks for the questions. First, on the timing for GATHER2, I mentioned a couple of things. It's early days and this is also a very competitive environment. And I think you've seen our execution in the past. So while we are dealing with a unique situation here with COVID, and I think as we've updated you through the second quarter, we've kept a very active and continuous dialogue with the investigators.

So at the current time, we're not going to provide any guidance as to when we finish the trial. So -- but we will continue to move at a pace that's as quick as we can. The key to that success will be the number of sites, the quality of the sites and obviously, the patient enrollment. So I am going to provide you detailed guidance at this point and the fact that we've got a pretty experienced team doing this.

As for the second question as it relates to collaborations. I think Pravin and his prepared statements did talk about that. Again, priority one for us today is the recruitment and retention of patients in GATHER2, but we are going to continue to explore our options for potential commercialization of Zimura, including a potential our-license. As you know, we do not have operations overseas even with the successful capital raise in a small company. So partnership at the right time will be an important part of our efforts to commercialize Zimura. Thanks for the calls -- thanks for the questions, Stacy.

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Operator [4]

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And we will now take our next question from David Nierengarten of Wedbush.

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David Matthew Nierengarten, Wedbush Securities Inc., Research Division - MD & Head of Healthcare of Equity Research [5]

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I'm sorry. I was on mute. Apologies. A couple of questions from me. First off, the...

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Glenn P. Sblendorio, IVERIC bio, Inc. - CEO, President & Director [6]

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