Ocugen, Inc. (OCGN) Earnings Call Transcript

Good morning, and welcome to the Ocugen Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Ken Inchausti, Head of Investor Relations and Communications for Ocugen. You may begin.

Thank you, operator. I'd like to welcome you to our Conference Call. With me today is Ocugen's Chairman and CEO; Dr. Shankar Musunuri, who will provide a business update; and our Financial Officer -- Chief Financial Officer and Head of Corporate Development, Sanjay Subramanian, who will provide a financial update. Earlier this morning, we issued a press release, including a business update and Second Quarter 2021 Financial Results. We encourage the listeners to review the press release, which is available on our website at www.ocugen.com. This call is also being recorded and a replay, along with accompanying slide presentation, will be available on the Investors Section of the Ocugen website for approximately 45 days. As always, we need to advise you that this call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including, among other things, the uncertainties inherent in research and development of our product candidates, risks to our business related to the ongoing COVID-19 pandemic, uncertainty regarding whether and when we will be able to submit a biologics license application for COVAXIN to the FDA and whether and when we will receive regulatory approvals for COVAXIN in the United States or Canada. These and other risks and uncertainties are more fully described in our periodic filings with the Securities and Exchange Commission, including the risk factors described in the section entitled Risk Factors in the quarterly and annual reports we file 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 our Form 10-Q with the SEC today. I will now turn the call over to Ocugen's Chairman and CEO, Dr. Shankar Musunuri.

Thank you, Ken. Good morning, everyone, and thank you for joining, and we hope you and your families are safe and well. We are now more than 18 months into coronavirus pandemic, and we share the concerns of our public health officials of the risks and challenges posed by this mutating virus. The headlines speak every day to a fourth pandemic wave, over many regions in the United States, and we now have a pandemic of the unvaccinated that represents the vast majority of new cases, surging through North America. It is really difficult to hear accounts of people in the hospital realizing too late that a vaccine and that taking well-known precautions could potentially have prevented serious illness and death. The same holds tool for our friends in the North. Last week, The Public Health Agency of Canada, too, reported that almost 85% of recent reported COVID-19 cases across Canada are among those who are unvaccinated. Every day, my leadership team and I, along with the staff at Ocugen, discuss our role and potential contributions to the broader public health agenda and the fight against COVID-19. Just as I stated on our last call with you, our hearts go to those who have lost loved ones or have been personally touched due to this virus. And our thoughts are also with the health care workers, public health officials and scientists who are working every day to bring this pandemic back under control. Today, I would like to provide you an update on Ocugen's achievements in conjunction with our co-development partner for COVAXIN Bharat Biotech. For the second quarter, we continue to believe that COVAXIN, if approved, would be a critical addition to our national arsenal to fight this pandemic, and we believe that our efforts during second quarter represent important steps, forward toward bringing COVAXIN to North America. All of this would not be possible without our collaboration with Bharat Biotech. As you know, these past months continue to be trying times for India. The demand for vaccines is great, and they have continuously been working to deliver for India and the 16 other countries in which COVAXIN has been authorized and approved for use. For their work and partnership, we see, thank you. On this slide, we have summarized the major events that have transpired over the second quarter of 2021. In June, Ocugen entered in an amendment to our agreement with Bharat Biotech, that expanded our ability to develop, manufacture and commercialize COVAXIN into Canada in addition to our existing rights in the United States. That was followed up with the discussions with Health Canada officials and lit to our ability to file a regulatory submission under their interim order, which was transitioned into a new drug submission for COVID-19. We're extremely pleased that this was accomplished in such a short order, especially when the urgency is increasing in Canada. Now the review has started. We are ready to answer their questions, and we'll work with them throughout their review. It's important to note that Ocugen utilize an affiliate called Vaccigen in Canada to help facilitate the submission and interaction with Health Canada. This affiliate will be responsible for the development and potential commercialization of COVAXIN in Canada. Next, I will discuss our engagement in the United States. As we stated in early June, the U.S. Food and Drug administration directed us to submit a biological licensing application, or BLA for COVAXIN. The data requirements for COVAXIN are still being evaluated. While we anticipate a need for an additional clinical trial, we're confident in our ability to navigate and address the FDA's process and requirements. Our partner, Bharat Biotech, posted compelling Phase III clinical data in early July, which are being evaluated for peer reviewed publication. These data showed that COVAXIN demonstrated an overall efficacy against COVID-19 at 77.8% and 93.4% against severe disease. Equally impressive is that this Phase III clinical trial was the first one to evaluate the efficacy of a COVID-19 vaccine against the Delta variant within a controlled setting. In fact, the majority of the symptomatic cases identified in aggregate in the COVAXIN and control arms in the Phase III clinical trial for COVID-19 variants. The majority of which were identified to be Delta variant B.1.617.2. Data showed COVAXIN achieving a 65.2% efficacy rate against the Delta variant. Data from COVID cases, demonstrated low viral load, at least 104 less in vaccinated individuals compared to placebo group, showing potential for less transmission of the disease by individuals who receive COVAXIN. Furthermore, the data show and efficacy against asymptomatic disease at 63.6%, suggesting the potential of the vaccine to reduce the asymptomatic spread of the disease. Finally, a readout of the safety data demonstrated that only 12.4% of participants in both the treatment and control arms of the clinical trial reported an adverse event, less than 0.5% of participant reported a severe disease -- severe adverse event. The totality of these data raises two important points, which make me optimistic about COVAXIN, serving a critical role in North America. The first, these data on Delta are very suggestive that COVAXIN is a valuable tool in our fight against this virus now, especially with this variant not dominating this fourth wave we are experiencing. This is a point we have been communicating to stakeholders, including FDA and Health Canada. Second, because this vaccine trains the immune system to attack the whole COVID-19 virus based on multi-antigens, including the spike in nucleocapsid proteins, COVAXIN has the potential to be effective against multiple variants and reduce the possibility of mutant virus escape. We recognize that this COVID-19 pandemic will continue to be a long-term challenge to our health care system and society and such a multi-pronged ability to attack the virus so effectively has the potential to bring flexibility into our public health strategies, providing COVAXIN as an option, which is built on traditional platform, similar to Polio vaccine, which has an established efficacy and safety record, may benefit many unvaccinated individuals and result in significant benefit to public health. On a final note about our progress for COVAXIN. In June, Ocugen selected Jubilant HollisterStier, which is a renowned contract manufacturing organization to be our partner for COVAXIN to prepare for potential commercial manufacturing in North America. Technology transfer from Bharat Biotech to Jubilant has also been initiated. And as you saw back in March, we hired JP Gabriel as our Head of Manufacturing and Supply Chain, which he is now building out a team experienced in drug substance and drug product management, logistics and packaging and procurement. This team is not solely focused on COVAXIN, but will have supply chain responsibilities for our entire portfolio of assets. This rounds out our update on COVAXIN. Now I'd like to turn our attention to our ocular portfolio. We remain on track to initiate our first gene therapy Phase I/II clinical trial for OCU400 later this year. These trials will be targeting 2 specific genome types, rhodopsin and NR2E3. Currently, our toxicology studies are progressing well with readouts forthcoming. All of these will support an IND that we anticipate being filed in the fourth quarter. This has been a busy quarter with much going on behind the scenes to advance COVAXIN and our ocular portfolio, and there is much more ahead. I will now turn the call over to Sanjay to provide our Second Quarter 2021 Financial Update. Sanjay?

Thank you, Shankar, and good morning, everyone. I will now provide an overview of key financial results for the second quarter of this year. We ended the quarter with cash, cash equivalents and restricted cash, totaling $115.8 million as of June 30, 2021 compared to $24.2 million on hand as of December 31, 2020. Our research and development expenses for the quarter ended June 30, 2021 were $18.9 million compared to $1.6 million for the second quarter ended June 30, 2020. R&D expenses for the quarter ended June 30, 2021, included $15 million of expense related to the upfront payment made to Bharat Biotech for rights to COVAXIN in Canada. General and administrative expenses for the quarter ended June 30, 2021, were $6.8 million compared to $1.8 million for the previous year's second quarter ended June 30, 2020. The increase was primarily driven by $1.5 million increase in noncash stock-based compensation expense, approximately $2 million of proxy solicitation costs incurred for our stockholder meetings and an increase in infrastructure cost to support the continued growth of the organization. Net loss was $26 million or $0.13 net loss per share for the quarter ended June 30, 2021 compared to a net loss of $16.2 million or $0.19 net loss per share for the previous year's quarter ended June 30, 2020. Finally, we are very pleased with our inclusion into the Russell 3000 Index as was with 2,000 index. It's a demonstration of the growing value of Ocugen, and we are happy to be a part of this important benchmark. That concludes my report.

Thank you, Sanjay. With that, we'll open up the call for questions. Operator?

[Operator Instructions] Our first question comes from the line of Rob -- Keay Nakae.

Go ahead, Keay.

So let's start with the Canadian approval review. Do you have a good understanding at this point? What other data they're going to need? And just any estimate on how long you think the review might take and when the authorization might be granted?

We have submitted all the data, what is needed for the submission -- for Canadian submission Keay. And again, on the specific timeline and the approval clock, we can't give you that at this stage. All I can say is it's under active review by Health Canada. As we get questions, we're ready to respond to them very promptly and provide any information they need.

Okay. And then maybe let's switch then to the U.S. and the FDA. In terms of the additional study. Do you -- can you give us a review of what the design of that study might look like?

Again, we are in discussions with FDA continuously. And as soon as we reach an agreement on requirements for the BLA, any additional studies we need, we'll be updating the markets.

Okay. Is there an expectation of -- in terms of timing when you might start -- be in position to start that study?

From our resource perspective and from a marketing perspective, we'll be ready to start the study this year. If -- okay.

Okay. Great. And then let's go ahead and shift to the gene therapy programs. So at -- can you give us an estimate of when you may complete the GLP tox? And what do you anticipate you'll be able to say about those results?

Yes. The GLP toxicity, so we're anticipating data in the next few months. We are on target to file our IND by the end of the year, as planned. Once again, as the readouts come out prior to filing IND, we'll be happy to share that news with the market. And currently, everything is on target.

Our next question comes from the line of Robert LeBoyer with NOBLE Capital.

First question is on the submission of the data for publication from the Phase III? And could you give any details about the type of publication, whether it's a general interest like the New England Journal or something more specific like an Immunology Journal and what the timing might be?

Again, the publication, the Bharat Biotech, our partners are directly dealing. Once again, it's going to be one of the key medical journals. And so they're directly dealing with them. And as soon as we know more, we'll update you.

Sure. Okay. And in terms of the FDA and the BLA submission, can you elaborate at all on the type of study that might be needed in terms of its size, scope or any of the timing? Is it too early to determine those things? Or are there any details that you can share?

Yes. At this stage, unfortunately, I cannot share any details. Once again, as soon as we reach an agreement on the path, and we'll be happy to provide update to the markets at that time.

Our next question comes from the line of Swayampakula Rama with H.C. Wainwright.

This is RK from H.C. Wainwright. A couple of quick questions. So I understand you're in discussions with the Canadian regulatory authority. So assuming the review goes fine, and you have a successful result. In terms of commercialization, do you -- how does this work? Do they have to be approved by individual provinces? Or is this a federal program in the Canadian geography?