EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) Q4 2023 Earnings Call Transcript

EyePoint Pharmaceuticals, Inc. (NASDAQ:EYPT) Q4 2023 Earnings Call Transcript March 7, 2024

EyePoint Pharmaceuticals, Inc.  isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning. My name is Kevin and I will be your conference operator today. At this time, I would like to welcome everyone to the EyePoint Pharmaceuticals Fourth Quarter and Full Year 2023 Financial Results and Recent Corporate Development Conference Call. There will be a question-and-answer session to follow at the completion of the prepared remarks. Please be advised that this call is being recorded at the company’s request. I would now like to turn the call over to George Elston, Executive Vice President and Chief Financial Officer of EyePoint Pharmaceuticals.

George Elston: Thank you and thank you all for joining us on today’s conference call to discuss EyePoint Pharmaceuticals fourth quarter and full year 2023 financial results and recent corporate developments. With me today is Dr. Jay Duker, President and Chief Executive Officer. Jay will begin with a review of recent corporate updates and discuss the ongoing clinical trials for EYP-1901. I will close with commentary on the fourth quarter and full year 2023 financial results. We will then open the call for your questions. Earlier this morning, we issued a press release detailing our financial results and recent operational developments. A copy of the release can be found in the Investor Relations tab on the corporate website, www.eyepointpharma.com.

Before we begin our formal comments, I’ll remind you that various remarks we will make today constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. These include statements about our future expectations, clinical developments and regulatory matters and timelines, the potential success of our products and product candidates, financial projections, and our plans and prospects. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC and in other filings that we may make with the SEC in the future.

Any forward-looking statements represent our views as of today only. While we may elect to update those forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. I’ll now turn the call over to Dr. Jay Duker, President, and Chief Executive Officer of EyePoint Pharmaceuticals.

Jay Duker: Thank you, George. Good morning, everyone, and thank you for joining us. 2023 was truly an exceptional year for EyePoint Pharmaceuticals on all fronts. We completed our transformation into a clinical-stage biopharmaceutical company with the out license of the YUTIQ franchise last spring for $82.5 million plus future royalties. We advanced our lead pipeline asset, EYP-1901, across three promising indications, wet age-related macular degeneration, or wet AMD, non-proliferative diabetic retinopathy, or NPDR and diabetic macular edema or DME. We also significantly strengthened our balance sheet, ending 2023 with $331 million in cash and investments and no debt. This is driven by the YUTIQ sale and a $230 million oversubscribed follow-on equity offering.

I’d like to review our recent progress for our lead product candidate, EYP-1901, a potentially paradigm-altering treatment for patients suffering from VEGF-mediated retinal diseases. In December, we reported positive top-line efficacy and safety data from our Phase 2 DAVIO 2 clinical trials in wet AMD, achieving all primary and secondary endpoints. We expect to initiate the first pivotal Phase 3 wet AMD trial, the LUGANO trial, in the second half of this year, with the second pivotal trial, called the Lucia [ph] trial, to follow. We also look forward to reporting top-line data for the Phase 2 PAVIA clinical trial in the second quarter of this year, and top-line data from the Phase 2 VERONA trial in the first quarter of 2025. As a reminder, EYP-1901 is an investigational, sustained-release product that consists of a vorolanib, a selective and patent-protected tyrosine kinase inhibitor, or TKI, formulated in Durasert E, the bioerodible version of our proprietary Durasert technology.

Vorolanib brings a new mechanistic approach to the treatment of VEGF-mediated retinal diseases by acting as a pan-VEGF receptor blocker, blocking all VEGF isoforms. In addition to the positive safety and efficacy data reported to date, vorolanib has also demonstrated neuroprotection in a validated retinal detachment animal model. Vorolanib may also have an antifibrotic effect, as it blocks the PDGF receptor. EYP-1901 is delivered by an intravitreal injection in the physician’s office, similar to the current FDA-approved anti-VEGF biologic treatments. Unlike currently-approved biologics and other sustained-release anti-VEGFs in development, EYP-1901 is shipped and stored at ambient temperature. Additionally, vorolanib, through Durasert E, is immediately bioavailable in the eye, featuring an initial burst of drug followed by our near constant zero-order kinetic release for up to nine months.

Our goal is to provide a product that maintains stable vision and retinal anatomy for the majority of wet AMD patients with an every six month label. This could represent a significant improvement compared to the current anti-VEGF treatments that are dosed on average every two months in the United States, and this may allow patients and practitioners the flexibility to reduce the number of visits without sacrificing visual outcomes. Turning to the Phase 2 DAVIO 2 non-inferiority clinical trial evaluating EYP-1901 in previously treated wet AMD patients as a potential maintenance therapy, all primary and secondary endpoints were achieved in this trial, including a statistically non-inferior change in best corrected visual acuity, or BCVA, versus the Aflibercept control for both EYP-1901 arms.

Non-inferiority change in BCVA is the most commonly used endpoint in wet AMD pivotal trials and subsequent FDA approval. Importantly, EYP-1901 continued to demonstrate a favorable safety profile with no EYP-1901 related ocular or systemic serious adverse events, or SAEs, reported. We also saw an over 80% reduction in treatment burden, measured both prospectively and retrospectively, with strong anatomical control in both EYP-1901 cohorts. At the Angiogenesis meeting in February, investigators reported that a subgroup of DAVIO 2 patients remained anti-VEGF supplement free up to six months after delivery of EYP-1901. This subgroup demonstrated numerical superiority in change in BCVA, along with strong anatomical control compared to the Aflibercept control group.

This result confirms that the positive top line data from the Phase 2 DAVIO 2 trial were driven by EYP-1901 and not by supplemental injections. We anticipate initiating the LUGANO Phase 3 trial in wet AMD in the second half of 2024, and the second pivotal trial, Lucia, several months after. The Phase 2 DAVIO 2 trial of EYP-1901 was designed to mirror the anticipated design of the Phase 3 trials based on our type C meeting with the FDA, as well as other interactions. The key differences between DAVIO 2 and the Phase 3 trials are that we anticipate the Phase 3 will feature redosing of EYP-1901 every six months. The primary efficacy endpoint will be non-inferior change in BCVA at approximately one year, and the two EYP-1901 arms will be one or two inserts versus the two and three inserts used in DAVIO 2.

The decision to use one versus two inserts in the Phase 3 trials is driven by the positive DAVIO 2 data for both the 2 milligram and the 3 milligram doses. The LUGANO Phase 3 trial will be conducted largely in the U.S., and the Lucia Phase 3 trial will include U.S. and ex-U.S. sites as we intend to seek EMA approval. We look forward to reviewing our plans at the end of Phase 2 meeting with the FDA in April, and we expect to provide updates after those meeting minutes are received. As I mentioned earlier, we are on track to report top-line data from the Phase 2 PAVIA trial in 2Q of this year. PAVIA is a randomized controlled trial evaluated EYP-1901 as a potential nine-month treatment for moderately severe to severe NPDR. The trial enrolled 77 patients who were randomly assigned to one of two doses of EYP-1901, or to the control group that received a sham injection.

There remains a great unmet need for a safe, efficacious, and convenient treatment for NPDR that proactively reduces the risk of progressing to site-threatening complications over the long-term. Approximately 90% of patients with NPDR receive no course of treatment apart from observation by their eye doctors until their disease progresses to DME and/or proliferative diabetic retinopathy. This is because the approved treatments are short-acting and therefore require frequent injections. We believe EYP-1901 could potentially create a new market for NPDR patients by providing an every nine-month treatment option that matches a patient’s visit cadence. In the PAVIA trial, the primary endpoint is structural. A photograph of the retina is taken on day one of the study and then compared to a photograph taken at month nine.

A reading center independently evaluates the photographs to assess the degree of retinopathy on the diabetic retinopathy severity scale, abbreviated the DRSS. The DRSS is a well-validated measure that correlates the functional with the anatomic outcomes. The accepted clinically relevant step change demonstrates a two-step reduction in the scale. In the PAVIA trial, we are looking for at least one-third of the patients to show a greater than or equal to two-step reduction on the DRSS scale at nine months. It’s important to note that this is a lower limit and not an expectation. We will also be looking at important secondary endpoints, including reduction in vision-threatening complications, prevention of DME and proliferative diabetic retinopathy, degree of retinal ischemia, and safety.

Consistent with our results to date for this program, we expect to see a continued favorable safety profile, a critical factor in any retinal drug. Turning to our third indication, in January, we initiated the Phase 2 VERONA trial evaluating the EYP-1901 and a second diabetic eye disease indication, DME, a site-threatening complication of diabetes that can lead to severe visual loss. Similar to wet AMD, this is a VEGF-mediated disease where there is a significant need for differentiated and longer acting treatments. Verona is a randomized controlled single-mast Phase 2 trial of EYP-1901 and DME patients previously treated with standard-of-care anti-VEGF therapy. The three-armed trial is expected to roll approximately 25 patients, randomized to one of two doses of EYP-1901 or an Aflibercept control.

The primary efficacy endpoint of the VERONA trial is time to first anti-VEGF supplement, up to 24 weeks, based on established criteria. Secondary endpoints include safety, change in BCVA, change in central subfield thickness as measured on OCT, and change in DRSS over time. We remain on track to report top-line data from the VERONA trial in the first quarter of 2025. We remain highly encouraged by the growing body of positive clinical data for EYP-1901, and we are optimistic that EYP-1901 is the potential to change the current treatment paradigm for VEGF-mediated retinal diseases. Turning to our pipeline programs, we announced a new preclinical program, EYP-2301, which delivers a promising tie-to-agonist Razuprotafib, formerly known as AKB-9778, formulated in Durasert E.

Razuprotafib is an inhibitor of vascular endothelial protein tyrosine phosphatase or VE-PTP. We believe that delivering EYP-2301 intravitrally has the potential to offer new site-saving treatment for patients with severe retinal disease, either alone or in combination with anti-VEGFs. We continue to evaluate additional molecules for sustained delivery in Durasert E, including complement inhibition and rare diseases, and hope to update you on these programs later this year. Last, I’m delighted to welcome Ramiro Ribeiro, M.D., Ph.D. to EyePoint, as our new Chief Medical Officer. Dr. Ribeiro is a trained retinal specialist who joins us from Apellis Pharmaceuticals, where he served as Vice-President, Head of Clinical Development. And we’re confident that his proven leadership and strong scientific and clinical background will be a tremendous asset to the EyePoint team.

I’d like to thank Dr. Dario Paggiarino, who served as our Chief Medical Officer for the past seven years. To close, I want to thank the entire EyePoint team for an incredible 2023 and a strong start in 2024. The impressive execution and dedication demonstrated by our team to reach these milestones reflects the entire organization’s commitment to patients. In addition, I’d like to thank the patients and clinical investigators for their participation in the ongoing trials. Without you all, the progress we’ve made advancing EYP-1901 would not be possible. With our compelling clinical pipeline representing potential multi-billion-dollar product opportunities, our best-in-class sustained ocular delivery to research e-technology, along with a strong balance sheet, we’re well positioned to grow as a leader in ocular drug delivery and to bring impactful therapies to patients suffering from serious retinal diseases.

I will now turn the call over to George to review the financials. George?

George Elston: Thank you, Jay. Before we review the financial results, 2023 was an exceptional year for our financial performance. As Jay noted, we ended 2023 with a strong balance sheet driven by the out license of YUTIQ, the retirement of outstanding bank debt, and an oversubscribed $230 million follow-on financing in December, resulting in $331 million of cash and investments at December 31. As the financial results for the three months and full year ended December 31, 2023 were included in the press release issued this morning, my comments today will be focused on the high-level review for the quarter. For the quarter ended December 31, 2023, total net revenue was $14 million compared to $10.5 million for the quarter ended December 31, 2022.

Net product revenue for the quarter ended December 31st, 2023 was $0.7 million compared to net product revenue for the quarter ended December 31st, 2022 of $9.9 million. This decrease in net product revenue resulted from our strategic exit from the commercial business in the first half of 2023, highlighted by the out license of YUTIQ in May. Net revenue from royalties and collaboration for the quarter ended December 31st, 2023 totaled $13.3 million compared to $0.6 million in the corresponding period in 2022. The increase was primarily due to partial recognition of deferred revenue from the license of the YUTIQ franchise which began in the second quarter of 2023 and will be recognized over a two-year period in connection with the delivery of YUTIQ supply units.

Operating expenses for the quarter ended December 31st, 2023 totaled $30.4 million compared to $54.3 million in the prior year period. This decrease was primarily driven by the strategic exit from the commercial business in the first half of 2023 and a one-time intangible asset impairment charge in the fourth quarter of 2022. Non-operating income totaled $2.3 million and net loss was $14.1 million or $0.33 per share loss compared to a net loss of $43.5 million or $1.16 per share loss for the prior year period. Turning to the full year ended December 31st, 2023 total net revenue was $46 million compared to $41.4 million for the year ended December 31st, 2022. Net product revenue for the full year ended December 31st, 2023 was $14.2 million compared to net product revenues for the full year ended December 31st, 2022 of $39.9 million.

Net revenue from royalties and collaborations for the full year ended December 31st, 2023 totaled $31.8 million compared to $1.5 million in the corresponding period in 2022. Operating expenses for the full year ended December 31st, 2023 totaled $121.1 million versus $141 million in the prior year period. Net non-operating expense totaled $4.4 million and net loss was $70.8 million or $1.82 per share compared to a net loss of $102.3 million or $2.74 per share for the prior year period. Cash and investments in marketable securities on December 31st, 2023 totaled $331.1 million compared to $144.6 million as of December 31st, 2022. We expect the cash and investments on December 31st, 2023 will fund us through top-line data for the planned Phase 3 clinical trials of EYP-1901 for wet AMD in 2026.

This also includes completion of the ongoing Phase 2 clinical trials for EYP-1901 in wet AMD, NPDR and DME. In conclusion, we are pleased with EyePoint’s progress in 2023 and are well capitalized to advance our product pipeline to key value inflection points. I’ll now turn the call back over to Jay for closing remarks.

Jay Duker: Thank you, George. As we’ve discussed, EyePoint is a story of execution and positive data. We’ve accomplished our clinical milestones efficiently and on track with our guidance and we plan to continue this track record in 2024 and beyond. Key upcoming catalysts include top-line data from our Phase 2 PAVIA clinical trial in the second quarter of 2024, an end of Phase 2 meeting with the U.S. FDA in April, an initiation of the first non-inferiority pivotal Phase 3 LUGANO trial of EYP-1901 in wet AMD in the United States in the second half of this year. Enrollment completion of the Phase 2 VERONA clinical trial of EYP-1901 and DME with top-line data expected in the first quarter of 2025 and earlier stage pipeline program advancement towards clinical development.

This remains an incredibly exciting time for EyePoint as we are well positioned to execute on our upcoming milestones and continue to transform the treatment landscape with innovative long-term solutions to improve both the vision and the lives of patients with serious retinal diseases. Thank you very much for listening this morning. I will now turn it over to the operator for questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Our first question comes from Tessa Romero with JPMorgan. Your line is open.

Tessa Romero: Hello. Good morning, guys. Thanks for taking our question. As you think about the potential opportunity for EYP-1901, are you able to provide a little bit of further context around how you think about further segmenting the NPDR population? And out of the 6 million NPDR patients here in the U.S., which patients do you see as the more low-hanging fruit for potential therapy? Thank you.

Jay Duker: Thank you, Tess. Before I get to the answer, I’d just like to take this opportunity to introduce our new CMO, Dr. Ramiro Ribeiro, who’s here with George Iverson [ph].

Ramiro Ribeiro: Thanks, Jay. First, I want to say that I’m very privileged to join the EyePoint team. I’m a retina specialist by training. After working private practice, I moved to the U.S. as part of my PhD program, where I really felt in love with research. After some time in academic setting, I transitioned to biotech, mainly small biotech, but always in ophthalmology. I spent time at Ophthotech doing the Fovista [ph] trial for wet AMD and Acucela doing a staggered disease. And recently, I was the head of clinical development at Apellis, where I led the clinical team from the inception of the Phase 3 protocol, execution of the global trials, regulatory submission and last year, the approval of SYFOVRE, the first therapy for GA.

I joined EyePoint for three reasons. First, because I believe in the technology that will bring options for patients with better conditions. Second, the strong and very convincing results from DAVIO 2. And lastly, the retina community is very small, and EyePoint has a reputation of being a strong scientific company and always puts patients in the first place. Jay?

Jay Duker: Thanks, Ramiro. And, Tess, back to your question. I think the obvious answer is that eyes that have the most severe NPDR are the logical first group that clinicians might treat because those are eyes that have high risk to go on to site threatening complications like DME NPDR. By preventing or at least delaying significantly the advancement of to those site threatening complications, using EYP-1901 potentially once every 9 months approximately, we think we can really improve patients’ lives by preventing visual loss and preventing the eventual need for multiple injections over years.

Operator: Thank you. One moment for our next question. Our next question comes from Tyler Van Buren with TD Cowen. Your line is open.

Tyler Van Buren: Great. Thanks. Good morning. Congratulations on all the progress during the quarter. For the planned end of Phase 2 meeting with the FDA next month regarding your Phase 3 plans, can you elaborate on the key discussion topics? And to what extent you discussed your development strategy prior to initiating DAVIO 2 as we think about the interactions you’ve already had with the FDA?

Jay Duker: Yes. Thanks, Tyler. So the second part of your question, I think I’ll answer first, which is the sharing and discussion of our development plans with the FDA. As we’ve said in the past, there was considerable discussion within the company and with the agency several years ago to go straight from our Phase 1 DAVIO trial into pivotal trials in wet AMD. As a result of that discussion, we had a Type C meeting with the FDA and further discussion after the Type C meeting, at which point the agency in the company had reached a general, let’s call it an agreement over the protocol for potential Phase 3. We then made the strategic decision to do a more, I’d say, traditional Phase 2 program prior to the Phase 3. Of course, that was the DAVIO 2 program.

And we took the agency’s advice instructions, learnings from the end of Phase 2 meeting and subsequent communications and developed the protocol for DAVIO 2 out of those discussions. And therefore, we’re optimistic in, I’d say, going into the end of Phase 2 meeting confident about most of the large touch points around our pivotal trial design. So you — in the first part of the question, you asked about key topics. I’m not sure that I can point to anything in particular is a key topic. We’re going to, again, see general agreement on a noninferiority trial with a minus 4.5% non-inferiority margin. All of this is kind of standard and was restated clearly in the draft guidelines. So I’m not sure those kind of issues really bubble up to the use of the term key.

We have some other questions around some inclusion, exclusion criteria, which we may hopefully be made clear in the meeting and also some issues around the safety cohort that we need to show the FDA. But again, I’m optimistic that these will all be straightforward and relatively simple for the agency and us to come to a agreement on.