Outlook Therapeutics, Inc. (NASDAQ:OTLK) Q3 2024 Earnings Call Transcript

Outlook Therapeutics, Inc. (NASDAQ:OTLK) Q3 2024 Earnings Call Transcript August 14, 2024

Operator: Greetings. And welcome to the Outlook Therapeutics Corporate Third Quarter Fiscal Year 2024 Update Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Jenene Thomas, Investor Relations. Thank you. Please go ahead.

Jenene Thomas: Thank you, Donna. At this time, I’d like to remind our listeners that remarks made during this webcast may state management’s intentions, beliefs, expectations for future projections, including but not limited to our expectations about the timing of clinical trials and commercial launch and the sufficiency of our cash resources. These are forward-looking statements and involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the Safe Harbor provisions of the federal securities laws and are based on Outlook Therapeutics current expectations, and actual results could differ materially. As a result, you should not place undue reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from these contemplated by such forward-looking statements are discussed in the periodic report, Outlook Therapeutics files with the Securities and Exchange Commission.

These documents are available in the Investors section of the company’s website and on the Securities and Exchange Commission’s website. We encourage you to review these documents carefully. Additionally, certain information contained in this webcast release to or is based on studies, publications, surveys and other data obtained from third-party sources and the company’s own estimates and research. While the company believes that these third-party sources to be reliable, as of the date of this presentation that has not independently verified and makes no representation as to the adequacy, fairness, accuracy or completeness of that or that any independent source has verified any information from third-party sources. During the call, management will discuss non-GAAP financial measures, which are not prepared in accordance with US generally accepted accounting principles.

Definition of these non-GAAP financial measures, along with reconciliations of the most directly comparable GAAP financial measures are included in Outlook Therapeutics third quarter earnings release which has been furnished to the SEC and is available on the company’s website at ir.outlooktherapeutics.com. Joining us on the call from Outlook Therapeutics leadership team are Russell Trenary, President and Chief Executive Officer; and Lawrence Kenyon, Chief Financial Officer of Outlook Therapeutics. I’d now like to turn the call over to Russ Trenary. Please proceed.

Russell Trenary: Thank you, Jenene, and thank you to everyone joining us for our third quarter fiscal year 2024 conference call and webcast. As we begin today’s call, I think it’s important for me to start with our mission, and that is quite simply to achieve the first-ever approval for an ophthalmic formulation of bevacizumab for the treatment of retina diseases, initially in the EU, UK, and US. We’re working toward achieving that mission in real time. We already received marketing authorization in both the European Union and the United Kingdom and are advancing toward the launch of the first approved ophthalmic bevacizumab approved for the treatment of wet AMD in those key markets. We’re also making good progress here in the United States with our ongoing NORSE EIGHT clinical trial, which, if successful, will serve as the basis for resubmitting our BLA with the FDA, which we expect to occur in the first calendar quarter of 2025.

More on that in a minute. Focusing on the European Union and the United Kingdom, we’re very pleased with the decisions from both regulatory bodies and believe this is a culmination of all the hard work our colleagues and partners have been striving to achieve these past several years. I think it also speaks to and validates the data we have generated, the clinical studies we have conducted, and the CMC work we have completed. We are going to do everything we can to bring this important drug to as many patients as possible in these two territories, which combined represent the second largest market for wet AMD in the world. Now, turning to commercialization, we’re continuing with market access work and inventory planning for Germany and the UK, and expected product availability in those markets in the first half of calendar 2025.

Additionally, we’re continuing discussions with organizations that have established EU infrastructure and will continue to evaluate potential partners in the EU. Turning to the US, we continue to make progress on our NORSE EIGHT study, a three-month noninferiority study with an eight-week efficacy end point. NORSE EIGHT is progressing as planned, and we currently have 359, that’s 359 of the planned 400 subjects enrolled. We continue to expect a complete enrollment before the end of the third quarter. Top line results from NORSE EIGHT are expected in the fourth quarter of this year and if positive should provide sufficient clinical data to resubmit our BLA with the US FDA in the first calendar quarter 2025. In addition, we’ve completed our planned Type C and Type D meetings with the FDA and believe we have addressed the open CMC items that were received in the CRL.

And now it’s my pleasure to turn the call over to Larry Kenyon, our Chief Financial Officer. Larry?

Lawrence Kenyon : Thank you, Russ. Good morning, everyone. During the most recent quarter, we saw a further reduction in the balance of our outstanding convertible note. Additional conversions of the note into common stock have continued in July, and the outstanding balance is approximately $30.3 million as of today. While the remaining balance, another $5.5 million is convertible at $7 per share, with the remaining balance convertible at $40 per share. Our June 30, 2024 cash position of $32 million when combined with the expected $107 million of proceeds from the full exercise of warrants to purchase shares of common stock, subject to meeting requirements for calling these warrants, should be sufficient to support our operations through calendar 2025.

Moving on to our financial results for the third fiscal quarter of 2024, I can report that we saw a reduction in adjusted net loss from fiscal quarter two of 2024. R&D expenses decreased during the current fiscal quarter versus Q2 of this year after we completed the majority of the NORSE EIGHT initiation activities in fiscal Q1. Previously, we had reported that we estimated a total cost of $30 million to complete NORSE EIGHT, with most of these expenses to be incurred during the first three calendar quarters of 2024. We have not changed our estimates for NORSE EIGHT and expect that overall R&D expenses will continue to run at these levels for the next quarter. The fiscal Q3 G&A expenses increased compared to fiscal Q2, as we did incur pre-launch expenses for Europe in the most recent quarter.

I will now turn the call back over to the operator for the Q&A portion.

Q&A Session

Operator: [Operator Instructions] Today’s first question is coming from Julian Harrison of BTIG.

Julian Harrison: Yes, hi. Good morning. Congrats on all the progress and thanks for taking my questions. First, just on enrollment in NORSE EIGHT, are you able to provide any more granular details with regards to how far along you are? I understand completion is still on track for later in the third quarter, calendar quarter of this year, but any more details there you could share at this point?

Russell Trenary: Yes, I think it’s worth noting, Julian, that in this five minutes we’ve got dozens of people that are in screening, and of course we track that screening rate to see how many of those convert to actual enrollments, and we believe that right now we’ve got enough in screening to take us to 380 patients. On top of, and of course today or yesterday we were at 359, so we continue to see a good level of screening and expect that to continue so that we can comfortably finish enrollment before the end of the third quarter.

Julian Harrison: Okay, excellent, very helpful. And then when enrollment completion is confirmed in NORSE EIGHT, does it become easier to guide to specifically when you expect BLA resubmission? I understand your updated guidance for 1Q ‘25, but does it become easier to be more precise than that guidance once enrollment completion is confirmed?

Russell Trenary: Yes, because I think there’s the amount of time between the last patient treated and when their last visit is scheduled is known and the amount of time to lock and clean the databases is predictable. So yes, we will be in a good position, in a better position to nail that down once we know when enrollment completion has occurred.

Operator: The next question is coming from Will Hidell of Brookline Capital Markets.

Will Hidell: Hey, thank you for taking the questions. Quick question about the UK process with NICE. I know I think they’re going to have a tech assessment delivered by maybe December. Are there any updates on that process?

Russell Trenary: I think really the only update we have is that we believe we put together a well-informed dossier to NICE and we’re going through the process with them. They’ve accepted our application and so we’re going through that process and we’ll know later in the year just exactly what that looks like in terms of the type of pricing that we’ll be utilizing in that market.

Operator: The next question is coming from Timothy Chiang of Capital One.

Tim Chiang: Hi, thanks. Russell, could you just talk a little bit about what came out of the Type C and D meetings that you had with the FDA? I noticed the timing of the filings and extend it to 1Q of next year. So I just — is there any correlation between your discussions with the FDA and the push out in the filing?

Russell Trenary: None. Really the timing of the filing is really associated with our prediction on completion of enrollment. It’s solely focused on that. After we had the first Type A meeting with FDA, they encouraged us aside from having discussions around what the additional clinical trial design would look like, they also encouraged us during that meeting to come back and meet with them during the course of the trial to talk to their CMC group around what the questions that they had in there. So we took them up on that offer, and so I think we would characterize our discussions with FDA’s have been very positive. And I think we’ve now reviewed with FDA every single question that they had on the CMC list, and so we’re happy to say we’ve completed those meetings, and we’ll continue to finish up some of the work, but we’re really at a point where we’re just going to publishing on answers to those CMC questions, so we’re quite satisfied with how that turned out.

Operator: The next question is coming from Douglas Tsao of HC Wainwright.

Douglas Tsao: Hi, good morning. Thanks for taking the questions. Just curious, so in terms of the timing of the BLA filing, as has been noted, you sort of now got into the first quarter versus the fourth quarter. Just curious exactly what led to that. And my guess is maybe patient enrollment is a little behind where you expected, and was that the result of just the pace of patients coming in, or just did you not quite get as many sites up and running as quickly as you may be anticipated? Thank you.

Russell Trenary: Yes, thanks, Doug. Yes, I think for us to be able to hit that end-of-year enrollment timing, or to be able to resubmit the BLA by the end of the year, we would have had to finish enrollment by the end of July. Our current enrollment pace is about two times faster than the industry average. Most people talk about in the industry that it takes a patient per doctor per site, that’s what should be predicted. And so if that were the case, then it would have taken us all the way to the end of the year to enroll. Instead, we’re going to finish enrollment by the end of the third quarter. So I think it was just a really aggressive goal that we’re almost going to hit. But I think it does, because we did not hit end of July, it puts us into the beginning of next year in terms of BLA submission.

Douglas Tsao: Okay, great. And in terms of the European launch, I’m just curious, what kind of investments are you making in terms of inventory for the European launch? And is that going to potentially provide supply for the US launch as well? Thank you.

Russell Trenary: Yes, it could. We actually went into; we had some inventory ready for August 29 of last year when we expected approval from FDA. So that inventory is still sitting there. And it’s going to be available for sale in the European area and or in the United States. And I think one of the nice things about having built that inventory is we’re continuing to be able to extend the shelf life of that product. So I think by the end of the year, we’re expecting to have between 30 and 36 months of dating on that product. So I think that’s kind of the work that’s being done on inventory right now is really just tracking stability and extending shelf life.

Operator: Our next question is coming from Daniil Gataulin of Chardan.

Daniil Gataulin: Hi. Good morning, guys. Thanks for taking the question and congrats on all the progress. I have a quick one, so we still have kind of approval in the EU and the UK. How does the off-label use dynamics change there between now and launch and shortly after launch? And as a follow-up, what are the current assumptions or checklist items on your list for the commercial launch in Europe in the first half? Thank you.

Russell Trenary: Yes, so in terms of off-label use, the situation in Europe is a really different market-by-market. There are some markets where off-label use is close to zero because it’s not allowed, and in those markets, people are following the law, and they’re not repackaging or compounding. In other markets, it’s also unlawful, but it’s tolerated for now. And I think the thing that we hear from doctors and from payers is that they like having a source of bevacizumab available. It’s the only molecule of its kind. And so they’ll turn a blind eye for a little bit of time, at least on offering off-label products. So I think once we’re approved, I think the market research and the customer conversations that we’ve had indicate that doctors and payers, they get it.

They understand that the standards that we have to live to and the standards that we have lived to with the product that was used in our clinical trial are different for that bevacizumab that we have versus the bevacizumab that was originally developed and designed to treat oncology and be delivered through a drip IV. So those standards for oncology don’t meet ophthalmic standards for things like utter lack of particulates. They don’t have the same requirements for pH levels. They don’t have the same requirements for endotoxin levels. They don’t have the same requirements for approved packaging for use in ophthalmology and validation that the vial or syringe that the oncologic version comes from meet ophthalmic standards. So there are a whole host of things that off-label bevacizumab doesn’t provide the payer and the customer compared to an ophthalmic approved version of bevacizumab.

So we think that we’ll be in a great position to go in those markets where it takes a while for the off-label to go away, we think we can compete with them based on quality, based on clinical data and ophthalmology, based on meeting all the GMP standards and based upon having the right amount of drug protein concentration vial by vial, syringe by syringe that is never validated. From a product that comes out of the repackaging effort. So I think the right product profile, the right level of quality and the right price point will put us in a position where we’ll be a very able competitor against off-label bevacizumab. But it’s a little different market by market.

Daniil Gataulin: Thank you. In terms of the assumptions and the checklists for launch in this first half of ‘25?

Russell Trenary: Yes, it’s really the, whether we’re hiring our own, so basically the work that we’re engaged in right now is market access. So we’re in hot pursuit of the health technology assessment groups and we’re talking to NICE, we’re talking to that same counterpart in Germany to establish with the payer community what it is that they’re looking for in terms of pricing and availability. So the HTA work comes first. That market access work has to be done. In addition to that, we’re going through the process of showing up at trade shows, conducting symposia with doctors and really doing some of the good communication that’s required with the retina community to help them understand what the real difference is between an ophthalmic approved bevacizumab versus what they’ve had available to them today.

We love having those conversations. The doctors do have a preference for a regulatory approved ophthalmic version. All the market research points to that so we’re continuing to engage in all of that work. And then the final step will be whether it’s with a partner or whether it’s our own would be to make the decision to put a salesforce and a group of medical scientific liaisons so-called MSLs on the ground so that the appropriate conversations can take place with the customers.

Operator: At this time, I would like to turn the floor back over to Mr. Trenary for closing comments.

Russell Trenary: Great, thank you so much. Well, look, we believe this is a really exciting time for Outlook Therapeutics. And the next few months have the potential to continue to transform the profile of our company. So to summarize what we’ve talked about today, in Europe the second largest market for wet AMD, we received marketing authorization in the EU and the United Kingdom. And we’re actively advancing market access initiatives, preparing product inventory, and are in discussions with potential partners to launch in these key markets. In the U.S., we remain on track with enrollment for NORSE EIGHT and expect to report top line results this calendar year and resubmit our BLA early in first calendar quarter 2025. We look forward to continuing this progress and the opportunity to bring an enhanced level of care to the retina anti VEGF space. Thanks so much for joining us today.

Operator: Ladies and gentlemen, this concludes today’s event. You may disconnect your lines at this time or log off the webcast. And enjoy the rest of your day.