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spk04: Greetings and welcome to the iNovia second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I will now turn the conference over to Eric Ribner of Lifetime Advisors. Please go ahead, sir.
spk08: Thanks very much, and good afternoon, and welcome to Inovia's second quarter 2022 earnings call and audio webcast. With me today are Inovia's chairman, Dr. Sean Ian Shulev, Chief Executive Officer Michael Rowe, and Chief Financial Officer John Gandolfi. This afternoon, Inovia issued a press release announcing financial results for the three-month end of June. 2022. We encourage everyone to read today's press release as well as Inovia's annual report on Form 10-K for the year ended December 31st, 2021, which was filed by the SEC March 30th, 2022, and our most recently filed 10-Q. The company's press release and annual report are also available on Inovia's website at www.inovia.com. In addition, this conference call is being webcast through website and will be archived there for future reference. Please note, on today's call, we will be discussing investigational products today, which have not yet to receive FDA approval. Please also note that certain information discussed on the call today is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that during this call, Inovia's management will be making forward statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are subject to a number of risks, which are described in more detail in our annual report on Form 10-K and most recently filed 10-Q. This conference call contains time-sensitive information and is accurate only as of the date of this live broadcast, August 10, 2022. INOVIA undertakes no obligation to revise or update any forward-looking statements, select events, or circumstances after the date of the conference call, except be required by applicable securities law. With that said, I'd like to turn the call over to Dr. Sean Ianchulev, Chairman of INOVIA's Board of Directors. Sean?
spk01: Thank you, Eric, and welcome everyone to our second quarter 2022 Financial Results Conference call. I'll keep my comments very brief this morning before handing the call over to Inovia's new CEO, Michael Rowe, for a comprehensive update. In June, I announced that I would be stepping down from both the CEO and chief medical officer roles and transitioning to chairman of the board, while also serving as a medical consultant to the company. At that time, the board retained an executive search firm and conducted a broad search for the most qualified candidates. We identified several potential candidates and conducted interviews. At the end of the day, however, the board agreed that none were better matched for the skill set we require right now than Michael Rowe. The appointment of Michael, who previously served as our chief operating officer, ensures continuity while at the same time bringing significant diverse ophthalmic industry operations and commercialization expertise to the CEO role. This is a critical moment given where we as a company stand today. We will be resubmitting our Midcombi new drug application in the fourth quarter, giving us line of sight to transitioning into a commercial stage company. At the same time, we're about to wrap up our second phase three presbyopia study, Vision 2, which will be one input of MicroLine NDA for what we estimate to be a multi-billion dollar presbyopia market in the U.S. alone. My goal was also instrumental in brokering our collaborations with Bausch and Lomb, the eye care business that was spun out of Bausch Health in 2021, and Arctic Vision. Together, these agreements provide us with potential sources of non-dilutive funding in the form of development and regulatory milestones, and if the respective products are approved, sales royalties. This could be significant over time. and we see opportunities for additional agreements in other territories. Given Michael's track record here, the board of directors has also voted to add Michael as a board member where we will be well served by his experience. With my transition to chairman, I will be able to continue to work with the board and leadership team to help guide Inovia towards its long-term goals while also remaining involved in future innovation as we work to expand our technology across additional therapeutic areas and cement our place as the new standard of care in topical ophthalmic therapies with the OptiJet device. This is a very exciting time for Inovio. And with Michael assuming the CEO role, I believe we have a world-class team in place to best position us for long-term success. This will benefit not only patients and physicians, but our shareholders as well. Remaining on the topic of leadership, last month we announced that we added Drs. Ellen Strauman and Ram Palanki as new directors to our board of directors. Each brings decades of medical technology, clinical development, launch and commercialization experience, much of it specific to ophthalmology. This cross-functional expertise rounds out what I believe to be a top quality board, especially at a time when we have these significant clinical, and regulatory milestones rapidly approaching. That Ellen and Ram have agreed to join our board provides strong validation of our technology, and I look forward to working with them and the entire board as we shepherd the company through this new and exciting phase of growth. At this point, I'd like to pass the baton over to Michael.
spk02: Thank you, Sean, for the kind words, and thanks for everyone for joining our call this afternoon. I'm excited for this next chapter in Inovia's evolution, and I'm eager to take on my new responsibilities in moving our company forward and sustain the positive momentum that we currently enjoy. I would like to thank you and the Board for the confidence that you are showing in me through these appointments. So let's begin, first with an update on our investigational mydriasis candidate, Midcombi. We are very, very close to completing all of the OptiJet device validation studies required by the FDA. when MidCombie was reclassified to a drug-device combination. We previously announced that three of four tests were completed successfully. Those included a microbial challenge study that demonstrated the ability of the OptiJet to keep microbes from entering the device, a human factor study assessing the ability of users to follow cleaning instructions, and the electronic safety study. The fourth test, which is real-time drug stability, is ongoing and nearly complete. we expect results later this quarter. We did experience modest supply chain delays that have impacted most high-technology manufacturers, and those have now been resolved. As a result, we now anticipate resubmitting our Midcombi NDA in the fourth quarter of this year. Reiterating the anticipated regulatory timeline, we are assuming a six-month review period and are making plans for a precision launch if approved during the first half of next year. and this launch timeline is unchanged from our prior guidance. As we have said before, we believe the time and effort invested in this OptiJet device validation work today may benefit and potentially streamline the review process for other programs in the future, both MicroLine and MicroPine. To ensure that we are fully capable of meeting the ongoing and new clinical product supply requirements of our partners, we recently announced that our new manufacturing facility in Redwood City, California, is now operational. The capacity and capabilities that we gain from this new state-of-the-art facility complement our existing contract manufacturing relationships. The facility is strategically located near several of our Silicon Valley-based suppliers and will be used primarily for OptiJet manufacturing finishing operations, including drug loading, labeling, and packaging prior to distribution. We also announced the hiring of medical technology industry veteran Bren Kern, as Senior Vice President of Manufacturing Operations. Brent has spent his career helping companies transition from research and development entities into scaled commercial manufacturing organizations. Over the past 20 years, he has led product and manufacturing optimization, supported regulatory approvals, and established GMP-compliant manufacturing solutions worldwide. We believe Brent brings to Inovia the ideal skill set and get-it-done attitude that we need as we prepare to make the important transition to a commercial stage company. Now let's move to Microlide, our proprietary microdose array print pilocarping therapy for the temporary improvement in near vision associated with presbyopia. This is an addressable market representing over 18 million people in the United States alone between the ages of 40 and 55 who otherwise never wore glasses and have the resources for a cash pay product. Our second phase three study, vision two, is progressing nicely. As a reminder, Vision 2 is a double-mass superiority trial evaluating 2% multi-array print pylocarpine versus placebo. We are close to achieving full enrollment of subjects into the study and anticipate top-line data this quarter. This is slightly later than our original guidance as we, as well as many other companies, found it challenging to get people out of their workspace for the required office visits. This is a consequence of the high employment rates that we currently enjoy. but we are approaching our target enrollment of 139, and this gives us confidence in the current timeline. Today, there is currently one pharmacological treatment available on the market, Allergan's Vuity. And while this is helping to create the market, we believe we can capture a significant share of this market by leveraging the potential benefits of our OptiJet technology. Among these is a low rate of headache. In Vision 1, we saw a very low rate of headache and browache, a common side effect of pilocarpine. Conventional pilocarpine eye drops can cause headache in about 15% of patients. With the OptiJet, we saw this rate reduced to less than 3% in our Vision 1 trial, and so far we're seeing the same profile coming out of Vision 2. In addition, microline delivery through the OptiJet dispenser is easier and neater to administer and is designed to be used on demand with far less ocular stress as caused by preservatives than traditional eye drops. Topical ophthalmic medications typically contain preservatives, to help ensure the sterility of the product and to increase its shelf life. Over time, this can lead to adverse events due to the toxicity from overexposure to these preservatives. We have conducted studies such as the one conducted in collaboration with Tufts University that we discussed last quarter, which have demonstrated that preserved drugs delivered with the optogen act more like unpreserved drugs, reducing ocular stress and potentially avoiding these long-term adverse events. We have compiled a significant body of market research among consumers, patients, and prescribers, indicating strong interest in the OptiJet over traditional eyedroppers. In our most recent research conducted in the last four weeks, 94% of prescribers agreed with the statement that the OptiJet will improve the drug delivery process for patients taking ophthalmic medications. This was based on the doctor's belief that the OptiJet would improve the ability of patients to get the medication onto the eye and address issues that patients have with handling eye drop bottles or vials, pelting their heads, and dispensing too much medication. Similarly, 93% of consumers who regularly use eye drops also felt that the OptiJet would give them more control or independence over eye medication use. The reasons behind this strong result were very much like those stated by the doctors. The totality of research that we have conducted give us a great deal of conviction that the OptiJet can be a significant differentiator for us potentially leading to strong consumer demand for our solutions relative to others on the market. I would now like to turn the call over to our Chief Financial Officer, John Gandolfo, to provide a financial update. John? Thank you, Michael.
spk09: For the second quarter of 2022, we reported net loss of approximately $7.2 million, or 22 cents per share, on approximately 33.6 million weighted average shares outstanding. And this compares to a net loss of approximately $4.8 million, or 19 cents per share, for the second quarter of 2021 on approximately 25.9 million weighted average shares outstanding. Research and development expenses totaled approximately $3.6 million for the second quarter of 2022. This compares to approximately $3.7 million for the same period in 2021, a decrease of approximately 2.7%. For the second quarter of 2022, general and administrative expenses were approximately $3.5 million compared with approximately $2.3 million for the second quarter of 2021, an increase of approximately 53.8%. Total operating expenses for the second quarter of 2022 were approximately $7.1 million compared to total operating expenses of $6 million for the same period in 2021. This represents an increase of approximately 19%. As of June 30, 2022, the company's unrestricted and restricted cash balance was approximately $29.4 million, which includes $7.9 million of restricted cash. Before we open the call to questions, I will conclude with a brief update on our licensing programs with Bausch & Lomb for Micropine in the U.S. and Canada and Arctic Vision for all three of our drugs in China and South Korea. It is worth noting that while our original licensing agreement in October 2020 was with Bausch Health, our U.S. licensee became Bausch & Lomb, the eye care business that was formerly part of Bausch Health that was spun out as a separate company in early 2021. So for the sake of clarity, our U.S. licensee is Bausch & Lomb and not Bausch Health. Micropene, as you may recall, is a proprietary atropine formulation for the reduction of pediatric myopia progression. It has been shown in clinical studies to slow myopia progression by 60% or more. There are currently no FDA-approved drug therapies for this indication, and if left untreated, this can result in retinal detachment, myopic retinopathy, and vision loss. Bifocal, multifocal glasses or contact lenses are typically prescribed to myopic children. Recall that as part of the agreement with Bausch and Lomb, Oversight and costs related to the Yango and Phase III Chaperone Micropine Clinical Trial were transferred to our partner. Chaperone is a 48-month, US-based, multi-center, randomized double-mass trial that is enrolling more than 400 children between 3 and 12 years of age. The trial is comparing micro-dosed actropine 0.01% versus placebo-optomic solution, and the enrollment is progressing as planned. Our agreement with Arctic Vision covers greater China and South Korea. And while the original agreement that we announced in August 2020 was for Micropene and Microline, they also subsequently added Mucambi as well. So Arctic Vision now licenses all three of our current programs. Micropene for pediatric myopia in particular represents a significant opportunity in China. The Ministry of Education estimates that nearly 53% of all Chinese children suffered from myopia in 2020, and 13 million children are estimated to be at the highest risk. Our agreement with Arctic Vision provides for sales royalties in addition to development milestones. So if and when approved, micropene could be a significant source of non-dilutive funds to our company. Finally, we've recently announced that Arctic Vision has now enrolled in its presbyopia study. So that program is progressing nicely. Data license agreements have generated approximately $16 million in license fees, and we have the potential to earn an additional $60 million in net license and development milestones and reimbursable expenses over the next four years. As noted, upon commercialization, if approved, Inovia can also earn significant sales royalties as well. We are also continuing to assess potential pipeline expansion opportunities as we believe we can leverage the OptiJet technology to address unmet needs and additional large ophthalmic indications. Some examples include anti-infectives, anti-inflammatories, dry eye and glaucoma, each with significant market opportunities. Pipeline expansion was a significant consideration as we were building out a new Redwood City, California facility. So in conclusion, we continue to be pleased with our performance to date. To summarize our key highlights today, one, we are continuing to rapidly advance our phase three microline presbyopia program. We are enrolling patients in our phase three trial vision two and expect top-line data in the third quarter. We are also actively preparing for the resubmission of our AdmitCombi MBA in the fourth quarter of this year, which, if approved, would give us our first commercial product and validate our optic jet dispensing technology. We executed on a planned CEO transition and added significant expertise to our board of directors ahead of these meaningful clinical and regulatory milestones. Our new state of the art manufacturing facility in Redwood City, California is now operational, and this provides additional capacity to complement our existing contract manufacturing relationships. And our license agreements with Arctic Vision and Bausch & Lomb are progressing well and continue to offer the opportunity for meaningful development and regulatory milestones, as well as line of sight to potential sales royalties, possibly within the next two years. So that concludes our prepared remarks. We would now like to open up the call to questions.
spk04: Operator? Thank you, sir. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Our first question comes from the line of Matt Kaplan from Ladenburg-Talman. Please go ahead.
spk06: Hi. Thanks for taking the questions, and Michael, congratulations on your new title. Thank you, Matt. Just in terms of, you mentioned... a stage launch that was planned for mid-combi. Can you give us a sense of what that means and how that would roll out and why a stage launch?
spk02: Yes. So our plan is approval the first half of next year. We'll be prepared within weeks after that approval to do the launch. But because it's a new technology and we want to make sure that people have – and the doctors, remember, this is geared for doctors, mid-combi – have an optimal experience with the product. We're going to roll it out with large group practices that we can go and train them and learn everything we can. It's almost like a beta launch or a beta test and get all the bugs out of that might be in the system because it is a new technology, a new way of doing things before going national. So I think what you'll see is that we are geared up to address about 10% of those offices with the current staffing and resources we have now. So we're not going to expend any additional money to do that. And once we have a bit of experience and have that under our belt, we'll expand after that. Okay, that's helpful. Thank you.
spk06: And then with respect to Michaeline and the Vision 2 study, as you're getting close to top line data, there, what should we be looking for in the data as it comes out in the near term?
spk02: Well, the primary endpoint, of course, everybody will be looking at is the percentage of patients who have a three-line gain in the active group versus the control group. So you'll be looking for a statistically significant result there. And then we want to see the adverse event profile. We've looked at the masked data in the trial so far overall where I said that the headache, brow ache was less than 3%. That's for everybody that's in there. So, you know, we're looking at the right profile, assuming we have the efficacy, which would be part of that top line. Our plan then is to set up an end of phase three meeting with the FDA, which takes about 60 days after that, go meet with the FDA, and coming out of that meeting, preparing to put together our NDA. And simultaneous with that, we'll start doing our registration batches for the NDA to save a little time.
spk06: And how long does it take to complete the registration batches?
spk02: The registration batches take a full year. So the sooner we can start that, the better. The trigger for that is the successful Vision 2. We'll go right into making those registration batches because they're not inexpensive. and we just want to be as efficient as possible.
spk05: Okay, great. Well, thanks for taking the questions. Thank you, Matt. Thank you.
spk04: Ladies and gentlemen, if you wish to ask a question, please press star 1 on your telephone keypad. Our next question comes from the line of Alex Matthews, an investor. Please go ahead.
spk03: Yes, thank you for taking my question. I want to find out if OptiJet, when it's approved, it would be available for over-the-counter purchase for regular use for dispensing drugs, eye drops. And also, do you expect approval within six months or it's going to take six months for approval?
spk02: Alex, first of all, thank you for being an investor. We appreciate that. The OptiJet is not something that you can fill with other products. It's not like you can take an eyedropper and squeeze it into the OptiJet and use it. It actually is a primary container, which means it has to be developed with the drug that it's intended to use from the beginning, and that's why we have to do these registration studies. So, but with that, we are talking actively with other companies to see if they would like to put their products in our technology, and there is substantial interest. And one of our strategies is to partner or license the technology to these other companies so that we can see things in areas like dry eye or glaucoma where other people might have very good drugs that but they don't have very good ways of having it dispensed, and if they marry with us, they could have the best of both worlds. For your second question, once we file, refile the NDA for mid-comb, the clock for approval is six months at that point. Did I answer your question?
spk05: Yes. Thank you very much. Thank you.
spk04: Ladies and gentlemen, our next question comes from the line of Len Yaff from Stock Talk Partners. Please go ahead.
spk07: Thank you. And, Sean, congratulations on having obsolesced yourself with an incredible successor so you succeeded all around. My question for Michael is pretty simply on the Vuity Launch project. from Allergan. They started with a lot of commercials, and then the commercials, I think, stopped. But what have you learned from seeing the launch and from talking to optometrists or ophthalmologists in terms of the pluses and minuses of the product, what you might have learned that you could do better when you launch the product in the next year?
spk02: Well, thank you, Len, and I'm going to correct your last name, Yaffe. Thank you for calling and for your support. The first thing we learned is that there's a tremendous interest in a pharmacological option for presbyopia. I think when Allergan went out the gate with the direct-to-consumer campaign, everybody was talking about it. Everybody was asking their doctors about it. So we've learned that the concept of having a pharmaceutical option for treating presbyopia is very, very high. So that's absolutely positive. What we've also learned is that what we bring to the table in terms of having a better delivery system for people and one that addresses the side effect of browache and headache is also a very big positive because that's the thing that people probably like the least about their product. So those were the two positives. The third thing that I think we've learned is how important it is to give doctors a heads up of what's coming out and who the right patients are for this product. For example, I have heard things like from other doctors who say they have 70-year-old patients who are coming into the office asking for it. And these products are really not designed for people like that. We've been very careful with what we've said, which has always been this is a product designed for people between 40 and 55. more or less freshly presbyopic, and that's really where they work best. So I think what we've learned is really to set the right expectation, who the right patient is, and what they can get out of this, which is good functional vision. What most people between 40 and 55 are looking for is they'd like to be able to look at their cell phone without having to grab their glasses, is that kind of function. They're not looking, they're teachers, they're not trying to grade term papers. without their glasses on. So it's really setting the expectation of what you're going to get. And I think our product, frankly, offers the best answer for all of those three things.
spk07: And you mentioned that there were 18 million presbyopes in the age range who have money and are naive to glass wearing. I was wondering what your expectations are for the revenue per patient per year so we could kind of arrive at a potential market size in the U.S.?
spk02: Well, our market research has said that people with the OptiJet specifically, on average, a patient would probably fill that three times a year. And we had previously discussed that our price would be somewhere around $100 a cartridge. So that would give you an estimate of the revenue per patient.
spk07: Great.
spk05: Thanks so much. Thank you, Len. Thank you.
spk04: Ladies and gentlemen, we have reached the end of the question and answer session, and now I would like to turn the conference over to Mr. Michael Rowe, your Chief Executive Officer, for closing comments.
spk02: Thank you. And thank you, everybody. That concludes today's call. We hope we were successful in conveying the significant progress that we continue to make with the OptiJet technology and across our key clinical programs. We remain on track to resubmit the MidCombie NDA in the fourth quarter of this year. And MicroLine's presbyopia program is progressing with many clear and distinct advantages over therapies currently available or in development. Put simply, we believe we have potential line of sight to two commercial products in the near future. Thank you again for joining us.
spk04: Thank you. The conference of INOVA has now concluded. Thank you for your participation. You may now disconnect your lines.
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