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spk04: Good day and welcome to the iPoint Pharmaceuticals fourth quarter and full year 2022 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. George Elston, Chief Financial Officer. Please go ahead.
spk10: Thank you, and thank you all for joining us on today's conference call to discuss iPoint Pharmaceuticals' fourth quarter and full year 2022 financial results and recent corporate developments. With me today is Nancy Lurker, Chief Executive Officer. Dr. Jay Duker, President and Chief Operating Officer, and Scott Jones, Chief Commercial Officer. Nancy will begin with a review of recent corporate updates. Dr. Duker will then discuss pipeline developments, and Scott will comment on our commercial activities. I will close with commentary on the fourth quarter and full year 2022 financial results. We will then open up the call for your questions. Earlier this morning, we issued a press release detailing our financial results and recent corporate developments. A copy of the release can be found in the Investor Relations tab on the company website, www.ipointpharma.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 factor 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 these 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 of representing our views as of any date subsequent to today. I'll now turn the call over to Nancy Lurker, Chief Executive Officer of iPoint Pharmaceuticals.
spk03: Thank you, George. Good morning, everyone, and thank you for joining us as 2022 was really an exceptional year for iPoint Pharmaceuticals. We continue to execute on our goal of being the leader in innovative, sustained ocular drug delivery using our best-in-class DuraCert technology to achieve improved outcomes with more convenient dosing regimens. I'll begin by reviewing our lead development program, EYP1901, and why we believe this therapy's six- to nine-month treatment interval, zero-order kinetics, and new ocular mechanism of action could be a game changer in retinal diseases like wet AMD that require lifelong treatment. EYP1901 is a bioerodible durasert insert that delivers virolinib, a selective and patented tyrosine kinase inhibitor delivered through a single intravitreal injection in the physician's office. We have advanced EYP1901 into two phase two clinical trials in wet AMD. and nonproliferative diabetic retinopathy, otherwise known as NPDR, based on the positive Davio Phase I clinical trial results that we reported last year. EYP1901 has emerged as a promising potential therapeutic for serious eye diseases, bringing key attributes to patients, including delivery of the active drug berolinib consistently over six to nine months, with the majority of patients not requiring any supplemental therapy up to six months after a single treatment in wet AMD. A new mechanism of action to treating retinal eye diseases beyond the current anti-VEGF ligand blockers on the market today. The potential for neuroprotective and antifibrotic benefits to the retina. A proven drug delivery technology with a very positive safety profile. And upon completion of our Phase II trials, and importantly, EYP1901 will have the most robust clinical data for any ocular TKI program, with over 180 patients having been dosed by the end of our Phase II programs in both WET-AMD and NPDR. This is in addition to a strong ocular safety and efficacy data set from clinical trials of virolinib, delivered orally in previous trials, treating over 150 patients. EYP1901 delivers the TKI Virolinib, which potentially brings a new mechanism of action to retinal disease beyond what currently exists with the current anti-VEGF large molecule therapies on the market today. When you look at treatment regimens outside ophthalmology, it's often standard practice to address multiple mechanisms of action in parallel in order to improve efficacy. We believe these retinal eye diseases, with serious consequences such as blindness, should be treated using all resources at our disposal as well, through a multi-pronged approach that targets multiple disease drivers. Additionally, EYP1901 sets itself apart by using our proven, best-in-class, bio-erodible DuraCert technology for drug delivery, which delivers the drug at zero-order kinetics, which provides constant, steady dosing over six months or longer. Dr. Jay Duker will review EYP1901's potential unique clinical advantages for patients in more detail later on this call. But of note, we look forward to presenting preclinical neuroprotection data for virolinib from a gold standard mouse model of retinal detachment at the 2023 ARVO annual meeting in April. Beginning with wet AMD, The current standard of care requires monthly or bimonthly eye injections of ligand-blocking anti-VEGF biologics, which can be cumbersome and unpleasant for patients, as it's very difficult for patients to maintain this routine for the rest of their lives. Importantly, we know from robust databases that even one missed or skipped appointment could mean vision loss for the patient. The positive phase 1 Davio clinical trial results support are treat to maintain. therapeutic approach for this disease with the potential to transition a majority of patients to an every-six-month treatment with EYP1901. This can fundamentally change the way physicians treat this disease and manage patients by having drug consistently delivered, providing treatment, which we are confident will enhance patient compliance and improve clinical experience. We are actively enrolling patients in the Phase II W02 clinical trial of EYP1901 as a potential six-month maintenance treatment for wet AMD. This is a massive, multibillion-dollar market opportunity with millions of patients in need of new treatments for this blinding eye disease, and we aim to bring a life-changing treatment to these patients with EYP1901. W02 is a randomized, a Flibercept-controlled, also known as ILEA, trial enrolling approximately 144 previously treated patients. To our knowledge, this is the largest Phase II trial being conducted in wet AMD among TKI treatments. We anticipate announcing top-line six-month results late in the fourth quarter of this year. The Phase II PAVEA clinical trial presents a compelling and proactive potential therapy for the treatment of non-prolificative diabetic retinopathy. The approved large-molecule anti-VEGF biologics to treat NPDR require frequent injections, just like wet AMD, for this disease, where patients may not feel symptoms and, as a result, may forego regular treatment. In fact, nearly 97% of NPDR patients receive no course of treatment, apart from observation by their retinal specialist, until their disease progresses to vision loss. Consequently, there's a great unmet need in NPDR patients for a safe, efficacious, and convenient treatment option that would maintain patient vision proactively through zero-order constant dosing. With EYP1901, we have the opportunity to potentially fulfill this need within every nine months, sustained delivery treatment option for patients that aligns with their office visits and provides patients and physicians with the comfort of having sustained drug delivery during the period between office visits. The PAVEA clinical trial remains on track to complete enrollment. in fourth quarter of this year. Between our W01 trial of 17 patients and our W02 trial of approximately 144 patients, we will have the most robust data set of any other TKI product in development for wet AMD. We are confident that the strength of these data, along with our proven drug delivery system and patented molecule, will give iPoint a significant optionality as we evaluate our pivotal phase three clinical development program path. to market and in discussions with strategic global partnerships. Further, we look forward to enrolling our first patient in a third phase two trial evaluating diabetic macular edema, or DME, in late 2023 or early 2024 timeframe. Importantly, I-POINT continues to remain actively engaged in expanding our sustained ocular delivery pipeline beyond EYP1901. We continue to evaluate molecules for potential use in our DuraCert technology, which can be tailored to each drug and disease indication for future growth. We're very excited because this week we also announced a research collaboration with RallyBio to evaluate their C5 complement inhibitor using our proven DuraCert technology to develop a sustained delivery treatment option for geographic atrophy. We're very excited to update you on this evaluation over the coming quarter, and Dr. Duker will talk further about that as well. Turning now to our commercial results, UTIC continued to demonstrate strong customer demand in the fourth quarter of 2022, which resulted in a very compelling 55% increase in UTIC net product revenue compared to Q4 of 2021. At the upcoming 2023 Arville Annual Meetings, We will present three abstracts discussing our UT Calm study, which is a phase four multi-center registry study, and a collaboration between iPoint and the Cleveland Clinic. Scott Jones, our chief commercial officer, will provide additional detail on this topic later on, but I'd like to recognize our commercial team for delivering on yet again another strong quarter and a strong year of product revenue for UT and for iPoint. Additionally, we're excited to share that in partnership with OccuMention Therapeutics, UTIC launched in China in the fourth quarter of 2022. This commercial launch marks an important milestone in furthering our mission of improving the lives of patients with serious eye disorders around the world. And we're very pleased to partner with OccuMention to expand UTIC's global reach in the emerging Chinese market. Finally, we completed a number of other significant corporate milestones in recent months. This February, we entered into a lease agreement for the construction of a commercial manufacturing facility to support global product supply EYP 1901 in UT. The lease is for a 40,000 square foot standalone facility in Northbridge, Massachusetts that will be built to our specifications. I-Point was awarded 1.9 million of state and local grants for this facility. And of note, lease payments not commencing until completion of construction. which is anticipated in the second half of 2024. This investment reflects the confidence we have in EYP 1901's potential for clinical and commercial success, and this level of control over our supply chain will provide an important point of value differentiation for UT, and we hope eventually EYP 1901 in the years to come. In January of this year, we were also delighted to promote J.S. Duker, MD, to the additional role of president. Dr. Duker has served as a chief operating officer since November of 2021. And in this expanded role, he will continue his duties as chief operating officer and now will also oversee regulatory affairs. Jay has been a tremendous asset to our team since he joined as COO, and we look forward to continuing to benefit from his deep ophthalmic expertise as an expert in retinal surgery and strong leadership in his new role as president. I'll now turn the call over to Dr. Jay Duker, our President and Chief Operating Officer, to provide an update on our lead program, EYP1901, as well as other pipeline initiatives. Jay?
spk11: Thank you, Nancy, and good morning, everyone. Before I begin, I'd like to reiterate what an important point this is in I-Point's journey. Our team is positioned to execute on multiple catalysts this year as we advance our Phase II clinical programs in growing pipeline opportunities. I am also incredibly grateful to Nancy and the Board of Directors to allow me to take on a new leadership role at I-Point as president, in addition to chief operating officer. I will begin with reviewing why, as a practicing retinal physician, I'm incredibly excited about the potential of treating patients with EYP1901 and why it represents a potential huge leap forward in the space before reviewing our clinical data and our phase two programs in progress. Turning to our lead product candidate, EYP1901 is an investigational sustained release therapy that uses a bioerodible formulation of our DuraCert technology, which we are now referring to as DuraCert E for erodible, with virolinib, a tyrosine kinase inhibitor that acts through intracellular binding of all vascular endothelial growth factor, or VEGF, receptors, thereby blocking all VEGF isoforms. Virolinib's differentiated MOA versus the standard of care ligand blockers may provide additional treatment benefits beyond anti-VEGF activity with extended longevity between treatments, such as neuroprotection. And we plan to share preclinical data from a mouse model of retinal detachment that suggests this differentiated advantage at the 2023 ARVO annual meeting next month. Additionally, compared to other TKIs, Virolinib features reduced off-target binding, specifically minimal activity against Ti2, leading to a potentially improved safety and efficacy profile. Bioerodible Duracert E, a miniaturized injectable insert, is the same technology used in the non-erodible products like Utique. However, the non-erodible shell is removed. Duracert products have been delivered to over 80,000 eyes with a consistently strong safety profile. So, to summarize, our program features a differentiated molecule, berolinib, coupled with the best-in-class delivery system, Duracert. In wet AMD, EYP1901 is being studied as a maintenance therapy, suggesting a new treatment paradigm, which we call Treat to Maintain. Our goal is to maintain vision and anatomy in the majority of wet AMD patients, the single injection of EYP-1901 for an interval of six months or longer. By providing the sustained delivery therapy and the new mechanism of action, patients and practitioners can potentially have the flexibility to safely reduce the number of visits to their retina specialist. Last summer, we reported positive 12-month safety and efficacy results at the American Academy of Ophthalmology meeting in Chicago. with the Phase I DAWBIO trial evaluating EYP1901 and previously treated wet AMD. The DAWBIO trial enrolled 17 patients and each received a single in-office intravitreal injection of EYP1901 at one of four different dose levels. All enrolled patients were previously treated with standard of care anti-VEGF therapy. No reinjection with the study drug was performed during the trial, and typical criteria for supplementation with a standard of care anti-PGF was employed. We were pleased that the 12-month data featured no reports of ocular SAEs or drug-related systemic SAEs, no reported events of vitreous floaters and ophthalmitis, retinal detachment, insert migration into the anterior chamber, retinal vasculitis, posterior segment inflammation, or retinal vascular occlusive events. In November 2021, we presented six-month data that confirmed stable best corrective visual acuity with a change from baseline of only minus 2.5 ETDRS letters, coupled with a stable macular anatomy as the central subfield thickness change on OCT was only minus 2.7 microns. After a single injection of EYP1901, 53% of eyes were supplement-free up to six months. and up to one year, one-third of eyes were supplemental anti-VEGF-free. Additionally, there continued to be clinically significant treatment burden reduction of 73% at 12 months compared to 75% at the six-month visit. On the heels of these positive data, we initiated two separate Phase II clinical trials of EYP1901, one for the treatment of wet age-related macular degeneration called W02, and one studying the drug in non-proliferative diabetic retinopathy, or NPDR, called the PAVIA study. The DAVIO2 trial is expected to enroll approximately 144 wet MD patients previously treated with a standard of care anti-VEGF therapy and randomly assigned to one of two doses of EYP1901, approximately 2 milligrams or approximately 3 milligrams. This is versus an on-label aflibrocept control. EYP1901 is delivered with a single intravitreal injection in the physician's office, similar to current FDA-approved anti-VEGF treatments. The primary efficacy endpoint of the W02 trial is non-inferiority of the change in visual acuity compared to the Aflib or CEP control, as measured at six months after the EYP1901 injection. Secondary efficacy endpoints include change in CST, as measured by OCT, time to first supplement the lengthy VHF, reduction in treatment burden, and safety. We look forward to progressing the W02 trial and anticipate top-line results in the fourth quarter of 2023. Turning to non-proliferative diabetic retinopathy, or NPDR, it is a very common disease affecting almost one-third of diabetic adults over the age of 40 and is projected to impact over 14 million Americans by 2050. In NPDR, blood vessels are weakened, potentially leading to swelling of the macula, called diabetic macular edema or DME, and in some cases, growth of abnormal retinal blood vessels or prolific diabetic retinopathy, also called PDR. If left unchecked, NPDR can be the harbinger of severe visual loss. Because the currently approved therapies for NPDR require a significant visit and treatment burden, 97% of NPDR patients are currently observed. This provides a significant market opportunity for EYP1901, which may be able to effectively be delivered at nine-month intervals or longer in NPDR. As a practicing retina specialist, I would be excited to have a safe, effective, and tolerable sustained-release therapy to prevent the complications of NPDR. The first patient was dosed in the Phase II PAVEA trial of EYP1901 for the treatment of NPDR in September of 2022. This trial is expected to enroll approximately 105 patients randomly assigned to one of two doses of EYP-1901, approximately 2 milligrams or approximately 3 milligrams, or to the control group, which will receive a sham injection. In this trial as well, EYP-1901 is delivered with a single intravitreal injection in the physician's office. The primary efficacy endpoint of the trial is improvement of at least two diabetic retinopathy severity score levels at week 36. Secondary endpoints include the occurrence of DME and or PDR, retinal ischemia, and non-perfusion, as well as safety. We remain on track to complete trial enrollment in the fourth quarter of 2023. Finally, we look forward to initiate a third Phase II clinical trial-evaluated EYP1901 in DME later this year or early next year, and we continue to evaluate potential product candidates through internal discovery efforts, research collaborations, and in-licensing arrangements to continue to build our pipeline. As Nancy noted, we announced an exciting collaboration with RallyBio to evaluate their C5 complement inhibitor and R-Duracert technology. We have been actively evaluating complement inhibitor models for use in our drug delivery technology as we see a significant opportunity to provide a sustained delivery treatment for geographic atrophy and potentially earlier forms of dry AMD. Similar to our approach with EYP1901, by providing constant dosing of drug over time, we hope to see improved outcomes and reduce treatment burden for patients. In summary, we are very proud of the clinically validated results we've seen from the Phase 1 trial of EYP1901, and we are excited to provide updates on the Phase 2 Davio-Empovia trials, as well as preclinical data on Virolinib's differentiated mechanisms of action in the years to come. I will now turn the call over to Scott Jones, Chief Commercial Officer, for the commercial update. Scott?
spk07: Thank you, Jay. We're excited to report a strong year for our commercial business with $39.9 million of net product revenue, a 13% increase compared to 2021. Our Q4 net product revenue for Utique was $9 million compared to $5.8 million for the fourth quarter ended December 31st, 2021, a 55% increase. Utique customer demand was approximately 980 units compared to approximately 890 units for the third quarter of 2022. a 10% increase. We are pleased with the continued customer demand increase for UTEEQ based on continued utilization by our retinal physicians and consistent messaging from our marketing and sales teams. We continue to collect real-world data on the benefits of UTEEQ for the treatment of chronic non-infectious posterior segment uveitis in the Phase IV CALM registry study, which is conducted in collaboration between iPoint and the Cleveland Clinic. Data from the UT-CALM registry study were presented in poster presentation by Dr. Puya Dayani at the Retina Society's 55th Annual Scientific Meeting in November 2022, and we look forward to presenting an additional update from the CALM study and three abstracts at the 2023 ARVO Annual Meeting next month. As Nancy previously mentioned, in partnership with OccuMention Therapeutics, UTIC commercially launched in China at the end of last year. Since its approval in the U.S. over four years ago, EyePoint has been able to deliver this innovative ocular therapy to patients and provide an improved standard of care for patients with up to three years of continuous control in chronic non-infectious UVIs affecting the posterior segment of the eye. We look forward to continuing to partner with OccuMansion and expand UTIC's global reach in China. as we work together to improve the lives of patients with serious eye disorders around the world. We're very pleased by the strong 2022 performance and expect a profitable UTIC franchise in 2023. I'd like to thank our commercial team for their dedication to bringing UTIC to physicians and patients in need. We look forward to updating you on revenues and demand in the quarters to come. I would now like to turn the call over to George to review the financials. George? Thank you, Scott.
spk10: As the financial results for the three months and full year ended December 31st, 2022 were included in the press release issued this morning, my comments today will be focused on a high level review for the quarter. For the quarter ended December 31st, 2022, total net revenue was 10.5 million compared to 11.5 million for the quarter ended December 31st, 2021. Net product revenue for the quarter ended December 31st, 2022 was 9.9 million compared to net product revenue for the quarter ended December 31st, 2021 of $11.2 million. Despite strong year-over-year performance by UTiQ, total net product revenues were impacted by the anticipated loss of pass-through reimbursement for Dexacu at the end of 2022. Net revenue from royalties and collaborations for the quarter ended December 31st, 2022 totaled $0.6 million compared to $0.3 million in the corresponding period in 2021. Operating expenses for the quarter ended December 31, 2022, totaled $54.3 million compared to $29.6 million in the prior year period. This increase was primarily driven by a one-time $20.7 million non-cash impairment charge of the intangible asset associated with Dexacute due to the loss of pass-through reimbursement by the Centers for Medicare and Medicaid effective January 1, 2023. Further, there was a $6.6 million increase in R&D expense and a $.4 million increase in the cost of sales. This was offset by a $1.9 million decrease in sales and marketing expense and a $.7 million decrease in G&A expense. Non-operating income net totaled $.3 million and net loss was $43.5 million, or $1.16 per share, compared to a net loss of $19.4 million, or 59 cents per share for the prior year period. Turning to the full year ended December 31st, 2022, total net revenue was 41.4 million compared to 36.9 million for the full year ended December 31st, 2021. Net product revenue for the full year ended December 31st, 2022 was 39.9 million compared to net product revenues for the full year ended December 31st, 2021 of 35.3 million. Net revenue from royalties and collaborations for the full year ended December 31, 2022, totaled $1.5 million compared to $1.6 million in the corresponding period in 2021. Operating expenses for the full year ended December 31, 2022, totaled $141 million versus $92.2 million in the prior year period. This increase was primarily driven by a one-time $20.7 million non-cash impairment charge of an intangible asset associated with Dexacute, which was due to the loss of pass-through reimbursement by CMS effective January 1, 2023. Further, there was a $21.1 million increase in R&D expense, a $9.2 million increase in G&A expense, and a $0.1 million increase in cost of sales. This was offset by a $2 million decrease in sales and marketing expense, Non-operating expense net totaled $2.6 million, and net loss was $102.3 million, or $2.74 per share, compared to a net loss of $58.4 million, or $2.03 per share, for the prior year period. Cash, cash equivalents, and investments in marketable securities at December 31, 2022, totaled $144.6 million, compared to $211.6 million at December 31, 2021. We expect the cash on hand at December 31st, 2022 and expected net cash inflows from our product sales will enable us to fund our current and planned operations into the second half of 2024. In conclusion, we are pleased with iPoint's progress in 2022 and are well capitalized to advance our product pipeline to key value inflection points later this year. I will now turn the call back over to Nancy for closing remarks.
spk03: Thank you, George. We trust this review has given you a greater understanding of iPoint's progress over the past year and our potential moving forward. Over the past year, we've executed the plan and our achievements form the foundation for future growth. This is a highly experienced management team and we are keenly focused on delivering results and executing well. Biotech is a rewarding but risky business and it requires well thought out and methodically executed plans. 2023 promises to be another productive and rewarding year for I-Point Pharmaceuticals as we continue to execute on multiple clinical catalysts and strengthen our commercial business. Over the coming year, we expect to complete enrollment in the Phase II W02 trial of EYP1901 in wet AMD and in the Phase II PAVIA trial of EYP1901 in non-proliferative diabetic retinopathy. We expect to dose our first patient in the Phase 1 clinical trial of EYP1901 in DME later this year or early next year. We expect to report top-line six-month data for our Phase 2 W02 clinical trial. We expect to publish neuroprotective preclinical data for EYP1901 using berolinib. And we continue to grow revenue for UT. We've had a great year, and we have a terrific team, and we're confident that iPoint will continue to execute. We look forward to keeping you all updated as we advance these value-creating milestones. Before opening the call to your questions, I do want to note how grateful I am for our fantastic team at iPoint Pharmaceuticals, who continue to drive our progress and are responsible for our company's clinical, operational, and financial success to date. We've made tremendous progress, as I've mentioned, in the last year, and we're excited and motivated to advance the future of sustained ocular drug delivery to benefit. Most importantly, the millions of patients who are at risk of serious vision loss. Thank you all very much for listening this morning, and I'll now turn it over to the operator for questions. Thank you.
spk04: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. One moment for our first question. And our first question will come from the line of Yatin Suneha with Guggenheim. Your line is open.
spk02: Yeah, good morning. This is Eddie on for Yatin. Thank you so much for taking my questions and congrats on all the progress. How soon after the phase two data in 4Q do you think you'd be able to initiate a pivotal program? And is there any other non-clinical or device work you need to do? And then if you could give us a little bit more color on what we should be looking for in the ARVO neuroprotection data. and how it might correlate to human patients and what added benefit that might have for 1901 in the future. Thank you so much.
spk03: Yeah. Jay, why don't you take that question or those two questions?
spk11: Sure. Hi, Eddie. Thanks for the questions. First, pending the outcome of the data at the end of this year, we would expect to be able to initiate the pivotal trials in the second half of 24. The other questions were about injector, I believe. Is there any other device work or non-clinical work? There is. I think as we've stated many times publicly, we're developing a new patented state-of-the-art injector that we expect to be used in the pivotal trials and commercially. We anticipate using that injector in our DME trial as the first trial that it rolls out. That still has some work to be done. While we're pleased with the current injection system, it's working quite well. We do like to update it with a state-of-the-art injector. And if need be, we would not delay the pivotals if there's any issue with the development of the new injector. But so far, the development is going smoothly, and we're on target to use it in DMA.
spk03: Yeah, can I just add to that? So let me just reiterate. Number one, we're on track for starting our phase three, as Jay said, second half of next year. The injector is a phenomenal, really exceptional, state-of-the-art injector, patent-protected. What Jay's trying to also, let me just say, is that We're on track with the development of that injector, but because this is state-of-the-art, we don't want to guarantee that we would actually start right away with that, so we're ready to go with the current injector that we're using in our Phase 2 studies, and that's working just fine, and we can easily do a bridging study should we need to. So we are well-prepared to go forward with our Phase 3 pivotals regardless, and we're on track. I also just want to state for listeners a couple of things. Number one, Getting ready for phase three takes a lot of pre-planning. You have to have clinical supplies ready to go and well-developed, not only the injector but the actual implant itself. You have to have an end of phase two meeting with the FDA. You have to have made sure that you've got your pivotals well-designed. That all takes a lot of pre-planning and ensure that you get it right. You don't start these trials hastily because they are very large and they do require substantial investment. We are going to go about this methodically, carefully, and ensure we also are as fast to market as possible given the guardrails that I just mentioned. The last thing you want to do is rush into phase three trials hastily and end up with problems on your hands. And we're not going to do that. So we think we're going about it the right way. We think it's prudent, but also ensuring that we ensure fast to market. And we're confident that we're on the right track right now.
spk11: Great. Thank you so much. And then on the ARVO data?
spk03: Jay, do you want to take that ARVO data?
spk11: Yes.
spk03: Okay.
spk11: So the model that was used was a retinal detachment model in animals. After retinal detachment is created, the photoreceptors will degenerate because they're no longer in contact with the retinal pigment epithelium. And what you'll see from our data is that eyes that were treated with virolinib had much less damage to their photoreceptors and their subsequent visual acuity than the control eyes that were not treated. This is a model for neuroprotection. Retinal detachment technically is subretinal fluid. And you may be aware that subretinal fluid is also a feature of wet macular degeneration and diabetic macular edema. So while this is a general model for neuroprotection, we think there will possibly and likely be read-through to the diseases that we're currently treating with EYP1901.
spk00: Great. Thank you so much.
spk04: Thank you. One moment for our next question. And that will come from the line of Georgie Yordanoff with Cowan. Your line is open.
spk09: Hi, everyone, and congratulations on all the progress. Thank you for taking our questions. So, maybe starting with the RallyBio partnership, we didn't notice they have two C5 acids based on the antibody platform. Maybe, can you talk about the requirements of putting a large protein into the DERISERT? Maybe talk about why some previous attempts to develop long-acting lucentis or ilea have not been successful? And in general, what gives you confidence that you'll be able to formulate it with one of RallyBio acids? And then we do have a follow-up on the DAW trial.
spk03: Yeah, let me just, let me make one quick comment, and I'm going to let Jay take it from there. First of all, let me make a statement on this. The RallyBio C5 is a alpha body. It's a smaller, it's smaller than the large ligand blockers like ILEA that are on the market today. So I want to make that clear. It is not as big as an antibody. So that's a key point. Second of all, I'm not going to claim this is going to be easy. It's not. But we do have a stellar scientific team. And they're already going to quickly begin working on this. So we'll see what happens. But I think this team is very, very well versed in how to deal with this. and hopefully we can be successful. Jay, you want to go ahead?
spk11: Yes. So in order to get a drug to work in Duracert, there's a lot of different factors. The size of the molecule is really what helps to determine the payload. Obviously, bigger molecules, you're not going to be able to get as many into an insert. So that's one factor. Proteins in general tend to degrade. at body temperature, and that's why small molecules have been preferable. Our team is optimistic about our ability to deliver this alpha body in a sustained release fashion, but until we really have some data to share, I would say that, again, we are optimistic, but as Nancy said, This is a difficult path. Others have tried with large molecules and not been able to achieve it. But we're optimistic.
spk09: And do we have any idea of, have you disclosed when you could potentially hear an update on the progress of this program?
spk03: No, we're not going to give that word now. It's way too early for that.
spk09: Thank you. Thank you. Yeah, we're very excited about that asset. And then just finally, can you remind us of the powering assumptions for W2 and specifically if the trial is positive and you hit STAT-SIG in terms of non-inferiority, could it potentially serve as one of the two pivotal studies?
spk03: Yeah. We've stated this before, but I'm going to state it again. This is not powered. for a p-value of 0.05. I want to be very clear about that. And I've said that multiple times. We did not believe, first of all, you also have to go out longer in time. As you saw, the FDA just issued guidance on these phase three pivotal trials in wet AMD, and they were very clear. You have to go out nine months. You have to have two dose arms and a number of other things. The good news is, because we've had our type C meeting with the FDA, Our planned phase three pivotal, which takes time, I want to again reiterate, to plan for and develop the right doses and begin to produce the clinical supplies so that you're ready to go. We followed what the FDA said, and based on the guidance that was just issued, we feel we are in a great spot in terms of our pre-planning that's occurred, and we don't have to deviate at all. So that's the great news. But we do not expect that this will count as a pivotal. And again, why did we do that? Because these are expensive, large global trials. I can point to any number of companies in this space. I shouldn't say any number, but a few that went from phase one straight to pivotal and failed. You have to have a robust database. You've got to be confident in the data that you've got. And we look forward to the readout of our phase two. As I mentioned, we expect that to be 144 patients coupled with our phase one. And what was done in the oral database, we think we'll have a robust database to make wise decisions going into pivotal studies. By the way, we do plan to run those both in parallel. And as a result, we still believe that we are in a great spot competitively to get to market in a fast way.
spk11: Can I just add one more comment to that? So it really won't be a pivotal for reasons that Nancy stated, but I think if you look at our phase two design and say how will the pivotal differ, basically in just two ways. The major way that it's going to differ is we're going to do reinjection, and the second is the time. You know, the FDA asks for nine months after your study drug is injected at a minimum for efficacy, and they want two-year safety. So we're having a readout in W02 of six months after 1901 goes in. So that will be, at least in the planning stage right now, the major differences between the Phase II and the Pivotals.
spk08: This is great. Thank you so much. It's super helpful. And congratulations again on the progress. Thank you.
spk04: Thank you. One moment for our next question. And that will come from the line of Jennifer Kim with Cancer Fitzgerald. Your line is open.
spk01: Hey, everyone. Thanks for taking my questions. I have a few here. Maybe to start off with timelines for 1901. I think you said that the date is coming by year end of this year. And I'm wondering, does that language reflect anything in terms of, I guess, like what you're seeing in terms of enrollment? And then same with Pavia, that seems all on track. So how does enrollment look for that trial? And then DME, I think that timeline, you said later this year or early next year. Is there anything that sort of like pushed that timing? Thanks.
spk03: So let me answer first. I'm going to let Jake take the DME. So first of all, we are happy with our current enrollment rate. We're on track. We still expect, barring any unforeseen circumstances, that we will have a readout in the later this year. Now, again, I just want to – stuff happens, so I'm always cautious in making any definitive statements. But right now, we're happy with where we sit. And then, Jay, why don't you take DME?
spk11: So, with respect to DME, we are looking at that trial in kind of a multi-pronged way. I mentioned already that we expect that to be the first trial that uses our state-of-the-art injector. And so we would like to, from a timing perspective, have that ejector ready to go with DME. That, again, may or may not be the rate-limiting step here. There are other factors that certainly go into decisions, you know, strategically about when to start a trial and how large, et cetera. So we're still kind of working through that. I think we'll be able to nail down the start time a little bit more later in this year. But right now, it looks like Q4 start, and as I said, one of the things we'd like to do along with testing 1901 and DME is literally give it a shot with a new injector.
spk01: Okay. And then with Pavia, that, like the timeline has seemed pretty consistent. Does that reflect anything in terms of what a sustained delivery
spk11: Treatment option could mean for this kind of patient population where I guess the unmet need it is pretty clear that that you need sustained delivery Yeah, I think the time of the the reflection in time of getting patients in has much more to do with the type of patient that would enroll in an NPG our trial versus a wet AMD trial number one and number two is Interestingly, if you've got a patient with wet AMD who's getting injections, you ask them, do you have wet AMD or are you getting injections? The answer they're going to give is yes. If you ask a diabetic, what level of retinopathy do you have? They have no clue. And therefore, it's a little bit harder for the patients to get interested in the trial. And even in some ways for the doctors to identify those patients, because in general, they're even retinal physicians in their office aren't documenting the diabetic retinopathy scale of their patients. So it means casting a wider net to, of, of the patients to, to get the appropriate ones. And so, you know, this isn't new. Uh, you know, we have said before, it's probably going to take about a year to enroll. That could be a trial. And, you know, as Nancy said, so far, so good. Our enrollment's going great in the, uh, the times that we have been talking about for full enrollment and beta readout are still consistent.
spk01: Okay. And then my second question is, I think during your opening remarks, Nancy, you mentioned having like significant optionality in terms of the global pivotal program. Can you go more into that in terms of how you're thinking about all of that?
spk03: Yeah, so look, our goal is to potentially get a partnership with a strategic fund, and we are in discussions with a number of them as we speak. So it obviously depends on the data, but that's our goal. We want to minimize dilutive financing, and our goal is to be able to go into those pivotal with a partner. These, again, are large studies. Now, we can do it ourselves if we need to, but our preference is to partner this with a large pharma or mid to large pharma companies. It's all the main ones. Most of you know who those are. And, you know, again, it's going to be somewhat dependent. Obviously, it's going to be dependent on the readout of our phase two data. So we do expect that anything announced should we be able to strike a deal will happen in the first half of 2024. Our data readout, as we said, is towards the end of 2023.
spk01: Okay, that's helpful. And then my last question, a smaller question. Is there anything that drove the higher cost of sales for the quarter?
spk03: Yeah, we have a great team. We really do. And I'm just going to say, and I've told our team this, first of all, we have a great product. Utique is really a terrific product for patients with posterior segment uveitis. The team has done a fantastic job, and they've done a fantastic job as well reaching out to retinal specialists over and above just uveitis specialists because they treat posterior segment inflammation as well and uveitis. So they've done a fantastic job. I just want to say it's a tribute to having a high-quality team a sound marketing plan, and how you go about talking about the product so that physicians start to realize where the opportunity is. And the product continues to deliver in terms of efficacy and safety. It just continues to do very well. Now, again, I always put caveats because drugs are, you know, funny things. Generally, we've got a great track record. We continue to have a great track record. Never can promise that something's couldn't happen down the road. But right now, it just continues to look great. Scott, I'm going to ask if you want to add anything to that.
spk07: Thank you, Nancy. I would reiterate a lot of the comments that you had. I think, Jennifer, if I heard your question correctly, you were asking about the change in the cost of sales. A lot of that is related to just investment, timing of investments that were made for various meetings and some of the ongoing trials that are going on, such as the CALM study, et cetera. So it was really that was more of a timing issue.
spk01: Okay. All right. Thanks for taking my questions, guys.
spk10: Thank you.
spk04: Thank you. One moment for our next question.
spk10: This is George. Just to clarify on cost of sales, to Jennifer's question, the big driver, you know, UTIC is a bigger mix because of the drop-off in DEXAQ. And cost of sales in Q4 in particular was impacted by a slight provision for remaining Dexa-Q inventory because of that drop-off. We don't expect that to continue 23 forward. And the items that Scott talked about are below the cost of goods line, just to clarify for the callers.
spk04: Thank you. And our next question will come from the line of Yale Jen with Laidlaw. Your line is open.
spk06: Good morning, and thanks for taking the questions. My first question is in terms of the new injector you are developing. Could you provide a little more color in terms of the specific sort of benefit attributes that could be provided by this new device?
spk03: Sure. Jay, go ahead on that, but let me just say that it really is best in, well, it's a, we believe a state, it's a state of the art for sure. And I would also say could be best in class. It's just a really, really nice injector. So, and we've, we've obviously tested that with physicians and using it. So Jay, you can take it from here.
spk11: Yeah. So the current injection system is based on the UT injector, which was developed well over a decade ago. It's essentially like a syringe with a plunger and the doctor is, presses the plunger to get the inserts into the eye. With a state-of-the-art injector, you have a trigger or a button that you press, and the mechanism within the injector delivers in a very controlled manner the inserts. Now, remember, we can inject up to three inserts with a single injection, and we want to do that in a safe and controlled manner. This new injector system allows that. What it also will feature is a visual guide to the doctor that lets him or her know that all the inserts have been delivered. So it's in a very ergonomic package. We're trying to minimize things like disposable items, minimize the size of the packaging, things that really physicians care about. for stocking and, you know, the environment and things like that. So, we're really looking at it kind of from a 360 perspective to provide retinal specialists and ophthalmologists something that they find to be easy, ergonomic, and very reliable even when delivering up to three inserts.
spk06: Okay, great. That's very helpful. Maybe two quick ones. The first one is In terms of the deal you announced yesterday, my question is why choose C5 versus other so complements which are also in development? Is there any specific reason for that?
spk03: Let me take that. Look, RallyBio is a great company, and they've got a C5 that is validated in some of their other clinical trials. A lot of it also depends on making sure that you've got the right terms and you've got a good partnership. C5 and C3 both are validated targets. Right now, I would say we're probably neutral between the two. So our goal was to work with a partner that we had a good collaboration with, has a validated target, and we are in sync. So I think it's as simple as that. And look, it's certainly a well-validated target. I think there's a lot yet to play out between the nuances between C3 and C5, but I want to state both of them are highly validated targets now.
spk11: And if I could add to that, we're still watching very carefully this space in looking at potentially other partnerships and other targets. Other companies are looking at membrane attack complex as a target. as well as complement factor B. And I think both of those are promising. They're clearly not as validated as either C3 or C5. But I don't think from a scientific perspective, you should view this partnership as we believe C5 is validated while C3 or the other ones are not. Not at all. We think that there may be multiple ways to block complement successfully here in what we can provide is that zero-order kinetics sustained release, fewer injections, and perhaps, because of zero-order kinetics, better results.
spk06: Okay, great. My last question here is that given UT has a pretty robust quarter of cells, and should we anticipate, at least from a modeling perspective, that 2023 quarterly, the fourth quarter number will be a baseline moving forward for 2023?
spk03: Yeah, first of all, I'm going to reiterate, Yale, we don't give guidance. We never have, and we're not going to start. Second of all, and by the way, just take the pandemic as a case in point. So in terms of being able to project guidance. The other issue is that, remember, in Medicare Part B drugs, and frankly probably a lot of Medicare Part D as well, you end up with quarterly to quarterly fluctuations. So first quarter oftentimes is lower in most categories of drugs, is lower than fourth quarter the prior year. And the reason is because insurance resets, co-pays kick back in again, And so patients can, and also you get holiday bills coming in. So what we find is first quarter, patients tend to skimp on their drug utilization. That being said, we are looking great in first quarter, and we do expect 2023 overall will be higher than 2022. But I'm not going to sit here and project quarter by quarter by quarter, because again, This is a category in Medicare Part B where co-pays kick in, and first quarter can oftentimes be a little weaker than fourth quarter. But again, you want to look year over year, quarter over yearly quarter, and we expect to continue to have slightly higher highs each quarter over prior year's quarters.
spk06: Okay, great. That's very helpful, and congrats on all the progress.
spk04: Yeah, thank you. Thank you. One moment for our next question. And that will come from the line of Yi Chen with HCW. Your line is open.
spk05: Thank you for taking my questions. Just to clarify, was there any sales product revenue from DexAQ in the fall quarter?
spk03: George, you want to comment on that?
spk10: Yeah, there was, Yi. We still had revenue from Q4, but it dropped off meaningfully. from the, we'll file the cane next week with those details.
spk05: Do you expect any further impairment charge?
spk10: No, so if you look at the results this morning, and you'll see that we've recorded a full impairment of the DEXA-Q intangible. And to the earlier question, there was a little bit of incremental inventory that we reserved for as well. So from a financial perspective, We start 2023 with a clean slate as it relates to Dexacute.
spk05: Okay. Was there an increase in the price for UTIC?
spk03: Yeah, we always have very, very modest price increases. But again, we always take very modest ones. And George, if you want to just comment what we took in 2022. But again, we typically stay way below inflation. They're very, very modest.
spk10: Yeah, I think the vast majority of the revenue increase for Utique is demand. And you can see that in the details. Quarter over quarter, the team continues to do incredibly well with that product. And price is a very small piece of that.
spk05: Got it. And lastly, so should we expect the gross margin for 2023 to return to the levels observed in the third quarter or second quarter of 2022?
spk10: So I would say that, you know, UTIC carried a much higher margin than DEXA-Q, so I would expect margins to improve as it relates to just that because it will largely be just that product in 2023. Again, we're not giving full guidance on that, but, you know, safe to say that, you know, we expect margins to improve because of the weighting higher to the UT.
spk05: Okay. Thank you.
spk04: Thank you. I'm showing no further questions in the queue at this time. I would like to turn the call back over to management for any further remarks.
spk03: I want to thank everybody for your time. I again want to reiterate I'm very proud of our progress. We are very keenly focused on executing methodically and we expect to have hopefully a good year in 2023. So thank you very much. Look forward to keeping you all updated as we continue to make progress, especially on our phase two clinical program. Thank you.
spk04: Thank you all for participating. This concludes today's program. You may now disconnect.
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